The Right Thing at the Right Time in the Right Place
— “Ahead of The Street” Column, by Mitchell Clark, B. Comm.
On a number of occasions in this column, I’ve written about a very interesting small company called A-Power Energy Generation Systems, Ltd. (NASDAQ/APWR). This stock has been a powerhouse wealth creator this year and it’s been volatile. To say that this stock is a trader’s dream would be an understatement.
It doesn’t happen very often (maybe once a year), but every now and again you come across a company that offers a unique “package” in terms of its investment potential. In A-Power’s case, the company builds small, localized power plants in China. This in itself is an exciting prospect for any company with this kind of expertise.
China doesn’t really have a national power grid. Cities, towns and industries build their own power plants to serve their local market. The International Energy Agency (IEA) projects that China’s energy demand will grow about five percent annually from 2005 to 2015. Based on these growth rates, China will overtake the U.S. as the world’s largest energy consumer shortly after 2010. The IEA estimates that China will have to add more than 1,300 gigawatts (GW) to its electricity-generating capacity over the coming years, more than the total currently installed capacity within the United States. So, in A-Power’s case, you’ve got a company that’s in the right industry at the right time. Those are good fundamentals.
The company also is in the wind power generation business and it’s done so in the right way. A-Power recently signed a deal with GE Drivetrain to supply it with wind turbine gearboxes and to establish a joint venture partnership for a wind turbine gearbox manufacturing plant in China. A-Power also recently announced that it was picked to be one of the lead suppliers of wind turbines for a new wind power project in Texas that is expected to be one of the biggest alternative energy developments in the U.S. Once the financing is in place, the total development is estimated to cost about $1.5 billion and take up 36,000 acres. Again, these are good fundamentals if you’re in the business of selling wind power equipment.
A-Power has already generated outstanding growth in its financial results and the company reports its latest numbers to the Street this week. Naturally, the stock is rallying in advance of the numbers. It’s up about three points just in the last week and has more than tripled in value since the beginning of the year.
Like most fast-growing companies, this stock got hammered during last year’s financial crisis. It has, however, made a full recovery since the November and March lows. Like I say, if you look long enough, you eventually come across a few amazing companies that aredoing the right things at the right time in the right place. In my mind, A-Power is one of those companies, so it’s a good example of what to look for.