Upside to FSYS looks extremely limited

Fuel Systems Solutions Is Due for a Nice Bounce

FSYS at Dec. 3 market close stood at $34. A nice round-trip bounce off your call when the stock traded in the $23 range. Whether any of the past couple of weeks price moves are rational or not - I believe that there is not much to realistically hang your hat on from a fundamental perspective here. If Fuel Systems sales are fundamentally linked to the price of crude oil and the demand for regular gas long term this stock should be trading in the low 20's to high teens. If you're looking at this as a potential buyout play - ala Pickens or a parts manufacturers - how realistic is that given Picken's & the parts gangs recent stock losses and seeming compromised liquidity positions. A stock price in the mid 30's is not pricing in the massive pullback in crude prices (which evidently appears as if it will be with us for at least a year and probably more - see S-A Andrew Mickey's piece yesterday on Oil's Slippery Slope - Dec 2) , with unemployment everywhere ramping up hard and fast and no quick fixes in store what companies or individuals are going to want to convert their vehicles engines when what's already under the hood is good and getting better pumpwise and not converting will save them king cash. If reality sinks in soon - the profitable trade looks easily to the downside. FSYS cannot trade on fundies because there is no meaningful outlook for the next couple of quarters. With no meaningful outlook how can this stock be an investment - it's not. This is purely a trade, a casino bet. Going short FSYS here not on fundamentals but on falling price of long term crude and relative pricing. BTW, if you have any info on FSYS forward numbers for 09 I'd be happy to hear it. Has the company even hinted what's happening to demand. Seems it's silence is deafening. Without forward projections for the coming year this company appears to be trading on gas fumes and Obama hope.

Fuel Systems Solutions: Third Quarter Blowout Is an Understatement

Okay, FSYS had a great quarter - but we're dealing with relatively small numbers here. If you compare how they did this quarter vs. the previous quarter - seasonal adjustments notwithstanding- you can see that the company's revenues have leveled off somewhat. Revenues increased a whopping $7 million - from 98.3 Million in Q2 to $105.5 Million in Q3. This is for a quarter that happened to a large extent before the full curtain of the financial crisis revealed the tragedies to come. Guidance for 2008 has been increased significantly - but unless cost cutting becomes greater at the company I think this is the top of earnings for the next several quarters. I find it hard to believe that any region - especially Europe and Asia where FSYS's growth seem's most pronounced - is going to be ramping up their industrial transports/fuel efficient vehicles/conversions significantly. Europe is more likely to cut back if anything considering the headwinds they are facing. FSYS will survive and prosper but it's short-medium term growth prospects expecially for the stock should factor in a long drawn out recession. I don't see this stock going much higher than $45. Reality bites.