8-5-09 - Government Backing Makes ECOtality, Inc. (ETLY.OB) Perfect

The stock market certainly has been holding up quite strong in spite of the large jump it's made the past couple of weeks. As a result, the perfect stocks have been a little easier to find. The next selection of http://theperfectstock.blogspot.com is along the lines of a post made a few months ago regarding NVAX. Certain stocks can have a story so powerful that it supersedes a long drawn out analysis. This is another one of those stocks. The next perfect stock is ECOtality, Inc. (ETLY.OB).

ECOtality, Inc. is engaged in providing electric vehicle infrastructure products and solutions that are used in on-road grid-connected vehicles, including plug-in hybrid electric vehicles (PHEV) and battery electric vehicles (BEV), material handling and airport electric ground support applications. Through its main operating subsidiary Electric Transportation Engineering Corporation (eTec), the primary product offering of the Company is the Minit-Charger line of advanced battery fast-charge systems that are designed for various motive applications.

ETLY.OB began the day at $0.12/share, but released some huge news around lunch time that almost caused the stock to triple. Now, the critics of this blog will be quick to question why I would point out a stock that has already had such a huge runup. Based on the share price alone, the naysayers would just lump this stock in with all the rest of the "penny pump and dumps". I say this stock requires a much deeper look.

News

Electric Transportation Engineering Corporation (eTec), a subsidiary of ECOtality, Inc. announced that it has been selected by U.S. Department of Energy for a grant of approximately $99.8 million to undertake the largest deployment of electric vehicles (EVs) and charging infrastructure in U.S. history. eTec will partner with Nissan North America to deploy EVs and the charging infrastructure to support them. ECOtality's President and CEO is quoted as saying, “ECOtality is committed to enhancing America’s energy independence, accelerating the market acceptance of electric transportation and supporting President Obama’s goals for job creation and advanced electric drive vehicle deployment.”

The basis for this post is conveyed in three key elements mentioned in snippets of the press release above:

1.) "... U.S. Department of Energy for a grant of approximately $99.8 million to undertake the largest deployment of electric vehicles (EVs) and charging infrastructure in U.S. history"

All the key elements are in bold print. When you've got the support of the government for $100 million to do something that's the largest in U.S. history, that is a game changing announcement.

2.) "eTec will partner with Nissan North America.."

ETLY.OB was able to partner with one of the leading automobile manufacturers in the world. Whatever credibility ECOtality may have lacked being a penny OTCBB stock, it was instantly upgraded with the inclusion of Nissan. This is the type of name recognition that attracts both quick flippers, long term retail holders, and institutional buyers (despite what you may have thought or read, institutions do occasionally buy stocks not on major exchanges if a stock has a powerful enough story). It's always best to have all three to maintain a share price that is quickly moving higher.

3.) "...supporting President Obama’s goals for job creation and advanced electric drive vehicle deployment"

The market is always seeking "Obama Trades" and this certainly qualifies as one. Obama has made it very clear that he wants to reduce the U.S.'s dependence on oil. Have you noticed how well a lot of the algae base bio-fuel companies have done recently. The announcement a few weeks back involving Exxon's investment in this form of bio-fuel is a classic example of an "Obama Trade". Many stocks in that arena such Biocentric Energy Holdings (BEHL.PK) have recently seen stratospheric rises in their share price. This push for the deployment of electric drive vehicles correlates conceptually with the algae bio-fuel and I'd expect the market to react in much the same way.


Conclusion

ETLY.OB finished today at $0.31/share on 70 times the normal trading volume. A lot of people will point to the $100 million and do market cap calculations, but I don't think that makes a lot of sense at this point. Nissan will probably get a cut of the money and keep in mind that this is a government matching program. I think what is important is the overall story. ECOtality has approximately, 160-170 million shares outstanding, but the float is about half that due to heavy insider ownership. Most of you know that I like low float stocks, but at the current share price, I think this share structure is perfect. In my opinion, ETLY.OB is poised to quickly double. The short term prospects for this stock is still solid because it ran with a mid-day press release. A lot of investors/ traders are still discovering it and they will want to buy in. Thursday, 8-6-09, I'd look to buy early and ride the momentum. Government backing, a strong partner, and Obama's blessing makes ECOtality, Inc. (ETLY.OB) the next perfect stock.

39 comments:

  1. I stumbled across your blog doing a search on CHGY a few shares of which I got awhile ago based on some stuff i read at Fools. Since their earnings doesn't yet refect their recent expansion, I think it is still doing well. Check out CAGC which is a solid company at 7X earnings with an all around Outperform rating by Reuters. I am a small change investor so I tend to be more conservative.

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  2. I'm speculating that a lot of the insiders may be taking some profits today. This selling pressure has put a temporary negative cloud over the stock. Unless more news is released, this may retrace back to 20 cents for the standard 50% correction before it has legs again.

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  3. Tornado15353, CHGY has been unreal the last month. I'm waiting for it to undergo some sort of correction before I begin another position in it. It's basically gone straight up since it hit 40 cents in early July. I'd love to restart a position between 50-60 cents. It could be a $2-$3 stock in 6-9 months.

    I'm not that familiar with CAGC. I'll have to check it out.

