Waiting for a microcap company to reach an all-important, commercial inflection point can be an excruciatingly drawn out process, involving multiple false starts and product pivots, all seemingly punctuated by dilutive financings at less than ideal times. Even steely-nerved investors tire of the wait and bail prematurely. If we've done our diligence, though, we should resist the temptation. Why? Because the big payoff eventually comes.
Look no further than Energy Recovery, Inc. (ERII). After years of faithfully plugging away with its proven technology, it secured a transformative deal with Schlumberger (SLB) in October 2015. What immediately followed for patient investors is self-evident - a permanent and dramatic revaluation.
Fast-forward to today and Clearsign Combustion (NASDAQ:CLIR) is poised for the same outcome.
After years of plugging away on research and development, a product pivot, initial field installations - and yes, multiple financings, including a $9.6 million rights offering in January - the company's on the cusp of meaningful commercialization with multiple shots on goal. CLIR's pipeline is full of blue chip customers, representing over $125 million in potential sales by my estimates, including:
- The $9.9 billion market cap Tesoro (TSO)
- Aera Energy, a multi-billion-dollar joint venture between Royal Dutch Shell plc (RDS.A) and Exxon Mobil Corporation (XOM)
- The $1.6 billion market cap, Delek US Holdings, Inc. (DK)
- An unnamed Canadian oil company, which my research suggests is either the $15.8 billion market cap Husky Energy Inc. (HUSKF) or the $10.6 billion market cap Cenovus Energy Inc. (CVE).
At this point, the receipt of a sizeable, multi-unit order from any one of those customers is a matter of when, not if. After all, CLIR's technology has been independently validated by multiple parties, definitively confirming there's no other NOx emissions reduction technology in existence that can offer the same benefits. Specifically:
- Ultra-low
