To OTC Journal Members:
 

US Energy: (OTC BB: USEI): Turn Around Gaining Steam

August- Time to bottom fish. The DOW and S&P have rebounded some from the severe drubbing they took in late May to mid July. The FED paused raising interest rates today. A soft landing for the economy is looking probable. OTC Journal members have been treated to a major victory with the resurgence of Commerce Planet (OTC BB: CPNE), a company that I stuck with through a bad year and is now delivering.

As promised back at the end of May, it's time to look at oversold stocks ready for a bounce. Bounce they will. Today's idea is one I feel will be dramatically higher by year's end. It's tough to call where we might be at the end of September, but I believe this is the single best idea for an oversold bounce. In essence- easy money for those with the 10 minutes away from the beach or golf course, a little capital, and a little courage.

US Energy; USEI- I love this stock for the next several years. An idea and technology who's time has come, and they are proving it with orders for their technology. Let's review: US Energy has developed a new and revolutionary "HYBRID" fuel system. It is the Toyota Prius of the diesel world.

In short- they have developed a technology which allows diesel engines to burn a combination of diesel and natural gas. There are significant cost savings in fuel consumption with no corresponding sacrifice of power. 

There are two distinct markets for their product: The OEM market wherein their technology is built into newly manufactured vehicles, and the retrofit market for existing diesel engines. The typical retrofit systems runs $3,000 to $4,500, and the customer receives a 100% return on their investment in 4 to 12 months depending on usage and fuel costs.

The system is really starting to gain traction in the Far East where diesel is running upwards of $7 per gallon if you can find it. The price of natural gas is far more stable, less expensive, and produced regionally- far less susceptible to geopolitical risk premiums.

Here's a few recent accomplishments:

• Will deliver a 470% increase in revenues from 2005 to 2006
• Will deliver a 900% gain in revenues for Q2 '06 over Q2 '05
• Got an order from Thailand based GreenGas for 1500 units 
• Got an order from European distributor TruckGas to deliver 2000 units.
• Was featured on CNBC as a new technology to watch. Click Here to view the video. 
• And the Coup De Grace: In early June announced their technology would be included in General Motorsmanufactured vehicles in the Far East starting in Q4 of this year.

So what's going on with this doggone stock? As with so many things in life, it's all about timing. The stock traded beautifully for the first thirty days we covered it. Starting at $.27 back on April 20th, we enjoyed a high of $.44 for a net 60% in short order. I remember the day the stock traded to $.44- the company announced a lousy $50,000 contract with the state of NY, and voila- 4 million shares of volume.

Oh, what a difference a month makes. In June they delivered the major news from the Far East on the major retrofit sales and the GM event. Two very major and significant company changing events. The stock just fizzled as the overall market was tanking. 

Once it started down with the markets in June, there was no turning back. The sell off was 100% market related at the get go. Then human nature took over. Once the stock violated the $.27 SSL (suggested stop loss), I'm sure many of you who heeded my trading advice simply sold. Once the decline started there was no turning back- investors took their cue from the stock price instead of the company and sold.

In my view, the decline in the stock was more of a buyers strike than a sell off. Note the big drop in volume as the stock just drifted down due to lack of interest. These low volume sell offs lend themselves to quick rebounds when buyers resurface.

In recent days the stock has made its low and has begun to rebound. Note the firming price and moderate volume increases along the bottom line of the chart. The bottom is in, and the rebound is underway. The stock has broken back above the 3x3 moving average- very bullish.

If the company had delivered such a potent volume of evidence concerning the efficacy of their technology, I wouldn't be so adamant about this being the best single bottom fishing idea. However, they have. Therefore, they have earned the right to be looked at. 

The stock is probably going back to its former high of $.44 in a reasonable market. That market is coming- perhaps now, perhaps October. Nevertheless, I would either reload, add to, or establish a new position at these levels before the stock works any higher. The next GM could come along any day, and you don't want to be on the sidelines from these levels.

Here's a recent news release for you to keep up:
 

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