“Obama and McCain’s Favorite Company?” Navellier

By Travis Johnson, Stock Gumshoe, September 12, 2008

Louis Navellier believes that our wildly entertaining presidential candidates have at least one thing in common: Their administrations will both push for the kinds of policy changes that will make one particular stock shoot for the stars.

Not bad, eh? I’ve seen dozens of emails about preparing for President McCain, or panicking about President Obama, most of which are simply pointless — but this one claims that we can win with this stock no matter who wins the White House in November. That sounds appealing, no?

Navellier, in fact, calls this the “Perfect Stock for President McObania … but you’d better buy it now”

It’s a cute ad — Louis even went so far as to write a speech for the candidates:

“I’ve even written the campaign speech that either Senator McCain or Obama could deliver. Whichever candidate does it first will get elected by a landslide.

“Here it is:

My fellow Americans. Elect me and I will double, no I will triple the miles you get to the gallon in the car or truck you currently own. (Applause)

Elect me and every car will get at least 40 miles per gallon, just with one simple modification, the cost of which my government will subsidize! (Hearty applause)

“Elect me and I will cut carbon emissions by 25% in a single stroke!! (Loud applause)

“Elect me, my fellow Americans, and I will drop your fuel costs from $3.75 a gallon at the pump to $1.90 or less!!! (Wild applause)”

Are you getting our free Daily Update
"reveal" emails? If not,
just click here...


OK, so I’m still intrigued — better mileage, cheaper fuel, government subsidies. Sounds familiar, sure, but it also sounds like a company that might have some promise.

So what is it?

Well, we do get a few specifics:

“Is it any wonder that the stock’s up 480% in 5 months?

“Or that T. Boone Pickens has a stake?

“Or that companies that run fleets of trucks are standing in line to convert to this system?

“Or that GM and Ford want to provide the company’s aftermarket conversion kits?

“Is it any wonder that the stock gapped up almost 29% recently in a SINGLE SESSION?”

You might guess from this that yes, Navellier’s picks are not generally for the faint of heart — it can be hard to buy a stock after it has already gone up this dramatically in a short period of time.

And in fact, the last time he predicted a short-term big pop in the price of this stock, he was far too optimistic.

But I can, at least, give you the name of Navellier’s secret company for President McObania …

This, though some of the teases above are misleading, is Fuel Systems Solutions (FSYS)

The big spike of 29% was in early August, after they released spectacular blowout earnings. And indeed, for much of the past month they have been seeing big spikes up in price on unusually high volume, which is exactly the kind of thing that gets Navellier all hot and bothered, with most of that spiking due to two blowout performances in their last two earnings releases.

And I do mean blowout — they have shocked analysts recently with their extremely good numbers, so this is a momentum stock with few peers. And yes, it has really gone up by something like 480% recently — you could have bought shares for $10 back in March, and it came near $60 a few weeks ago (it’s still way up there, shares are around $53 as of the last close).

As far as I know, T. Boone Pickens doesn’t own shares of this one, however. It wasn’t included in his latest 13F, though it’s certainly possible that he bought it since that filing date.

He does own shares of Clean Energy Fuels and Westport Innovations (I also own that second one), and Westport could be called a competitor to FSYS in some ways.

Fuel Systems Solutions is focused on components and kits for converting conventional vehicles to run on natural gas, essentially. They sell to fleets and manufacturers worldwide, and they’re clearly in a pretty sweet spot. I personally prefer Westport, which I own, (because of some big orders they are in the process of getting and because they have a great partner in Cummins and some anti-pollution based potential that is not dependent on gas prices), but that preference has been wrong so far — FSYS has dramatically outperformed WPRT.

Navellier has teased this stock before, and touted it for some time. Last time, he was promising that the stock would double in a matter of days. The promise was that this was a “$32 Fuel Conversion Stock that would double to $64 by July 7,” and I took the opportunity to poke fun at the ad — this was one in a series of ads he ran over the Summer that promised that a particular stock would double within a week or two, and of course that never happened and he probably didn’t believe it would happen, either.

