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WPRT: Classic "V" Recovery in Value Holds on Good News
HEAT: Gains 19% on Near-Doubling EPS and Revenues in Q3 2009
WAVX: Gains over 15% Today and Tops 52-Week High
With U.S. retail sales up in 1.4% in October and Japan's annual GDP growing 4.8% in July-September, the markets took-off this morning as advancers far outweighed decliners early in the session and three SmallCap stocks, WPRT, HEAT and WAVX posted big value gains on good news and strong numbers.
Gaining 9.54% this morning is Westport Innovations Inc., (WPRT) http://www.westport.com/ currently trading in the $12.17 range. WPRT is a heavily traded stock and it is approximately $1.15 off its 52-week high of $13.32 set on 09-29-09. WPRT is on the mend. $9.50 is the bottom here as demonstrated in the classic 'v' fall and rise as seen in the chart below. WPRT investors like the $12 level. With trailing twelve month revenues of $115 million, WPRT and the global industrial sector showing life again, this stock could make a move to $15 in the near-term (3 Mo). WPRT is a short-term (6 Mo) 'Watch Closely' stock for me. The more top-line deals it brings about on growing sector strength, the better its chances for finding broad support at $12.
WPRT gains this morning are based on its news of today; that its alternative fuel, low-emissions transportation technologies have won over Volvo and a deal has been struck with WPRT becoming a 'Tier 1 Development Supplier' of its heavy duty natural gas engines. WPRT will supply its "Westport HD" technology and work together with Volvo's Gothenburg, Sweden engine manufacturing engineers.
"High energy efficiency and low emissions of greenhouse gases are a key focus for our strategic development efforts as natural gas and its renewable fuels counterpart, biogas, quickly become the mainstream alternative fuel choice for heavy-duty engines," said David Demers, CEO of WPRT.
Just What the Doctor Ordered
Last Thursday, WPRT reported its Q2 2010 which had typical decreases for a sector so beaten down by the 'great recession'. A new deal with a big name like Volvo for heavy duty engines is just what the doctor ordered for WPRT to get back to generating profits.
WPRT Q2 2010 revenues had a 19% decrease from Q2 2009. WPRT posted a Q2 2010 net loss of $0.28 a share compared to a positive two cent EPS y-o-y. The Q2 2010 of WPRT was better than its Q1 report with some sequential improvement, but with big engine users like Peterbilt, Mack and Freightliner slowly coming back into their own even amidst a desire to use natural gas as a 'green' standard, the transportation market now has to catch up to WPRT technology. That will happen in 2010.
WPRT is well positioned (as the Volvo deal affirms) to provide its engines utilizing gaseous fuels for transit and shuttle buses, conventional trucks and tractors, and refuse collection trucks, as well as specialty vehicles, such as short haul port drayage trucks, material handling trucks, street sweepers, heavy-duty trucks and forklifts.
WPRT 3-Month WPRT 1-Month
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Another Industrial Goods Sector company taking off this morning is SmartHeat Inc., (HEAT) http://www.smartheatinc.com/ gaining as much as 19.11% in early trading. HEAT is currently trading in the $10.65 range. HEAT is also a very heavily traded stock.
HEAT is a couple dollars and change off its 52-week high of 09-18-09, but I think $7 is its old floor, $9 could becomes its new bottom and since it keeps spiking up to $12 and beyond, it could be a near-term 'buy' at this price if the support develops. Considering HEAT is China-based and has plenty of access to China's stimulus dollars, at this price, it's a 'Buy' stock for me. HEAT has also produced a trailing twelve month diluted EPS of $0.36 and with news like today...
