“Tiny $0.80 Geothermal Company Is Now Generating Revenue: BUY!”

By Travis Johnson, Stock Gumshoe, March 2, 2009

That’s the subject line of a recent ad from Jeff Siegel for his Green Chip Stocks newsletter, as he issues a new buy recommendation on a stock that he has written about several times before.

It’s a geothermal power generation company, which was a huge favorite of investors for quite a while in 2007 and 2008 when energy prices were climbing and alternative energy stocks of all stripes were taking turns being the “flavor of the month.”

We’ve seen many of these stocks teased by newsletter writers over the past couple years, including the one we’ll look at today, not just by Green Chip Stocks but by several other newsletters as well.

So what is today’s pick? And with almost every single stock in the market falling like a stone today, is it worth a gander?

Siegel tells us the story of going to meet the executives of this particular company a few years ago:

“After I checked into the Marriott, dropped off my luggage and freshened up, I was escorted to downtown Boise, where I was to meet the top brass of my latest blockbuster renewable energy play.

“I met them at the Basque restaurant Leku Ona, which means “good place.”

“I was pretty excited to meet the officers of the company because single-handedly these guys sealed the deal to construct and operate the first-ever geothermal power plant in the state of Idaho. This is huge considering the DOE ranks Idaho 3rd in the nation in potential geothermal energy capacity. Only California and Oregon are bigger.”

And the story continues …

“Now, the next day – on Saturday, July 29, I attended the groundbreaking ceremony at the site of the new power plant, which is situated in a town known as Raft River.

“Raft River is the most unlikely place to find the early stages of the American geothermal revolution. It’s a jerkwater outpost that’s a 3-hour drive from Boise. When I say “jerkwater” I mean this place is isolated from civilization. I counted only 6 residential homes and just one diner on our way in.

“But I couldn’t have cared less. This was an historic day for the state of Idaho and for the entire geothermal energy market.

“You see, the geothermal power plant at Raft River would soon become the only geothermal power plant in the state of Idaho. So this tiny $0.80 company had a virtual stranglehold on the Gem state. “

He goes on to explain the potential of this company …

“And were talking about a mountain of cash in return. This one single project has a potential worth of about $140 million in annual revenue!”

And then he goes on to explain why this stock should be bought now — I’ll give you a little hint: he thinks it’s a bargain, because it’s once again as cheap as it was when he first touted it:

“I recommended this geothermal stock to my readers on July 25, 2006, when it was trading for around $0.80 a share. By October 31, 2007, the stock hit $4.78 a share – delivering Green Chip investors a 497% gain – in less than 14 months….

“Less than 3 years ago, this company had no operational power plants, no revenue stream, and only one other property besides the one in Idaho.

“That’s when we first got in and watched it soar nearly 500%.

“Today however, in 2009, the company has 2 operational power plants, a consistent revenue stream, and another property that it’s currently developing.

“But it’s trading at $0.80 a share again!”

No mention is made of having told his investors to sell when the shares were anywhere near $4.78, of course (he might have, I have no idea … but it seems unlikely that he would have made a good sell call and not bragged about it).

So what is this geothermal company that has an operating power plant, and some actual revenue?

I’m so glad you asked!

Siegel says it’s a better stock now than it was last time he recommended it, since the company has advanced while the share price has collapsed. And he doesn’t spare the hyperbole:

“Bottom line: This is perhaps the greatest, and most ignored bargain on Wall Street.”

And the Thinkolator tells us that this stock is …

US Geothermal (HTM)

I wrote about this stock close to two years ago, when Green Chip Stocks was promoting it very heavily with teaser ads — back then it was still traded over the counter and hadn’t yet moved to this AMEX ticker symbol, but investors were jumping on in droves … by then the shares had already been talked up to about two bucks, and they were well on their way to the highs of well over four dollars that they reached about six months later.

US Geothermal does indeed have a geothermal power plant in the Raft River area that they were just starting to build back when Siegel touted the shares, and their revenues have been climbing significantly (and are expected to climb still further, according to the one analyst who follows the company). That one analyst, according to Yahoo Finance, does not expect earnings, though — he (or she, haven’t checked to see who it is) thinks they’ll be up to 3.4 million in annual revenue by the end of the current month, and to over $7 million in the year that ends next March, but still losing seven or eight cents per share per year.

You can see the company’s financial reports here — they released their last quarterly report a few weeks ago, and reported a net loss of one cent per share for that December quarter (they’re on a March fiscal year, so we won’t see an annual report for several months yet).

It’s hard for me to guess how and when a big capital project like this is going to make money — and after that, when it will begin to be profitable for the investors, but it is nice that (unlike some geothermal story stocks) they are actually generating electricity, and they’ve been funded primarily by equity so they don’t appear to have any big debt problems at the moment.