But I’ll give him credit — it was certainly a good stock pick at $32, as long as you didn’t really believe you were getting a double within a week or two. You would have had to sit through a bit of a decline in the share price, but if you held for a month or two you’d be happy indeed … and while you wouldn’t have quite doubled your money, you could have come awfully close to that. So the ad was ridiculous, but the stock pick in this case turned out to be a good one (don’t get me started on the other stock he used this “double in a week” scheme with, Gran Tierra Energy — that one has just about halved, not doubled).

If you’d like to learn more about FSYS, it has been a well-covered “wonder stock” of late — there was an article in SmartMoney back in the middle of the stock’s huge run, and folks on SeekingAlpha have seen it both ways — as a huge upside surprise winner, and as a stock that then became a bit overvalued. How you feel about this one will depend a lot on your investing preferences — this is one of the best performing stocks of the year, so it has been a great investment. It’s in a hot sector, but expectations are no longer going to be low and timid for these guys — it will be interesting to see if they’re able to wow the analysts again when they report earnings in a couple months.

Whaddya think? Do you believe in the Pickens Plan and the worldwide trend toward more natural gas vehicles? Will FSYS be the winner in the end, or is it too expensive? All of these companies are pricy based on earnings, but Fuel Systems Solutions, unlike Clean Energy Fuels or Westport, is currently profitable … hard to argue with that, even if oil prices are going down.


guest

12345

This site uses Akismet to reduce spam. Learn how your comment data is processed.

17 Comments
Inline Feedbacks
View all comments
James Davenport
Guest
James Davenport
September 13, 2008 11:05 am

I live in Texas. I researched converting an auto engine from gasoline to natural gas.

It is not feasible. The conversion kit, plus installation, makes it a fools project.

Then, there is the problem of finding service stations that even sell the stuff.

The last fact that killed any enthuasim for this is the required windshield sticker. The state of Texas, and probably all of the other states, depends a lot on the state tax on motor fuel.
The price to purchase this sticker? My mechanic told me that it is over $250.00, and you have to buy a new one each year.

For fleets, etc., this would probably work. The wild card is the future price of natural gas, and it’s availability.

Add a Topic
338
Add a Topic
338
A. Nony Mouse
Guest
A. Nony Mouse
September 13, 2008 12:35 pm

Awww…I thought it was the company that is marketing “Frank Sinatra’s Greatest Hits” on CD

Michael
Guest
Michael
September 13, 2008 1:24 pm

A few months ago with Navellier added FSYS to his Quantum service, but investors who listened to him got stopped out for a double digit percentage loss if they followed his stop price. Subsequently, FSYS almost doubled, as Travis points out. Recently, Navellier added FSYS back to his Quantum buy list… after missing out on most of the gains since being stopped out.

WaveRider
WaveRider
September 13, 2008 6:25 pm

Hello investers,
FSYS has/had a deal with GM Holden Australia to retro-fit & supply their new cars with CNG (Compressed Natural Gas) systems – they had a 30% market share in Australia (Aussies & Kiwis only buy Fords or Holdens when they want a big car).
Since the 1970’s fuel crisis there has been an acceptance of running cars on CNG – the governments of Aust & New Zealand offered $1500 rebates to retro-fit the system.
You need a big car/big boot space as the tank is the size of a bag of golf clubs.
If you can get your head around driving with a large gas bottle in the boot of your car, it is cost effective – paticularly if you travel high miles and your car’s miles per gallon is very low (like most of Detroit’s vehicles) – but at least with Detroit you get the boot space needed for the installation.
My dad drove a 1992 GM Holden Statesman taxi with CNG for 15 years – no problems. Most petrol stations had a refill tank in NZ – you fill your BBQ Gas Bottle there? – same stuff, bigger tank.
If the USA Govt offers an installation rebate, these guys will do very well & if their deal with GM Australia is transferred to GM America (if it hasn’t been done already) as preferred supplier – wow ! – may help GM’s new car sales too !
A note on share price :
Went from $10 in Jan 08 to $60 in Aug 08 – pretty quick. It went up in 5 straight steps but has started to come back in what I think is a 3 wave retracement. This should finish in the low $30’s before rising again to $60+, if investors remain Bullish on the company’s prospects.
However,I believe the USA share market still has a long way to go on its own retracement (the DJIA to 7500, or less, is my bet) and this may bring FSYS’s price down even further.
Shouldn’t go less than $10 though.
Personally I think there is a lot to like about these guys – except buying them at $53.00.
May your stocks rise and your debt fall…..