Today, HEAT said the growing Chinese construction industry boosted demand for its products. "We are optimistic that SmartHeat is on track to achieve solid fourth quarter earnings growth and another year of rapid growth in 2010," said Chairman and CEO James Jun Wang. In Q3 09, revenues increased 83% to $37.8 million from $20.7 million in Q3 08, net income increased 105% to $8.9 million from $4.3 million in Q3 08 and Q3 09 EPS increased 98% to $0.36 from $0.18 in Q3 08. Sales climbed 83% percent to $37.8 million. Management at HEAT also noted and re-affirmed the company forecast a 2009 profit of $15.5 million, approximately 62 cents per share on $80 million in sales. Street analysts expect 59 cents on $78.6 million in sales for the year. Those are some numbers.
HEAT 3-Month WAVX 3-Month
Gaining 15.32% this morning is Wave Systems Corporation, (WAVX) http://www.wavesys.com/ currently trading in the $1.28 range. WAVX doubled its 3-Month average daily trading volume within the first hour of this morning's session. WAVX topped its 52-week high of $1.25 set on 06-02-09. WAVX has a floor in the $0.80 range and I think it will add a dime to that as it steadily climbs past a dollar. This is a near-term 'Watch Closely' stock for me.
The gain today came on Friday's news that WAVX has formed a European Advisory Board. The Board's charter is to work to raise the profile of WAVX and its hardware-based security solutions across Europe, and to support the company's business development in the region. Expansion requires toeholds becoming footholds and WAVX is doing just that. This is a very positive move for the software maker.
On November 9, WAVX released its Q3 2009 earnings: net revenues rose 164% to $4.8 million, compared with Q3 08 net revenues of $1.8 million. Total billings for Q3 09 grew 13% to $5.2 million compared to Q2 09 and grew 126% as compared to Q3 08.
The Q3 08 EPS loss of a dime has all but evaporated with WAVX only losing a penny in Q3 09. Management noted last week "... shipments of (our) EMBASSY Trusted Drive Manager with self-encrypting drives sold by our OEM customers increased 42 percent in Q3 09 versus Q2 09."
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Comment #1 Posted by Dennis Askew Thu Nov 19, 2009 9:46AM PST
Thanks for your feedback on WAVX. I did see both the earliest mention of the WAVX HPQ deal reported in the Nov 13 filing and the subsequent Nov 17 8-k filing; that WAVX entered into a reseller agreement that permits HP to distribute and sell WAVX’s software products through HP channels, but I also noticed “The reseller agreement does not provide for guaranteed minimum shipped quantities or royalties.” The filing wasn’t posted by HPQ on their web site and there was no press release by HPQ to confirm any other information; including numbers. Doing a very positive piece on WAVX, and working with a contained amount of space, I chose the more compelling information (to me) about the Euro Advisory Board from Friday’s news noting: “The gain today came on Friday's news that WAVX has formed a European Advisory Board. The Board's charter is to work to raise the profile of WAVX and its hardware-based security solutions across Europe, and to support the company's business development in the region. Expansion requires toeholds becoming footholds and WAVX is doing just that. This is a very positive move for the software maker.” And also: “On November 9, WAVX released its Q3 2009 earnings: net revenues rose 164% to $4.8 million, compared with Q3 08 net revenues of $1.8 million. Total billings for Q3 09 grew 13% to $5.2 million compared to Q2 09 and grew 126% as compared to Q3 08.” Numbers and Euro-growth (and content space) outweighed a reseller agreement with no specifics in my inclusionary decision. I hope when SmallCap Investors read my writing, that they are compelled by a new interest in a stock and with due diligence in mind, do a complete ‘study’ of the company mentioned and all of its relatable news. Since I am not writing complete corporate profiles or complete research papers, there obviously has to be some omissions of listings, links, mentions and older news. I do try and capture ‘the essence’ of a story being told about a company at a particular point in time. Whatever your relation to the company, please let me know in the future of any Material Events or news about WAVX that you think should be included when and if I revisit this company. Thanks for your e-mail. Best Regards, Dennis Askew
I received an email from a reader stating: You need to check the news again. Wave Systems has signed a deal with Hewlett Packard; that's what's moving the stock today.
My reply is:
