Hydrogenics RecommendationFraser Recommends the Following Issue: Hydrogenics
Being a contrarian sometimes means doing things others find foolish. However, doing so can also lead to big gains, especially if you are first to the party. Follow James Fraser's advice against the current to just such possible gains.
Here are the highlights from the Featured Expert column:
Hydrogenics (Nasdaq:HYGS) is a "clean energy" company with a two pronged strategy: the company makes fuel cell modules and provides fuel cell testing equipment and services to other industry participants. The strategy focuses on short-term results, so that internal cash flow will adequately fund further development.
It is expected that most of HYGS' future revenue growth will come from its line of PEM fuel cell power products. Fuel cells convert hydrogen into electricity. They may well be a critical ingredient of the decentralized power generation world in our future. HYGS has learned to focus on premium applications (where customers will pay up for quiet, low emission and flexible power generation) rather than basic research. Hydrogenics' low-pressure PEM fuel cells create efficiencies and allow applications not available to other PEM systems. The initial products are 20-kilowatt units.
To further its goals, HYGS has established strategic relationships with key industry players. The idea is to leverage the partners' R&D, improve or create the product and then once again leverage the partners' sales capabilities. GM and HYGS have created this kind of relationship (GM now owns 24% of HYGS). GM is committed to the development of fuel cell technology as a clean power source for vehicles.
The March 31, 2003 balance sheet shows US$55 million in cash ($1.00 per share) and $0.5 million in debt. Cash used in the first quarter - exclusive of acquisition and integration costs-was $400,000. The company has a 2003 goal of positive operating cash flow. We expect revenues to double to $32 million.
Fraser feels that Hydrogenics is well-positioned to outperform in both the investment and power generation worlds. It seems like it's a matter of "when," and not "if" it will happen. Hydrogenics' sustainable strategy means being around when the payoff comes.
James Fraser and his team offers much more commentary in this month's issue along with price targets for Hydrogenics.