US Energy, the Rodney Dangerfield of the alternative fuels microcap world, made a valiant effort to break out today on a strong quarterly earnings report.
As I write this BLOG at 10:30 Pacific, the stock has already traded 1.1 million shares and tried to break out. It surged to $.14, but unfortunately as has been the consistent pattern with this stock, sellers appeared to sabotage the price movement of the volume surge.
The company reported top line growth of 217% above Q3 of ’05- they approached the $.5 million mark in revenues, and they made a gross profit of $200k, which suggests some pretty good margins.
Here’s the chart and some thoughts:
You can see the stock made a nice move up today on big volume, but has since turned around and is near the low of the day. This is a pattern which continues to repeat itself with this stock.
In the press release, USEI states there is an in depth discussion of the progress in each of their major projects in their 10Q- I can’t comment because the 10Q has not been filed as of yet. As soon as it is, read it over and share some thoughts.
USEI is now in a position of effect a reverse split if they so choose. I believe it is highly likely the company will engage in a reverse split, but unlike PhotoChannel, I don’t believe it will be productive for the shareholders. I believe this one will have the stock chasing to new all time lows. Too bad, because the company is going to rock in ’07.
Reverse or no, the market will still have to deal with a massive supply of stock. On the plus side, in ’07 the company will generate some real numbers, and who knows what new business might come in.
Bottom line- My $.12 SSL still stands for traders. For long term investors, corporate developments are very strong.
If the stock craters after a reverse split, it could be the oversold bargain basement deal for 2006 or early 2007. Long term, I still love it.
Comments and questions are welcome.
I still believe that USEI is one of the best opportunities on this board as they have positioned themselves well.
I think investors should understand that their alliance with General Motors could produce some huge contracts. GM is the largest producer of both consumer and commercial vehicles in China and they have plans to expand that base.
Geoge Bush is not going to give GM/Ford, and Chrysler any domestic relief for the NA market so they are focuseed in the oversea’s R&D and sales penetration.
USEI is well positioned to be the benefactor.
Long Term a diamond in the haystack!
Scott
Editor: I believe this company is going to deliver some breathtaking numbers in 2007- huge increases over past years and real value. I’m not sure how big GM is going to be in the picture. All they need to do is get rolling on the bus conversions in Thailand, and off you go. Then- look for China to be the next generation of major sales for years in the future. In the meantime, long term is the key phrase. The stock is another matter. The shareholders are now paying for 9 years of development and failure through poor stock performance. Also, the pending reverse split will be a short term negative in this case. A drubbing in this stock would be the buy of 2007 at these levels.
This may be a company with a good product but I think that their great earning report lost it’s thunder when their 10QSB was no where to be found even though their release referred to it as if it where filed already. These guys better get their act together!!!
Editor: Normally, you would see the Q filed with Edgar in conjunction with the news coming out. I am planning on reading the Q over the weekend- want to read what it has to say about filling future orders. This company appears to know how to sell product, but their shareholder communication and awareness is ineffective. Someday, this one will have a lot of upside if they start filling those orders.
HI,
I have a question about the planned reverse split. On the USEI website they talk about appoving the reverse split and expecting to exercise it by 11/15/06. Now does that mean it may have already happened but like dividend payments there is a date of record but the dividend does not get paid out unitl later? Alternatively can it mean that the split may happen later or not at all? I am somewhat new to the penny stock market as I got interested in this stock because of its product not its penny status.
Thanks!
Editor: It is my understanding they now have shareholder approval. Therefore, it could happen at any time simply at the management’s discretion. There will be a record date announced, and it could be as quickly as the next day. The stock will change symbols when it trades post reverse split, and your brokerage firm will automatically adjust your account to reflect the changes. The company has wide latitude concerning the magnitude of the reverse split as they specified in the SEC filings. I believe, if it happens, it will be a major short term negative for the stock, but perhaps good over the longer term.
Have you heard of the extent of the reverse split (1 for 10, 1 for 25)? If it’s imminent (before end of the year), wouldn’t the negatives associated with it and the tax selling which will occur in December make this an incredible bargain? It might be trading at the equivalent of 1/2 its current level on December 31.
Editor: I have been given no information on when and if they will actually implement the reverse split. I just know they now have the legal ability to do one when they want to. Clearly, they wouldn’t have done the legal stuff if they didn’t intend to do it sooner or later. If they are smart (which, on the market side they haven’t shown they are), they will let it stay as is through the remainder of the year, and do a reverse split when they can start announcing significant revenue streams. In any case, your observation is right – there will be tax selling in this stock in December- that will be bargain basement time. If they did the reverse split as well, that would just make it even more attractive.
I’m still in this for the long-term and am contemplating putting in a limit order to buy some more at 5 cents (or its equivalent after a potential reverse split). I agree with you that this stock could be a star of 2007. I am just wondering if you still feel the same way. Of course I understand that its current price movement is related to tax selling and the pending reverse split, but certainly 5 cents would be an unbelievable bargain, no? That would give this company a market cap of only about $5 million.
