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.
Everybody likes a
bargain.Investors really like a good
cheap buy.A review of our four
alternative energy industries revealed several stocks trading below industry
average multiples of forecasted earnings.
first week in November 2014, could have been a turning point for trading in shares
of Advanced Energy
Industries, Inc. (AEIS:Nasdaq).The company reported flat sales in the quarter
ending September 2014, compared to the same quarter last year, but delivered
higher earnings by 15%. Investors were
thrilled with the results, bidding the stock higher in the first week of
trading following the announcement.
Energy supports industrial customers and the solar power industry with power
conversion technologies and products.Continued
difficulty in utility-scale solar power sector has cut into demand for the
invertors Advanced Energy supplies.Sales in this segment were down in the most recently reported
quarter.Fortunately, demand for precision
power products has been robust, delivering low double digit year-over-year
growth.Precision power products
represent the largest portion of the company’s total sales.
really got shareholders excited was management’s guidance for the December 2014
quarter that was announced during the earnings conference call.Sales are expected to be in a range of $140
million to $150 million, a level which was in-line with the prevailing
consensus estimate.However, guidance
for earnings in a range of $0.29 to $0.37 for non-GAAP earnings was well above
the consensus estimate.Advanced Energy has
a consistent track record of beating the consensus estimate, which suggests
management does a very good job of managing expectations with guidance levels
that are achievable.
prospect of higher than expected earnings helped the stock register a
particularly bullish formation in a point and figure chart in the first day of
trading following the earnings announcement.The quadruple top breakout alerts investors to a significant amount of
unmet demand and suggests the stock has developed sufficient momentum to reach
the $30.00 price level.If achieved this
represents 47% upside potential.Note that
there is a very strong line of price support at the $19.00 price level, setting
up a particularly appealing risk/reward picture for investors taking a long
position in AEIS.
the current price AEIS trades at 11.6 times the consensus estimate for 2015.That multiple might even improve if analysts
following the company take management’s bullish guidance into
Neither the author
of the Small
Cap Strategist web log, Crystal Equity
Research nor its affiliates have a beneficial interest in the companies