Every once in a while as I'm sitting in front of the computer screen watching the markets and watching CNBC a idea comes along that seems right. Usually if it is presented on the TV I am skeptical from the outset and that was no exception today. But when they mentioned Capstone Turbine my ears perked up because this stock was a favorite speculative stock of mine a few years ago. Capstone Turbine makes "micro-turbines" that are fueled by Natural Gas and generate electricity. When energy prices are on the rise this stock used to do well. I see that now it has been in a range for some time. Well, NG prices are declining with no end in sight. Electricity prices are rising with no end in sight. And on the CNBC interview today the CEO of the company mentioned that they can generate electricity at $.03 per/ Kw.
That is cheap. They talk about getting orders from the operators in the shale gas production areas who want to use the gas available to generate their own electricity. In the past these turbines have been used by universities and hospitals to generate onsite power. So on the surface there may be a good story here.
Whenever something stimulates my interest in a stock I immediately bring up a long term chart. It is important to look at the long term prices to get an indication of the potential for price movement. When I look at a longer term chart I notice that CPST has been weak over the years, which is why I quit trading it some years ago, but lately has been in a sideways range. At the very least when looking for a bottom in a stock a range is a good indicator. The fact of a trading range over a period of time means that the sellers have had many opportunities to sell if they wanted to. It also means that that selling must have been met with some buying since the price has stayed in a range, and didn't collapse under the selling. A long term range has also probably persuaded the "bottom pickers" that it isn't going anywhere and they have given up. Maybe.
The problem with a stock being mentioned on a national newshow is that the publicity will cause a surge in volume. This may be the opportunity that a large holder of the stock was waiting for to sell. Or it may just be that a large holder will take the opportunity to get rid of stock that they weren't that fond of. In any case publicity is often a mixed blessing.
But here are the charts. The stock has been in a range for awhile. Very good volume on the upmove today. There is room to run, maybe... And the story does make sense although I would actually feel more confident if the stock had already been in an uptrend for some time! But, I bot some today.....
No big losers. Control risk........