They’ve also got a couple other properties that they may be working on for new plants in the years to come, and it’s quite possible that they’ll benefit from any additional “green energy” stimulus spending or credits in the years to come, but I wouldn’t necessarily count on anything exciting like earnings or dividends anytime soon — this is a small company paying all the overhead for a fairly expensive power plant that’s a long way away from most of the customers who’d like to pay a premium for “green” energy (a similar problem to most of the wind energy companies — most of the States that mandate green energy purchases are on the coasts, most of the good wind and available real estate is in the plains). And as natural gas prices collapse, the impulse to pay a big premium for geothermal energy might be lessened.

Who knows, maybe we will see a “smart grid” and a better power transmission infrastructure built over the coming decades, which could only help the appeal of remote generation projects like US Geothermal’s Raft River plant.

Most current geothermal generation in the US is in Northern California, at the Geysers — so you can also look at some of the companies working there, from Western GeoPower (WGP, trades in Canada) on the small side to Calpine (CPN) on the large side. (Calpine emerged from bankruptcy not that long ago, and Western GeoPower was still, last time I checked, a ways behind HTM — they’re aiming for an operational plant in 2010).

There’s also Raser Technologies (RZ), which has also been teased many times — they’re working on lower-temperature geothermal generation in Utah and elsewhere; and Ormat Technologies (ORA), which is vertically integrated, meaning they build and operate plants and design generation equipment, and is the largest pure-play geothermal company I know of, (and the only one that’s profitable).

If you’ve looked at US Geothermal before — and I know many of you long-time Gumshoe readers have, since it has come up several times over the past couple years — please let us know what you’re thinking. My general preference is for companies that are profitable these days, but maybe I’m just a nervous nellie — and God knows, the profitable ones are falling just as hard as the unprofitable at the moment.

And of course, if you’ve ever subscribed to Green Chip Stocks, please click here to share your opinion of that service.

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21 Comments on "“Tiny $0.80 Geothermal Company Is Now Generating Revenue: BUY!”"

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niall
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niall
March 2, 2009 4:19 pm

I wonder if as a US investor you would be better to look at the Australian geothermal development company GDY. It too has just reached the production stage and it too requires a lot of capital yet to scale up production. But you would be able to take advantage of the currently strong US dollar and enjoy a little currency risk diversity.

John Mattingly,farmer John
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John Mattingly,farmer John
March 2, 2009 7:15 pm
Travis, thanks for the insights. I know up here in our neighborhood people are doing small scale stuff, pumping water down a few hundred feet and harvesting the heat differential for both heating and cooling. But right now, even GOOD utilities are being hammered, so it’s hard for me to see much upside in this one. To play off your remark about the market falling like a stone, the gravity of that remark was not wasted on me. It doe strike me that much of the current downward pressure on the market is that we are gong thru a re-evaluation… Read more »
SageNot
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SageNot
March 2, 2009 8:00 pm

http://finance.yahoo.com/q/ta?t=1y&s=ORA&l=on&z=m&q=l&c=rz%2Ccpn%2Cwgp.v%2Chtm

Jeff is trying to pick winners in a blizzard. I had a short subscription to his service in the winter of 2007/2008 & most of these Geo stocks were higher then, incl, ORA.

He’s an attentive guy, he even replies to emails, but he’s working in a very beaten down set of industries.

sean
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sean
March 8, 2009 12:45 pm
Fellow Investor, The clock is ticking, so I’ll be brief. Now that President Obama has signed off on the stimulus package which will send billions of dollars into the green energy markets, a powerful GREEN OPEC is forming. Their goal is crystal clear: To seize control of the KEY INGREDIENT behind the lithium-ion battery, which is not only set to drive the electric car boom of the next 10 years… …but also to grab $2 billion in stimulus money in the weeks and months ahead. Who, exactly, is behind this “Green OPEC?” Here a few names that you may already… Read more »
SageNot
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SageNot
May 22, 2009 8:41 am

My PC is printing postings from March, 2009, (even one of my own) am I missing something, or did you want this rehash Travis?

BTW, I’m still on the road, have a Happy Memorial Day W/E, drive carefully folks!

Jerry G
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Jerry G
May 22, 2009 8:51 am

Can any of these GRREN stocks make any money without sudsidies from the government? Yes we all love a clean, green environment ….but what about “REALISTIC” alternatives like Nuclear and Natural Gas ……EXCELLENT clean fuels whci we have in ABUNDANCE. it took awhile ,but we can now see that ethanol additives in gasoline were worthless…..and a BIG failure …..do we have to repeat this with Geothermal and Wind?
Just think , OBAMA will have us all driving “Clown Cars” with windmills on the roof LOL

Ray Voigt
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May 22, 2009 10:13 am

Travis, I would assume the Navellier teaser above will recieve a quick toss in the thinkolator. We know you like to expose his secrets. Hopefully even at 70% off. Love this site.

