US Energy made a valiant effort to come up off the canvas last week, but the move was short lived and the stock seems to be slipping back into a coma.
Sometimes the stock market just doesn’t make sense. This is the case with US Energy. One would think the market would be willing to give the company the benefit of the doubt- after all, they have the right product at the right time and the right contracts.
However, it seems investors have a hair trigger for this one, and I don’t quite understand why.
Here’s a very short term look at the stock:
The chart shows last week’s move up from the absurdly oversold level of just over $.10. All the company did was put out a press release reminding investors about their achievements.
As you can see, we had a couple of big days on the volume side, and the stock traded up nicely. As has been the case with this one all along, the move did not hold, and sellers have pushed it back down a bit, albeit on much lighter volume.
Now would be a great time for the company to deliver more substantive news. I’m not sure what could top a $54 million contract over 5 years- perhaps news of the first purchase orders from the contract.
Here’s where we are today- the perfect level to buy this stock based on this very short term look would be $.126.
Therefore, my SSL for the stock is now $.12 if you are a trader. For long term investors- just stay the course- I believe the company will be delivering increasing revenues for at least the next three plus quarters, and the valuation is absurd at these levels relative to what they have announced.
Comments and questions are welcome.
Is this company going to have a rs? I haven’t seen anything on that?
Editor: They have filed a proxy statement asking shareholders permission to give them wide lattitude on a reverse split- they have asked for permission to reverse split 2:1, 10:1, 100:1 and I think there might even be a couple more. I can tell you the CEO is very upset about his share price relative to the company’s accomplishments- I can’t blame him but the market is still paying for the previous nine years of failure to get to this point. My guess- there will eventually be a 10:1 reverse split. I don’t think it will change anything- this stock still needs to go through a major clean up process before it will really get any serious legs. I wish I could say how much time it will take- however, they will do real numbers in 2007, so sooner or later………Â
From the Bangkok Post 3rd Nov 2006:
Transport and environment authorities plan to dust off a project to eliminate diesel-fuelled passenger buses from city streets, and replace them with cleaner gas-fuelled vehicles to reduce air pollution.
However, budget constraints may mean the project gets off to a slow start.
Chalor Kocharak, deputy permanent secretary of the Transport Ministry, said the project is a joint operation between the Transport and the Natural Resources and Environment Ministry.
The Transport Ministry will focus on the replacement of diesel-fuelled passengers buses with environment-friendly vehicles while the Environment Ministry will set acceptable standards for exhaust emissions and severely punish operators who fail to follow the regulations.
According to Mr Chalor, the plan for gas-fuelled engines will help solve the air pollution problem and also cut operators’ costs by two to three times.
The Transport Ministry will resubmit the project to the interim government and it will include a request for soft loans and exemption from the 40% import duty on buses and engines to help bus operators.
Opas Petmunee, acting director of the state-owned Bangkok Mass Transit Authority (BMTA), the city bus agency, said the Environment Ministry had called for environment-friendly engines, limits being put on bus lifespans, driver training, and stripping operators of their licences if they repeatedly offend.
He said the BMTA plans to replace all its diesel-engine buses with gas-fuelled vehicles by 2009 but its private bus concessionaires need more time, by 2015.With gas-fuelled buses, operators can cut fuel costs by 2.26 billion baht a year for every 2,000 buses and, for every 1,000 buses, the nation can save up to five billion baht a year for air pollution-related medical treatment for the public, he said, citing figures from a report of the Pollution Control Department.
Banyong Amporntrakul, head of the private city bus operators club, said most operators welcomed the change to gas-fuelled engines but they needed soft loans and tax privileges on bus and engine imports from the government.
Bus operators had tried to seek loans for engine replacement and also gas-fuelled bus procurement themselves, but their requests had been turned down by creditors, he said.
Editor: Thanks for ferreting this out. I haven’t been reading the Bangkok post of late. This doesn’t change my thinking for traders- $.12 stop loss. Unfortunately, this stock is still a technical nightmare.
Do you the 3rd quarter result or when it will be anounced?
Editor: No, I don’t, but I’m not expecting anything special. You won’t see any big gains until Q4.
Wow UESI is taking a beating. I still can’t figure out the reason for the recent poor performance of the stock. Logic says that investors should be lining up to get in with this company considering all the good news that’s been reported. Yes this is the first profitable year but at the same time they are still around after 9 years of R/S and development of the technology. I would think that that would point to a very good management team. Ah well I got in for the LT, but it’s a bit frustrating when every thing seems to go right but the stock moves in the wrong direction.
Editor: Two challenges here: 1. the massive excess supply of stock that was for sale up in the $.20 killed all the momentum the stock had. 2. A CEO that is so upset about the way the market has treated his achievements, he is unwilling to commit and capital or attention to getting the word out on his stock. I am sticking by mid recommendation for traders- $.12 was my suggested stop loss- if you are a trader you should be out. If you are a long term investor, nothing to get upset about- it’s just an opportunity to accumulate at an absurdly low valuation. 2007 will be a great year for the company, and someone will come along and want the stock someday if they start delivering on those Far East contracts. Here’s the problem- I don’t know what the catalyst will be to get this thing going. If I could get a handle on that, I would publish on it. Also- the shift to the democrats in Congress is a good thing for this company.
Dear Editor,
I bought this stock at .31 and sold it for a profit at .41. I then bought back into the stock at an avg. price of .33 (5050) shares in late may and have been sitting on it ever since. I’ve lost 67% on this stock since then but I bought it with a long term motivation. Do you anticipate this stock ever regaining its strength in ’07, or would you suggest getting out right now. Please advise.
Editor: I believe I already advised everyone in this BLOG- I stated $.12 was my SSL- suggested stop loss for traders. If you still own the stock it means one of two things- you either didn’t read the SSL, or you are not a trader, but a long term investor. If you are a long term investor- anotherwords prepared to hold at least one year if you have to, it really doesn’t matter that the stock has dropped so low. It’s an opportunity to accumulate it super cheap. The key- will they deliver product against the contracts they have announced in 2007? Sales should pick up in Q4- and really ratchet up next year. Someday this stock should start behaving better. I have no idea when. If you view yourself as more of a trader, you really have to sell this stock and move on. They just have to generate the numbers associated with the sales, and let everyone know. Strength should come back to this someday.
Now that USEI has touched the magic 10 cent mark today, do you still feel the same way about the company? What news could possibly spur interest in this company? How many shares could the company buy back without crippling its cash flow?
Editor: This company has zero money for share buy back. Whatever capital they have is going into building out inventory to fill their orders. If they start delivering on orders and telling the market they are doing so, the stock should rebound at some point. I feel it is a hell of a buy for long term investors, however if you are more of a trader you should have been out when the stock hit my suggested stop loss of $.12. That’s really this issue- I don’t know what kind of investor you are- if you like stocks that are in favor and have momentum, you should be out of this one. If you like beaten down, undervalued, and underfollowed stocks, you should buy it. The main issue with being a “contrarian”- you have to be patient.
I am wondering what is the latest with GM and the car show. Also, how is the conversion with the buses going.
Editor: As far as I know on the conversions- the company is gearing up to provide product for the first order flows which I believe is going to come in December. As far as the car show- I have no information on how it went. I do understand how GM plans to market the system- it will be available on all new Tahoe Pick ups sold through the dealer network- it will be an add on option- if you want it, you leave the car overnight and it’s on the next day.