Riding the Rally: Energy Stocks A-Power Energy (APWR), Rex Energy (REXX) and NGAS Resources (NGAS)

The 7-Day climb in the Energy Sector combined with a broad market lift provided by August retail sales beating expectations contributed to the gains this morning of energy stocks A-Power Energy Generation Systems (APWR), Rex Energy (REXX) and NGAS Resources (NGAS).

In somewhat mixed news, the Commerce Department said today retail sales climbed 2.7 percent last month, faster than the 2 percent jump expected by economists and the Labor Department said today that wholesale prices rose by 1.7 percent in August, sharply higher than the 0.8 percent rise economists had forecast. Wholesale prices had fallen by 0.9 percent in July. Both months were heavily impacted by energy prices. Oil by barrel has recently fallen off while oil at the pumps has staged an increase. But the Energy Sector as a whole has lifted most energy-involved companies and the rally continues.

Gaining 7.43% ($0.74) this morning is A-Power Energy Generation Systems (APWR) http://www.apowerenergy.com/ currently trading on the Nasdaq in the $10.59 range. APWR has a new market cap of $356 million. APWR has a 3-Month average daily trading volume of 1,376,280 shares and it had easily matched that by mid-session.

APWR management announced today that the Company had won a "full-responsibility" contract to develop a 49.5MW wind farm in the township of Saiwusu, Guba County, Inner Mongolia ("the Saiwusu Wind Farm"), for the Urat Rear Banner-based Jihe Orient Wind Energy Co., Ltd. The total value of the contract for APWR is $90.5 million.

APWR will supply the wind turbines, the towers and the foundations, and oversee the construction, subcontracting and installation for this project. The estimated cost breakdown is: equipment procurement $84.2 million; construction and installation $4.8 million; miscellaneous $1.5 million. The project is due to start in early October 09 and is estimated to be completed in June 2010.

APWR Q2 09 earnings released on August were positive: earnings came to $6.3 million, or 14 cents per share, compared with $6.2 million, or 18 cents per share, during Q2 08. Revenues declined 13% to $57.5 million, down from $65.7 million in Q2 08. APWR management guidelines in August for all of 09 remained: net income of $320 million.

APWR provides onsite distributed power generation systems and micro power grids for industrial companies; and produces wind turbines. It designs, constructs, installs, and tests distributed power generation and micro power grids as stand-alone facilities for various customers in the steel, chemical, ethanol, cement, and food industries.

At $10.59, APWR is below its 52-week high of $15 set on 09-22-08 and is above its 52-week low of $3 set on 03-03-09. At $10.59, APWR is ahead of both its 50-day and 200-day moving averages. APER has trailing twelve month revenues of $255 million and a trailing twelve month diluted EPS of $0.79. APWR is widely held by insiders. Its shares out versus float ratio (33m/21m) is a little off and I would like to see more shares in the public float.

Also riding the rally in Energy is Rex Energy (REXX) http://www.rexenergycorp.com/ currently trading on the Nasdaq in the $7.47 range. REXX picked up 15.97% ($1.04) this morning. REXX has a new market cap of $262 million. Its average daily trading volume is 396,314 shares and it topped 939,649 shares traded by mid-session.

REXX filed an 8-k on Sept 10, noting it had fired its COO effective Sept. 8. Shares were up that day, but down the next. While the REXX operating revenue decreased 55.4% for the Q2 09 period and it posted a $9.4 net loss (which was substantially better than the $38.4 million loss in Q2 08), its losses haven't deterred analyst; they love this company.

As a matter of fact, on August 25, REXX picked up yet another supporter with research house CanAccord Adams initiating a 'Buy' of the stock.

REXX is an independent oil and gas company in the Illinois Basin and the Appalachian Basin. As of December 31, 2008, REXX operated approximately 2,314 wells.

At $7.47, REXX is below its 52-week high of $21.58 set on 09-22-08 and is above its 52-week low of $0.99 set on 03-05-09. At $7.47, REXX is ahead of both its 50-day and 200-day moving averages. REXX has trailing twelve month revenues of $58 million. REXX is widely held by institutions. Its shares out versus float ratio is a little lopsided and I would like to see more shares in the public float for stability.

Gaining 15.02% ($0.32) this morning is NGAS Resources (NGAS) http://www.ngas.com/ currently trading in the $2.45 range on the Nasdaq. NGAS has a new market cap of $66 million. NGAS has a 3-Month average daily trading volume of 319,245 shares and it had easily quadrupled that volume trading topping 1,492,038 by mid-session.

NGAS announced no official news today, but if there is another component to its rise today other than the whole sector rally, I think it must be the August 18 sale of its remaining 50% interest in 485 miles of Appalachian gas gathering facilities to Seminole Energy Services (SES) for $22 million. NGAS is using the initial $7.5 million to reduce debt and the balance of $14.5 million payable by SES in monthly installments through December 2011 will give NGAS some flexibility and liquidity.

And speaking of flexibility and liquidity...

In August, NGAS also held a direct offering for 3.48 million units for $1.90 per unit. Each unit consists of one share of the company's common stock and a warrant to buy 0.5 share of common stock, for a total of 1.74 million warrants. The warrants will be exercisable for four years, beginning six months after issuance, at an exercise price of $2.35 per common share.   

NGAS engages in the exploration and production of natural gas principally in the southern portion of the Appalachian Basin in the eastern United States. The company also has interests in the New Albany shale play within the Illinois Basin in western Kentucky, as well as interests in West Virginia and Virginia. In addition, NGAS own the rights to gold and silver properties covering 381 acres on Unga Island in the Aleutian Chain.

At $2.45, NGAS is below its 52-week high of $5.59 set on 09-23-08 and is above its 52-week low of $0.77 set on 03-06-09. At $2.45 NGAS is ahead of both its 50-day and 200-day moving averages. NGAS has trailing twelve month revenues of $77 million. Its shares out versus float ratio is near-parity.

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