Over the past 52 weeks, shares of Capstone Turbine (CPST) have traded in a range between $0.85 and a $1.69. Shortly before that high was set, Capstone traded as high as over $2 but retreated quickly as short interest mounted just as fast as the share price drove to $2. Aside from a brief trip back toward $1.50 earlier this year, Capstone shares have been stuck at or near the $1 mark.
During the time frame discussed above, the key highlight for this company, which has become a recognized leader in the field of green energy with low-emission microturbines that are catching on globally, may have been a mention by U.S. President Barack Obama during a speech on clean energy in Brazil. The lowlights consist of high short interest, a share price decline, and the failure of the company to make quick enough strides toward profitability to ward off the naysayers and the short sellers.
Historically, at least over the past few years, Capstone has proven to be a nice buy for right around $1, and an even better one below that level. Although it's obvious that none of this stock's recent price runs have been able to hold their highs, the opportunities to trade a few shares into the mini-runs while holding on to a core position have been plentiful. One example is the modest rally that accompanied the CEO's appearance on CNBC's "Fast Money" earlier this year.
While volatility is sure to continue to accompany the trading patterns of this stock until the ultimate goal of profitability is met and a relative normalcy can dominate the days, the tide may be starting to turn for Capstone Turbine and -- as always -- it's worth keeping this company under consideration as a growth story in the green and clean sector.
One encouraging sign is that in each quarterly earnings report Capstone has demonstrated continued revenue growth and an increasing backlog of orders -- many of which are re-orders from existing customers, which in my opinion is a huge validation of confidence in the company's technology. The proof is in the pudding, as they say, that the road to profitability is in effect.
Technically speaking, Capstone shares have crossed a bullish technical boundary, which has some investors predicting a short-term breakout and a possible attack on the closest levels of resistance. Such action could set the stock up nicely for what should be another quarterly report of solid growth and -- if keeping within current trends -- improving margins, too.
On the subject of backlog and new orders, Capstone has issued some announcements over the past weeks that indicate a continuing growth trend. Last week the company secured a couple of orders in the Colombian natural gas market. Capstone already has a presence in Colombia and, according to last week's press release, that was a factor in landing the sale. The natural gas industry is booming right now and Capstone has been able to capitalize nicely on an international scale. Aside from Colombia, sales have been registered in other South American countries as well as in Russia and Asia, among other areas of the world.
Shares traded up by 3% this past Friday during a broad market rally, but dropped by 2% to open the new trading week. Things could be heating up for Capstone right now, so it's worth taking a look at the company on any dips back toward $1.
There is also some buyout potential here. While it's much more likely that the company would be bought out once it can demonstrate a profitable business plan, speculation has in the past looked toward General Electric (GE), being that Capstone already has a relationship with the company, while Caterpillar (CAT) and Cummins (CMI) have also popped up in conversation.
Another one to keep an eye on in the sector is FuelCell Energy (FCEL). Like Capstone, FuelCell is inching toward profitability and could be on the verge of a share price rebound after -- again, like Capstone -- having dropped back to the dollar level after trading as high as nearly $2 just months ago.
For a much more risky and speculative play in the energy sector, it may be worth taking a look at Far East Energy Corp. (FEEC.OB). The company has a U.S.-based management team and is sitting on very notable interests in three of China's largest coalbed methane fields. The company's share price has moved up over 50% since mid-June and volume has also been picking up very significantly, usually an indication that news may be brewing.
The key -- for all of these stocks -- is profitably. For the investor, the key is determining whether profitability is possible and then being a shareholder when that goal is met, because once a company is profitable, the discounted share prices will be history.
For those looking at the long term, Capstone may look like a nice discount at right around $1.