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Joe Springer
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We love the royal "we". Email joespringernews@gmail.com to be added to our free newsletter. Check out our record picking stocks: http://seekingalpha.com/article/1896981-6-doubles-in-a-row-and-2014s-top-pick Please follow us on Twitter and subscribe to our Youtube channel:... More
  • Hydrogenics - Near Term Profitability And Huge Upside 22 comments
    Apr 7, 2013 11:03 AM | about stocks: HYGS, MNKD, TA

    Email joespringernews@gmail.com to be added to my free newsletter, I sent this out on Thursday:

    I wanted to give you a heads up that I'm researching a stock for an in-depth article - Hydrogenics (HYGS). It will probably be several weeks until I publish the article, but the stock is not liquid so I wanted to tell you now in case you are interested.

    Hydrogenics is close to profitability now, and may be profitable in Q1 2013 depending on how orders are recognized, they have $16 million cash and a very sizable backlog, they are healthy and the excitement seems about to start.

    HYGS has three businesses:

    -they are a leading supplier of on-site Hydrogen generation for all sorts of industrial and fueling purposes

    -they have a fuel cell business for propulsion and backup power for cell towers - they just got a $90 million propulsion order

    -and the most exciting business is that they do energy storage from renewable sources. The idea is that a windmill spinning at 4 am is wasted, no other way of storing the energy can scale for use at utilities. What they do is use the energy from the windmill to split water into hydrogen and oxygen, and then they take that hydrogen and inject it directly into the natural gas system. They already are doing it in Germany where they have won 4 of the 6 contracts awarded, they are competing for 12 more there currently. They have interest elsewhere in Europe and Japan, and Enbridge - the largest distributor of natural gas in North America - recently partnered with HYGS and took an ownership stake. This is a $10 - $50 billion market.

    Here is the presentation from the latest conference call:

    http://www.hydrogenics.com/assets/pdfs/2012.Q4.Presentation.pdf

    The CEO's latest presentation:

    http://wsw.com/webcast/roth27/hygs/

    And their site:

    http://www.hydrogenics.com/

    This is an exciting play on the Hydrogen economy, and I like it quite a bit. Remember this is not a liquid stock: if there is not an eager buying/selling counter-party when you want to get in or out you may not get a good price. That same phenomenon can work to your advantage though - if you are long and an institution wants to get long, you will enjoy a nice ride up.

    My last two articles worked very well, TA has doubled and MNKD put on close to half a billion dollars market cap:

    http://seekingalpha.com/article/1106981-3-reasons-travelcenters-of-america-could-triple

    http://seekingalpha.com/article/1254581-5-reasons-mannkind-could-be-the-best-performing-stock-of-2013

    Please do your due diligence on this if you like it, I like it but there are no guarantees.

    Success to trade,

    Joe

    Disclosure: I am long HYGS, MNKD.

    Themes: Hydrogen Stocks: HYGS, MNKD, TA
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Comments (22)
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  • Great Work here Joe,

     

    Thanks for posting!

     

    DCSIII
    7 Apr 2013, 02:49 PM Reply Like
  • Author’s reply » Thank you DCSIII!
    7 Apr 2013, 02:52 PM Reply Like
  • You're really nailing this MNKD run up Joe, good work. Should've taken a position a couple months ago. Still watching.
    7 Apr 2013, 06:54 PM Reply Like
  • Author’s reply » Thanks Noreika!
    7 Apr 2013, 06:55 PM Reply Like
  • Got in late afternoon on HYGS. Hope we will see that $12.00 or higher target price. As always, great info. Appreciate it.
    8 Apr 2013, 10:19 PM Reply Like
  • Author’s reply » I'm glad bholly, rock on!