Add a Topic
1270
Add a Topic
338
Add a Topic
1270
Wayne
Guest
Wayne
September 13, 2008 8:17 pm

In my business I was aware of two fleets in my city that used Natural Gas in their vehicles. One was city busses and many or most of the city trucks. The other fleet was city delivery trucks. No self-service: a special licence is required for the person doing the fueling. Natural gas produces about 60% of the heat energy of gasoline. Therefore a tank of given gallon capacity will give about 60% of the total miles possible with gasoline. In the US, availability of LNG makes driving outside a predictable limited area difficult or impossible. The second tank for gasoline as a reserve is essential. The LNG tank(s) are quite space consuming. The fuel guage for the LNG is an ‘estimate.’ You know you are out of fuel with LNG when the engine quits. Then you hit the switch to change to gasoline and hope it works! Decades ago I knew someone who used the system for his pickup truck. Back then he could fill up at any natural gas supplier, the people who provide for the BBQ grill tanks and for home heating tanks. Laws were written to prevent this because of the loss of highway taxes when that gas was used as motor vehicle fuel. The windshield sticker mentioned in another post would be an average annual highway tax. That sounds like a reasonable compromise.

Add a Topic
338
Add a Topic
338
Add a Topic
1340
destry
Member
destry
September 13, 2008 10:11 pm

In my neck of the woods, some folks are a little
surprised, that Texas has been running vehicles on propane for more than 40 years…The same propane you all use to fire your BBQ’s…It wasn’t meant to be a secret…At higher altitude you have to move the switch to cut off the propane and switch to gasoline; But until that point, propane works just dandy.

Warner Taylor
Guest
Warner Taylor
September 13, 2008 11:49 pm

There seems to be some confusion about gases in the preceding threads. Natural gas (mostly methane, with traces of other things like sulfur and other petroleum fractions) is not an easily transportable substance in small portable units (automobiles).

To store a reasonable quantity of gas at normal human compatible temperatures it must be compressed to high pressures (1200 psig and up). There is a great deal of potential energy stored in high pressure storage gas bottles. Much thought must be involved in the design of portable high pressure storage for motor vehicles. Even with high pressures only a small amount of fuel energy can be stored in a given volume compared to gasoline or diesel fuel. This state of the gas is often referred to as Compressed Natural Gas (CNG).

To store a large quantity of natural gas, it must be liquefied. In a liquid state, natural gas begins to have a very high energy density (not as high as Diesel). That is why large quantities are transported in liquid form when pipelines are not available. The problem for the small user is that the gas must be kept at a temperature below -260 Degrees F (-165 Degrees C). This requires very efficient insulation (such as vacuum jackets or advanced insulation materials). This state of the fuel is often referred to as Liquefied Natural Gas (LNG)

A check a Wikipedia or other sites will give further information on these gasses. In either case (gas or liquid) the potential for tank rupture and much fire in a bad collision is high.

