China Energy- They’re Starting To Talk

CGYV behaved pretty well today on the volume side. I would like to have seen a little appreciation on the price, but it’s a sign of the times.

If you have capital, and you have bought into this company, you are not a seller of this stock. If you are forced to sell because of your circumstances, or are focused solely on the market, you could be a seller.

If you are a seller, I suspect your timing might be bad, as the majority of the damage has been done out there in the stock market. Real revenues, real profits, and really valuable energy saving technology in a world where that technology is very valuable will eventually take this stock where it deserves to go.

There’s a couple of interesting items worth pointing out. For starters- this morning’s news release. The company announced a new contract for engineering services- admittedly very small by their standards, yet important for another reason. Note who is handling the services- MECS.

MECS is relatively meaningless to the average guy, but the name Monsanto (NYSE: MON) is not. MECS is formerly Monsanto Enviro-Chem Systems, and one of the largest designer and builders of manufacturing facilities in the world. It was formed in 1969, and was purchased in a management led buy out in 2005 from parent Monsanto. If you look at their office locations, they are a world wide firm. Click here to visit their web site.

CGYV is deeply entrenched with MECS, and obtains a high percentage of its business from the aformentioned world wide firm.

Here’s a second item for you to chew on. There was an interview published at CleanTech.com with Roger Ballantine, the most recent board member added to the CGYV management team, and one of the most respected names in the alternative energy movement.

Mr. Ballentine is a frequent lecturer at Harvard, and served under President Clinton as Chairman of the White House Climate Change Task Force and as Deputy Assistant to the President for Environmental Initiatives. The Clinton Climate Change Task force was the birthplace of Al Gore’s environmental movement, and led to the making of the movie An Inconvenient Truth. In the Alternative Energy field, this guy is the real deal, and highly respected world wide.

If you would like to read the interview with Roger Ballantine, simply click here.

Today’s action in the stock was pretty interesting. Here’s a chart:

There was a nice volume surge with no associated price appreciation. This means sellers were matching buyers 1 for 1.

This stock has now traded 1,018,198 shares since the company’s registration statement of 7 million shares went effective. The financing was done at $2.20- so $2.75 isn’t a really exciting profit- unless you think the world is coming to an end of course.

I suspect the number of shares for sale is probably in the range of 10% to 20% of those in the reg statement. Most of the players have very deep pockets and a long term perspective, but there are always going to be a few weak sisters.

If you average it out, and assume it’s 15% (just a guess), about 1 million shares of buying would clean this stock up and position it to move higher.

Assuming the volume is all double printed, which is a worst case scenario, this would mean the market has chewed up about 1/2 the existing supply.

So, here’s the point- keep an eye on the volume. If it holds up over 100k shares everyday this week, a break out is inevitable. If the volume slows down, the stock is likely to go into a slight pullback- probably pretty shallow.

I’m told there’s starting to be some chatter on this company around the internet. My hope is that investors look at the facts around the company, not the past. The past is over. It’s been a bear market, and the US is in a recession. There is no recession in China. Perhaps a slow down worst case.

I picked up another 5,000 shares for my own account today- I believe I’m going to make a fortune on the stock.

If you have any questions on the company’s numbers or technology, post them here. Comments and questions of an intelligent nature are always welcome. If you don’t like the company, go ahead and tell us why, and I’ll publish your comment with a response.

5 thoughts on “China Energy- They’re Starting To Talk

  1. do you think this company has a chance of getting a Nasdag listing? and if I am reading your disclosure correct why are you selling?

    Editor: No, you are not reading the disclosure correctly. I have sold zero. I have bought about 30,000 shares in the open market. I am not the only shareholder in my company. One of my partners sold a few shares he bought at $2.79, but he still holds a major position. The company needs to meet two criteria to be qualified for NASDAQ- 400 shareholders and a $4 stock price. I’m pretty sure there are probably 400 shareholders by now. Therefore, we just need the $4 stock price to make the eventual jump.

  2. My name is Lewis, not ANONYMOUS. If you are ANONYMOUS, you are so because you feel that what you write will make you uncomfortable. If it makes you uncomfortable to write something, then the veracity of those words is questionable.

    Ok, macroeconomically speaking, the background sucks. But, the company’s fundamentals are in print with the SEC. Their balance sheet is strong FACT. The stock WILL appreciate with conitinued fundamental appreciation (new contracts). If the stock does not go up as fundamentals increase, then the price becomes “compressed” and once the sellers who need cash are gone, it has the potential to explode to the upside.

    I trade around a core position. I have cash at all times. If I buy cheap shares, I let them go when the stock moves up, even 10%, to keep cash handy and to manage the profitability of the entire allocated position. Just some thoughts for the blog, Sir.

    Srong buy, no BS. This is a value proposition right now. When the price goes up, then it will be about how much of a premium should be assigned to the stock. This is a value and growth play.

    Lewis Berry

    Editor: The stock is currently trading at about 20 x this year’s earnings,- 8 x next year’s earnings. If you use the age old bench mark of the PE being about 1/2 the growth rate, this stock should be trading at about 50 x this year’s earnings, or about $6. It’s obviously going to take some months to get there in my view- a perhaps a couple of earnings releases, new contracts which could be huge, a wider audience, and a better market. A resurgence in China stocks, which are down 60% from their highs, would be helpful as well. I believe China stocks will come back before US markets. China is not experiencing any sort of recession. Perhaps slightly slower growth.

  3. So if anybody is still in then they go against your cardinal rule of ssl. Therefor you excuse yourself from any complaints in the future. Nice ….

    Editor: That’s right jerk. It’s there, it’s published. There’s a video explaining it. If you don’t use it, it’s your fault. Go whine somewhere else. Life will go much better for you if you start taking some personal responsibility and stop blaming others for your own stupidity.

  4. For a young investor who wants to invest long term in alternative energy companies…how does this company look? Good from where I stand…but I’m new to the game.

    Editor: Technically, meaning how the stock is trading, it simply looks awful. The stock has gone down pretty much everyday, and it’s tough to say where the bottom is. The vast majority of the supply of shares is coming from early investor funds who are being liquidated today with no regard to cost. They are being shut down. BTW- their cost basis was $2.18- this stock is $1.10. From the fundamental side- or the corporate performance side- it looks great- they went from $5 million in ’06 to almost $12 million in ’07 and are on track to deliver well of $20 million this year. They are also profitable. There is a disconnect between the intrinsic value and the stock price. I don’t know how long it will take to close the gap, and it could go lower in the meantime. This is why I am not suggesting opening any positions unless you have a 6 month time horizon. If you plan to hold for at least 6 months, it’s a great opportunity.