Friday, March 18, 2011

CPST: Natural Events Could Benefit Capstone as the New Orders Keep Rollin' In

Note:  This post is intended for VFC's Stock House only.  No other repostings or reproductions are authorized. 

Capstone Turbine announced on Thursday that it had secured a follow-on order for six more of its C65 low-emission microturbine units to a prominent natural gas producer who already has 49 Capstone microturbines on hand with over one million hours of combined service time.

This announcement comes just weeks after a 24-unit order from another major oil and natural gas player that is destined to the Eagle Ford shale play in South Texas. 

The acquirer of these six units will use them to expand a minigrid system in New Mexico's San Juan Basin.

CPST has been a stock gaining radar traction over the past couple of months following the most positive earnings report to date, and the current global geopolitical events also have attention flowing to companies that are considered to produce or aid the shift to green technology. 

Capstone's low-emission technology fits that bill.

As I've mentioned on numerous previous occassions, every time oil prices are on the rise, CPST tends to do well.  There's also a lot more attention on the future of nuclear energy right now, following the string of unfortunate natural events in Japan.  There's little doubt that the fragility of nuclear energy, when assessing the risk versus the reward, is going to push many nations to undertake means of producing alternative forms of energy technology.

Just as talk of a shift away from a large reliance on tends to bode well for the future of Capstone, the same can be said about a potential shift away from nuclear technology.

As recently as a few months ago, CPST was trading for well under a buck, and while various dips and spikes have characterized this stock for the past few years, 2011 could be shaping up to be the year that the potential upside of this company takes hold and sustained higher prices are realized.

Take note of the volatility and increasing short position, however, because we're now in a market where anything can happen.

That said, the good ones are going to come out on top in the end.

CPST is as good a speculative 'buy the dips' play as there is out there, in my opinion.

Disclosure:   Long CPST.


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