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Energy Power
(OTC BB: EYPSF)- Next Leg Up Imminent? |
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The OTC Journal's biggest
winner of 2001 could be poised for an encore performance in 2002. Up
57% in 2001 as measured from our launch date February 12 through
December 31, 2001, Energy Power is setting the stage for another
outstanding year.
Shareholders were moderately disappointed
when the company's oil and gas exploration division failed to hit a major
home run in the LadyFern region of British Columbia as disclosed in a January
press release. However, other drilling and exploration sites in Alberta
are consistently producing new, cash flow generating wells. Click
Here to read a recent press release describing current successful finds.
More importantly, Energy Power's
30
year old Engineering and Offshore Division is back in the spotlight with
major new contract wins.
The world wide recession and the
post September 11 corporate slow down put a hold on many infrastructure
build out projects which had been planned by the major energy companies
for Atlantic Canada.
With gas and oil prices rising, economic
indicators strengthening, and tensions escalating in the Middle East, the
energy giants are now moving aggressively to reactivate their Atlantic
Canada infrastructure projects.
It is estimated $2.35 billion
will be invested by a consortium of multi national energy companies over
the next several years in the Atlantic Canada region. Affectionately known
as the Bush Push, our current administration is encouraging
the major energy corporations to focus their expansion efforts in North
America in order to minimize our dependence on Middle Eastern oil.
This past Wednesday, Energy Power
announced its Engineering and Offshore Division had new contract wins on
three projects, totaling $3.5 million (cnd) in the month
of March alone. Click
Here to read the full text of the press release.
Supported by a 147,000 sq. foot fabrication
facility on the interior coast of Newfoundland, and a 40,000 square foot
facility on the Atlantic coast of Newfoundland, Energy Power's Engineering
and Offshore Division is poised for further major contract awards as these
massive infrastructure projects are reborn.
The OTC Journal currently has
a price target on Energy Power of $6 for 2002, 26% above Thursday's close.
Look for our expectations to increase if more contacts of this nature are
awarded and energy prices continue to rise.
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Market
Outlook |
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As the end of the 1st Quarter of
2002 nears subtle evidence is building that companies are poised to regain
some semblance of their former earnings momentum.
The index of leading economic indicators
has been up every month since December. Most economic indicators which
have been reported in March have come in unexpectedly strong, led by the
largest increase in consumer confidence in history.
As depicted in this chart, small
cap stocks have clearly been the only place to make money over the past
year. While both the Dow and the Nasdaq are barely above levels set a year
ago, the S&P 600 Small Cap index has appreciated a respectable 21%
in the past 12 months.
There is evidence building that the
tech heavy Nasdaq may indeed begin to close the gap over the next three
months. We have been trapped in a trading range between 1800 and 1900 this
entire year. Volume has dried up, and fund managers are anxiously awaiting
first quarter financial results.
Over the past year companies have
once again become lean and mean, eliminating expenses wherever possible,
cutting back work forces, and plowing through excess inventory. Wall Street's
former compulsion to over finance unproven businesses during the last bull
market led to an enormous excess supply of technology related inventory.
With the damage behind us, aggressive corporate restructuring will yield
dramatic profit increases on small incremental top line growth.
Moreover, there is an important unmeasured
indicator that bodes well for the near future. It is the last week of the
1st quarter. This is "Earnings Pre-Warning Season". The last
five quarters have been characterized by numerous earnings pre warning
shortfalls several weeks prior to earnings releases.
There have been virtually no earnings
shortfall pre warnings this quarter.
This overlooked phenomenon suggests
companies have their businesses back under control. It also suggests that
March quarterly results will be characterized by earnings surprises to
the upside, leading to further gains as general economic conditions improve
and corporate' earnings growth accelerates.
Different market conditions favor
different trading styles. Since the September 21 market low, traders with
the courage to step in at the lows and sell the rallies have made money.
Few stocks have been able to gather any real momentum.
It is our belief that a new baby
bull will be born over the next several months. It will be a baby bull
with shaky legs, but we believe stocks will have a stronger upside bias
than they have had in the past two years. Pullbacks will be shallower and
shorter, and great buying opportunities will be harder to find.
For now, identify your favorite stocks,
and buy when they fall back. Sell when they rally if you want to protect
your profits. However, we may be on the verge of the final evolution from
down market, to sideways market, to upward market. After all, the current
bear has lasted as long as the worst bear markets last.
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