Small Cap Strategist is published by Crystal Equity Research an independent research resource on small capitalization stocks. Follow along as we discuss the most recent trends in the small-cap sector, investigate interesting companies and pan a few not-so-promising stocks.
week US Geothermal
power generator from geothermal projects in California, Oregon, Nevada and
Idaho, made an appearance at the Marcum Microcap Conference in New York
City.The company stood out among most
of the companies appearing in Marcum’s so-called ‘energy track’ as one of the
few with solid revenue and profits.US
Geothermal reported a net profit of $1.9 million on $28.8 million in total
sales in the twelve months ending March 2014.The net profit is commendable, but what I find more interesting is the
conversion of 30% of sales to operating cash flow of $11.4 million.
San Emidio Power Plant, Nevada
ability to generate cash flow is vital for a growing company like US
Geothermal.Over the last three years the
company has spent an average of $16.5 million annually on capital investments.The company has also been acquisitive.Most recently the company bought the Ram
Geysers project in Sonoma County, California for $6.4 million in cash.Ram Geysers has five completed wells
available for immediate production near 30 megawatts of total steam assuming
25% of the geothermal liquid is re-injected back into the reservoir.
Geothermal management thinks they got quite a bargain in the Ram Geyser’s
deal.The Ram Power subsidiaries had
already invested over $90 million in the project, implying that US Geothermal
paid seven cents on the dollar for the capital investment value.Once the company’s development plans have
been carried out it seems likely the Ram Geyser’s will make a strong
contribution to return on assets
the end of March 2014, US Geothermal reported a total of $204.5 million in
tangible assets or $1.97 per share of which $0.38 is in the forms of cash and
financial assets.It is instructive to
compare tangible assets per share to the company’s share price of $0.65.Trading at 33% of tangible asset value
suggests investors have little confidence in the long-term potential of these
investors might be simply concerned about the required investment for the
projects the company currently has under development in Guatemala and
Nevada.The company current estimates a
capital cost near $195 million.
current price for HTM could also represent an egregiously undervalued situation
if US Geothermal’s assets prove out. So
I will continue to follow the company’s progress and view the stock at the
current price level as an option on full operation of all assets.
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of the Small
Cap Strategist web log, Crystal Equity
Research nor its affiliates have a beneficial interest in the companies