If there is a bullish case to be made for Ocean Power Technologies (NASDAQ:OPTT), it involves national security, not electric power. Its chief customers are the Department of Defense and Department of Homeland Security, and its chief product is the PowerBuoy, which is mainly used for ocean surveillance.
The idea is that a system that generates its own power can use that power to seek out bad guys aiming to hit us from the ocean, or immigrants trying to sneak in the back door. An acoustic sensor system using radar to track boats on the ocean makes vessel detection the prime directive for OPTT. Tidal power is practically an afterthought.
This may ultimately bring OPTT some profits. It currently has a market cap of under $36 million, and while it's usually losing a little over $1/month, its system is being proven now in the field -- meaning some more profitable contracts could be forthcoming.
But we're not talking about a huge market; we're not talking about a commercial market. We're talking here about a defense contractor, a small-scale contractor whose best chance to deliver profits for shareholders is -- once the technology is proven -- to sell out to a bigger defense contractor.
I'm a big booster of renewable power sources. I know the tides roll as much as the sun shines. But if you're only powering 250 homes with the power of the Bay of Fundy, you don't have something interesting. You have a press release.
The big run-up yesterday in OPTT is overdone.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.