Ron H
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Ron H
May 22, 2009 10:58 am

Such rosy short-term predictions have investors swooning over Sociedad Química y Minera de Chile S.A., or SQM, the Chilean fertilizer and mining company that produces nearly a third of the world’s lithium carbonate and whose leather-skinned employees brave the Salar de Atacama for the sake of gadget lovers. In the past three years the Big Board-traded shares of SQM have climbed from $11 to $22. In the first six months of 2008 SQM reported a profit of $191 million, up 103% from a year earlier, on sales of $787 million, up 41%.

jeff
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May 22, 2009 12:19 pm
I contacted Siegel a couple of years ago, asking why we shouldn’t drill ANWR. He replied that the oil there would last America for perhaps a year or so, implying the false premise that we would discontinue importing oil. Yeah, right. I was born at night, but… If the guy would simply say, Hey, the fix is in, and YOU can profit from it, I could handle that. But this “great idea” aspect (requiring huge infusions of taxpayer dollars) is nonsense. If not for the pump and dump nature of exclusively green co’s (as opposed to established co’s that are… Read more »
Pete Ewing
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Pete Ewing
May 22, 2009 12:33 pm
I’ll second the motion on SQM. They are the dominant Lithium miner and enjoying rising fertilizer prices with a potential new agriculture boom underway. They are firing on all cylinders and located the most capitalism friendly South American countries, Chile. PE is 21 and growth is about 30% per year. “Sociedad Quimica y Minera de Chile S.A. (SQM) (NYSE: SQM) reported today earnings for the first quarter of 2009 of US$86.3 million (US$0.33 per ADR), an increase of 33% with respect to the same period of 2008, when earnings totaled US$64.8 million (US$0.25 per ADR). Operating income reached US$119.5 million… Read more »
BeDe
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BeDe
May 22, 2009 1:40 pm

Thank you Ron H & Pete Ewing for your comments. Very good. Keep ’em coming.

Mike
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Mike
May 23, 2009 10:31 am

Got sick of this idiot and had to report him to the SEC and FCC to get them to stop sending these carrot emails. No customer service replies and his money back is BS. He’s taunting SQM and has been for over a year.
Yeah – Buy this newsletter and I’ll send you more emails telling you to buy more newsletters for a higher price.
Ripoff and annoying!

jerry v
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jerry v
May 23, 2009 1:02 pm
So far, Mr.Doug Casey has touted a lithium company (in Canada-?). It doubled nicely within a coupla months and then pulled back but still, news keeps this one alive. Me, I bought Icon Energy Limited (ICN) on the AU exchange when it was .03 and .05/share presently .38.share. I am holding for ever because they are the ONLY company that has ever done what they said they would. THEY, not only are sitting on 5-7trillion cu.ft. of nat gas but havn’t even started on their other leases, which boys and girls, include ‘hot rocks baby'(geothermal)and more CBM natural gas. I… Read more »
bob pernell
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bob pernell
January 15, 2010 10:44 am

today from wealth daily by jeff siegel he is pushing a co. producing what he calls a ” negawatt box” as a fifth fule which could make many x % gain if you sub. his alternative energy letter. do you know what he is talkng about? thanks for your information. keep up the good work. bbpernell

Peter
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Peter
April 9, 2009 10:10 pm
GDY is real, the resource is real and it works. OK. But it is a long long way from any users meaning a seriously big enough connection point on the grid to take serious power to scale up to where it is economic). Haven’t checked but maybe a 1000 km (Australia is a big country) so even if they have great success who pays for the $2bn transmission connection. Their best chance is to sell to the Olympic Dam Uranium project but there is another company closer to that project (called Green Rocks). So do your research.
EYOUNG
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EYOUNG
May 22, 2009 9:06 am

You’re right, SageNot,,, I think we have a glitch here, somewhere,,, OR maybe Travis did rehash,,, With it being a Long Weekend, Can’t say I’d blame him! HAVE A SAFE and Lovely Weekend,,,
Remember Our Veterans, as well
EYoung

Gravity Switch
Admin
11
May 22, 2009 1:22 pm

That’s right folks — as I noted last week, Fridays are now generally reserved for a new article for the Irregulars, so I’ll often be sending around some older articles if the teasers or the stocks are heating up again. Then again, perhaps some fabulous ideas will crop up on Fridays that I just can’t resist writing about for everyone and I’ll make time for more than one article … we’ll see. Thanks for noticing!

Glenn
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Glenn
May 23, 2009 10:05 pm

GDY have never produced any electricity. Their piolet plant was suposed to power a local town population 12 they have run the lines but one of their wells sprung a leak last month and is still gushing steam (over 4000m deep)so the price has dropped a lot so it maybe a good time to buy. They have got government funding and rich partners.

Robin Green
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January 15, 2010 6:00 pm
A “negawatt box” builds on a concept developed by the energy visionary Amory Lovins, that it is almost always cheaper to spend money on reducing demand for electricity, than it is to build new generating capacity. A negawatt box would be devices such as Smart Meters (which provide fine-grained time-of-use electricity monitoring for customers who are charged different rates based on time of day) or Peak Savers (which throttle back power demand by air conditioners or electric water heaters when the utility approaches peak demand, so they don’t have to buy power from other utilities at a time of peak… Read more »
Robin Green
Guest
0
January 15, 2010 6:03 pm

Sorry, the address for the negawatt box article is http://www.green-energy-efficient-homes.com/negawatt-box.html.

stockcrazy10
Irregular
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stockcrazy10
January 15, 2010 6:12 pm
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