Editor: I believe this is probably the most undervalued situation out of the slate of 2006 ideas. It is absurdly undervalued at these levels. That having been said, I don’t believe the stock is ready to turn back up. Everyone who is anyone seems to want to sell this stock with no end in sight. $.05 seems like a very real number to be a buyer. I don’t know what it’s going to take to get this stock moving in the right direction- however, if they are delivering orders, the trading level of this one is just absurd.
Does’nt this company have about 3 million in debt and could’nt that be why it is not going anywhere? It has to did itself out of the whole first.
Editor: $3.5 million actually. I believe all of it could be converted into common stock under some sort of terms. It would probably kill the market cap if it converted at these prices. However, the answer is no- the debt doesn’t need to be paid off for the stock to trade well. It’s kind of funny that everyone is selling this stock when the company has so much potential in 2007- and the better it trades, the easier it will be to deal with its debt. There is nothing about this stock other than the company’s potential in 2007 that makes any sense. It’s simply a disaster.
STLOF all over again, tons of outstanding shares, stock drifting down to nothing, the litgitimate good old OTC criminals in action, its going to nothing trust me.
Editor: You are simply a flat out moron. You are bringing up a failed idea from 2001. The company you refer to had a development deal with Ford, but it never materialized into sales. This company has consistent sales and a $54 million contract over the next five years. Also- in everything I have written about this stock for this last six months, I have stressed this one was technically highly risky- I consistently told you this one was swimming in supply thanks to nine years of failure in the rear view mirror. The shareholders are paying for that failure now. My first SSL back in May was $.27- then I suggested it was a buy at about $.11- the stock surged back, and then my SSL was $.12- if you are still holding the stock, it’s against my advice. I guess it’s too inconvenient for an idiot like you to point that out.
Truth hurts does it , I can see I touch your big nerve, why be so angry I was talking about the company, the response you gave me is extremely vulgar, you would sware it was from one of the criminal am talking about ? IS IT ?
D’ont be so frustrated, we know you have tons of fail idea’s but its are chance to take, not yours, relax. Are you going to post that one , i think not.
Editor: Thanks for the contribution. Always good to let people hear all sides of the story. You are welcome to your opinions, no matter how narrow your focus.
I believe you have been very clear about the different price levels for short term vs long term invester. I am in this one for the long term and the only real problem I have is that I wish I had more free cash to buy such a bargin. Nothing is a sure thing until you have sold your shares and you make that clear. I wish the company was a little regular with updates on the current contracts. I think once a fair amount of investors feel comfortable with the contacts being completed this stock will start to move in a positive direction.
Editor: I have had extensive discussions with management about their shareholder communications policies. Mark Clancy is simply not getting the job done in that arena. He is a pretty hard headed and volatile guy. Nevertheless, the company should have a great year in 2007- the stock price is absolutely atrocious. The death knell was when the stock closed lower than where it opened when they announced the huge contract. That set us up to be where we are today. I don’t know where the bottom is, but I am quite sure they will reverse split the stock, so there could be further downside pressure. At this point, the market is saying the company is worth about $12 million-absolutely absurd.
What is your estimate of how much more stock needs to be absorbed/sold from the years of financing? And…why would the remaining sellers sell at these levels since they rode the elevator down this far….If sellers would emerge at .25 I’d understand but down here a .08? The value of the volume these days hardly ever amounts to more then 20-30 K Dollars…That looks like small fry owners like myself….and I am not selling at THESE levels, I rather buy more. Your wisdom please……
Editor: If I knew the company was not going to reverse split, I would say it is a hell of a buy down here. However, as we all know they have shareholder approval to do a number of different reverses. I believe the selling down here is probably all tax selling related. Investors just throwing in the towel to lock in a tax loss. Going into next year, I would be all over it at these levels. However, I have seen foolhardy managements do reverse splits just because they are upset about how their stock has traded. Then the stock goes lower. Love your idea, but I don’t believe the timing is quite right at this point. As far as potential supply, I cannot come close to gauging it. I know the Chairman owns about 1/2 the company- 60 million shares or so. Perhaps we are close to having this cleaned up.
You seem to be giving up on this one. I know you are frustrated with how the company does not seem to work on public relations in regards to the stock price. Do you know I someone as a stock holder could or should contact them about this issue? I have tried emailing through the conpanies site but the email came back as undeliverable. Thanks and I am still hopeful of a price turn around this year.
Editor: Mark Clancy is the CEO. His email address is markclancy@hybridfuelsystems.com. The fact that investors cannot communicate with the company through a published email address is absolutely pathetic, and is clearly reflected in the stock price.
Well, now it is January and good ole USEI is even lower then in Dec and it can hardly be tax related selling now…….Almost reached the previously unimaginable .05 level and I wonder why company insiders are no sweeping in and buying massive amounts at these levels (I have bought another nice chunk today….) Can you make some comments on the viability of the company overall? Stock price aside, is there any danger of them simply closing the doors as they become worthless (on paper anyway?) Are their Thailand orders firm or are they endangered by the unrest in the country?
Editor: As far as I know, the Thailand orders are for real. The stock performance suggests otherwise. There has been no disclosure to the contrary. If you like to buy stocks with a lot of upside when everyone hates them, this is a classic candidate.