Wednesday, November 18, 2009

American Superconductor Discounting Contract Wins (AMSC)

Last month, in "American Superconductor Lifts Guidance; Stock Soars (AMSC)" I wrote:
I'm starting to think that this is one of those stocks that always seem overpriced.
I passed on Berkshire Hathaway the first time it was shown to me, at $800/share.
As one of my mentors used to say, "Stocks are smarter than analysts (fund managers,etc.).
The stock was up 13% at $32.80 at the time. Today it's trading at $31.83 and I was a bit reluctant to use the "discounting" headline. It's not an efficient market thing, just that I've heard the "the stock isn't pricing in ____..." pitch so many times.
Anyhoo, the headline and story are from 24/7 Wall Street:
American Superconductor Corporation (AMSC) is one of the (almost) cult stocks out there in the field of alternative energy and green energy as its has proprietary megawatt-scale wind turbine designs and electrical control systems. The company has announced two orders this week, yet shares are ignoring the news. It seems that the valuation and performance is going to demand from the company.

The company announced yesterday that it has received a follow-on order for $10 million worth of wind turbine core electrical components. This was from China’s CSR Zhuzhou Electric Locomotive Research Institute Co., Ltd. and will be used in the 1.65 megawatt wind turbines designed by American Superconductor’s Windtec subsidiary.

Then this morning came the announcement that American Superconductor received a follow-on order for 30 sets of electrical control systems. This order was from Hyundai Heavy Industries Co. for its 1.65 megawatt wind turbines now in production in South Korea. AMSC has already received an electrical control systems order for HHI’s 2 MW wind turbine prototypes and all of the systems will be shipped by the end of May 2010.

Neither order announcement has generated much buzz in the stock. Yesterday shares were down about 1% at $31.78 on only about 579,000 shares after the first announcement was defined and shares are down 0.25% at $31.70 on under 100,000 as of 10:10 AM EST this morning.

What is interesting is that American Superconductor is still under the $100 million per quarter in revenues business stage. That means that any and all new or follow-on orders can influence the quarter....MORE