The categories of Liquid Petroleum Gases (LPG) is a more practical fuel for small portable units, since it can be liquefied at normal human compatible temperatures at relatively low pressures (less than 125 psig). LPG is a blend of several gasses, the primary blend referred to as propane for temperate latitudes and butane for tropical latitudes. Both of these categories are actually blends of both and other gases in varying ratios. Again, refer to Wikipedia or other sites for more specific information.

I seriously doubt that any one went downtown and purchase LNG for their “barbi”. It is certainly possible to purchase (in some locations) CNG, but that would not be my choice.

In 1975 when my new 50 foot sailboat was launched, it was equipped with a CNG cooking range. This was for the purpose of safety (lighter than air so it won’t collect in the bilge). The CNG was provided in cylinders that were of the size and form factors of SCUBA tanks. The gas was compressed to about 1750 psig. Since each cylinder would only provide enough gas for cooking for a family of four for 5 days, two additional cylinders were carried aboard. When a cylinder was empty it was exchanged at designated fuel docks. The cost of the gas, while trivial the cost of compressing the gas and distributing it at that time was definitely not trivial. When we outfitted for a two year trip to the South Pacific and New Zealand in 1977, we jettisoned the CNG and converted to LPG. We left California with 3 five gallon containers of LPG (Propane). Each container provided over one month of cooking. All through our trip, LPG was always available at the most remote places that had more than a handful of people.

Today, I am sure CNG is more available and less expensive in small quantities, but the difference of the amount that can be stored in a given volume is still dramatic. CNG or LNG use as a motor fuel is being promoted because natural gas is very available and not too expensive (remember that many of the price comparison of NG to gasoline does not include the Federal and State taxes that are applied to gasoline). Another reason that there is much support for NG as a fuel is that it burns cleaner and produces less carbon dioxide that LPG, gasoline and Diesel.

This is not to discourage the development of NG for motor fuel, but to point out that it is not as simple to do effectively as to convert to LPG.

Add a Topic
338
Add a Topic
338
Add a Topic
338
WaveRider
WaveRider
September 14, 2008 1:29 am

Hello Warner
Great info – got me wondering, so I rang Dad – he had an 80L LPG tank,(not CNG like I thought),he says he got between 250 > 300 klms (180 miles)per tank fill and combined with filling the petrol tank (60L) could do 450 miles, or about 600 klms, all up. He confirmed that once you left the main centres in NZ, getting it refilled was rather hit & miss – but around town was fine.
The tank fitted crosswise between the back wheels inside the boot which afforded some protection in an accident.

Limecreek
Guest
September 14, 2008 9:51 am

We had a 1959 Chevy panel van that we converted to LPG in 1971. We had a tank installed behind the 2 front seats and used it for a while and even took it on vacation to Idaho. I don’t recall having any trouble with altitude. It was also set up to run on gas. We moved to Idaho shortly thereafter and sold the van before we left.
It didn’t seem very expensive to retrofit the van either but I might have forgotten. I sure wish I had that vehicle back now.

Warren
Guest
Warren
September 14, 2008 5:46 pm

From Big Oil’s Hydrogen Future
William Pentland 06.20.08, 6:00 AM ET
Forbes.com
“…the oil and gas industry is quietly gambling billions of dollars that natural gas and its controversial liquefied counterpart will replace oil and coal in the energy economy of the future.”

“The reason: Hydrogen engines can run on fuel derived from natural gas more cheaply than other currently available feedstocks.”

“Another irony: like crude oil, a small number of countries–Russia, Iran, Qatar and Saudi Arabia–control the vast majority of the world’s natural gas reserves. Many have begun referring to this possible gas cartel as OGEC. In other words, here we go again.”

Add a Topic
359
Add a Topic
2578
Add a Topic
338
destry
Member
destry
September 15, 2008 12:57 am

Limecreek…Won’t argue the point…’Not sure enough of my ground. Year’s ago me and a buddy drove up to Colorado to fish the Black Canyon of the Gunnison…Had to switch over to gasoline,
from the propane tank long about Texas City,
on the other side of the mountains from Gunnison.