     

    I think $12 is very low, HYGS' story is finally playing out. Their power-to-gas tech is 25% better than the rest and protected by patent.
    9 Apr 2013, 12:00 PM Reply Like
  • Thank you, Joe. I've been impressed with several of your calls over the past year, and the detailed research you do before posting. SA is fortunate to have you.
    9 Apr 2013, 12:34 AM Reply Like
  • Author’s reply » Thank you Chris! I am fortunate to have SA, not only to be read but I've learned more from the smart people on this site than any other source.
    9 Apr 2013, 12:02 PM Reply Like
  • Thank you Joe for a Great article and insight!
    10 Apr 2013, 04:55 PM Reply Like
  • Author’s reply » You are most welcome, I hope to have a persuasive article in a week or two.
    10 Apr 2013, 04:57 PM Reply Like
  • Hello. My name is Joe Elchert and I have been following hydrogenics since early 2008. Very glad to see your coverage Joe. Ty. I believe once an institution or 2 get involved here we will see the market cap multiply especially when we see a profit. I was hope full for a profit in Q2 but love the possibility of Q1 like you say.
    11 Apr 2013, 06:50 PM Reply Like
  • Author’s reply » Thank you Joe. They have Commscope revenue in Q1 for the first time, and the $90 million propulsion order could start generating revenue in Q1 also per the CEO. They are profitable at about $50 million revenue annually per the CEO, they should get there this year easy.
    11 Apr 2013, 08:25 PM Reply Like
  • Thanks Joe. Noticed you were working on Hydrogenics... looked it up a couple places and crossed it off my list... BUT... if you are optimistic then... I can be. Numbers looked horrible in what I saw. BUT... likely going long sometime Monday... hoping for the "Springer Effect". And looking forward to your article! Very long MNKD... soon HGYS.
    27 Apr 2013, 12:08 PM Reply Like
  • Author’s reply » Thanks Dennis, here's a quick run-down, 16 years of pain followed by inflection points in several of their businesses:

     

    http://seekingalpha.co...

     

    They should be profitable in the near term, the backlog (all with deposits) is bigger than the market cap, so is the tax loss carry forward. The sales pipeline looks very good in all sectors, it has been a long time coming for Hydrogenics. They have the best patents, best partners, and are first to market in the renewable storage at utility scale market, a huge market. The puny market cap will be a thing of the past soon enough in my opinion.
    27 Apr 2013, 03:22 PM Reply Like
  • Great article, but I'm quite worried about Hydrogenics management when I read the presentation from the latest conference call:

     

    http://bit.ly/17v98PV

     

    The reasoning exposed in my understanding is the following:
    1) We do not sell what we offer our price, so we make discounts for our products to boost revenue growth (otherwise it would be the disaster it seems).
    2) we increase our costs to better lose money.
    3) Conclusion: With the deterioration of margins and deepening our losses when sales increase, we have a clear path to return to profitability.

     

    Maybe they'll get there and I missed an episode, but I'm not ready to take the paris. In any case, I would not recruit a manager with such a plan.
    30 Apr 2013, 07:43 AM Reply Like
  • Author’s reply » Hi Titus, they delivered the very first power to gas project ever in December, the real money will be in much larger projects but this first project is the first to market and a working proof of concept, I have no problem with it, the CEO on the Q4 conference call:

     

    "We occasionally use very competitive pricing when introducing new technology that requires a lead adopter or a lighthouse project. Once identified, Hydrogenics will assist lead adopters in such markets by strategically lowering the hurdle rate to use our technology and thereby accelerating the demonstration of the pilot phase of the application. We do this from time-to-time targeting new and attractive markets be they geographic based or application based, and the adoption by a lead company that will materially move the market in our favor."
    30 Apr 2013, 08:00 AM Reply Like
  • i also enjoyed hbo rome titus poulo is insane aha
    8 May 2013, 05:51 PM Reply Like
  • Would I be a little late buying HYGS?
    21 May 2013, 12:30 AM Reply Like
  • Author’s reply » I don't think so at all Gabriel.F, I hope to be done my extensive article by tomorrow, I think this one will prove to be a billion dollar company.
    21 May 2013, 08:40 AM Reply Like
  • Joe............the bid/ask dropped on HYGs !?
    22 May 2013, 11:41 AM Reply Like
  • Author’s reply » Looks like a buy to me! Hang in there, hoping to be done the article today.
    22 May 2013, 11:44 AM Reply Like
  • i bought some more........the bid had dropped to 8.22 temporarily......its moving up again
    22 May 2013, 12:01 PM Reply Like
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