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  4. OUCH, I feel sorry for the people who listened and got in at the open... (-37%)

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  5. Hi Card,

    thanks for this pick, it may be a great long-termer. I also appreciate your information about ABK, which went up easily with other bond insurers. I would like to alert you to an incredible stock that I found yesterday -QASP.PK (light commercial aircraft company). It's up 70% today, but still can be a 5-bagger or more from here considering the potential and share structure. They announced insane news today: "after closing 4 acquisitons on 28 August we are now estimating that our 2010 revenue will exceed $150 million and our pre-tax profit is estimated at approximately $33 million" plus they announced a stockbuyback program. It may sound too good to be true (pump and dump?), but there are a lot of believers. It may be the next SPNG or BEHL.

    P.S. My nickname is actually bighoper (not bighoper1), but I forgot the password to my original openID :-)

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  6. Qasp was formerly Equus Resources, Inc. A search of Equus turns up lots of litigation about stock scams and investigations by the SEC.
    I didn't read everything that I saw, just enough to make me not interested.

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  7. Thanks bighoper. ETLY had a tough day today, but I agree that it does have some good long term prospects. I've learned to never completely judge a stock after one poor trading session, so I won't call this selection a bust yet.

    I did notice the move in QASP. However, I noticed the same thing as Tornado15353, which is troubling. It may have a carryover day tomorrow, but I'd be hesitant to stick around much longer than that.

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  8. Keep and eye on VNDA and TTNP today. Vanda reports earnings on Monday before the bell and some people are speculating that they may release some news regarding a buyout or partnership for their schizo drug. There could possibly be an "anticipation runup" today.

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  9. OXPA was a textbook trade based on what I wrote on my other blog http://yourtradingtips.blogspot.com . Look for a new post there soon regarding "Free Online Trading Aids".

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  10. card,
    any info on MEG...another one fromt he league of LEE and MNI

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  11. Guys, BMOD has major upside potential with their new medical device technology designed to find early stage lung cancer. The stock as gone from .04 to .11 just in the past few days.

    This one is a sure winner.

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  12. Ankeet, all newspapers are good for the next 3 months in my opinion. MEG fits right in.

    I'm checking out BMOD right now aroramax.

    I am also liking SPDE. The parallel with STEC is eye opening. This kind of technology has got to be worth more than a market cap of less than 10 million. I bought it earlier today. It's looking good so far. Very little shares outstanding. It could move more than OPXA if people jump on board.

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  13. I was considering a quick flip of SPDE, but after looking at this further, I may roll the dice and hold this as a long term play. The market cap is just entirely too low for this.

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  14. Card, BMOD is now .17.. I was thinking of getting in at .04 but jumped in at .09.. It's on fire. What do you think is gonna happen?

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  15. saw SPDE when it was up 212% something. thought i was probably too late..Currently up 380%...i am kicking myself right now :(

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  16. Aroromax, my only concern about BMOD is the volume in respect to the shares outstanding. If 77 million is correct, it could fall quickly so be careful.

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  17. I bought SPDE at $1.71 this morning and sold half of it at $3.80. I'm letting the freebies ride and hopefully this will turn into another STEC. You never know!

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  18. Card, congratulations on SPDE! I missed that one.
    My pick QASP is up again over 40% on $500,000 volume (it’s a pink!). It seems that Equus Resources was only a shell and they reverse merged into it. QASP now sits at 0.035. If their numbers are real, their fair valuation is about 1 to 1.5 dollars…
    I also have another stock that should explode very soon: MGLG.PK. It's a real natural gas company which has recently doubled the number of gas producing wells in Oklahoma. Once the eagerly awaited production numbers are out (any day now) it should be a 3-5 bagger depending on the amount of gas produced. When they announced the start of the production two months ago, the stock ran from 0.0001 to 0.0033 in just two days! Now it has a rock-solid support around 0.0006-0.0007. My average is 0.0009, but I am not worried at all.

    Good luck and I'm looking forward to new additions to your blog.

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  19. Is anybody looking at buying Citigroup(C)at these levels ($3.85/share)? One of their CEO's just bought 2 million shares and many people believe that the government will try to push up the share price as much as possible until September. That is when the government can start selling their stake. It might not be a bad play for the month of August.

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  20. My last thought for the weekend is that if anyone once to play a purely technical play on a penny stock, check out PLBI.PK. It broke out of its bottom on volume Friday (no news). I don't believe this one is in any of those newsletter or alerts yet, but it'll probably be there soon. If it follows the same pattern of the last year, it will at least triple from the current level of .0019. I think there are only about 50 to 60 million shares in the float so it'll move quickly since it's priced so cheaply.

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  21. It looks like the sellers are gone in ETLY. It could be about to make a really nice move. I'm standing behind my statement of a double.

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  22. r u chekcign out DANR: dana resources.
    up 50 % today . they are into metals mining.

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  23. Ankeet I don't know much about DANR. I'll check it out.

    Is anybody playing FRE? 2 Bucks looks like a given before the week is out. I want to buy at around $1.25, but it doesn't seem to want to dip that low again. I'm predicting it'll gap up at least 20% tomorrow.

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  24. If anybody is interested, check out MSGI.OB. They just announced a partnership with NASA about an hour ago. It's currently at 12 cents and has less than 25 million shares outstanding. You know I just had to buy it!

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  25. Hi Card,
    What do u think about FRE & FNM both have good run up today and still UP big time in AH.
    Do u think it run up like AIG did last week???

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  26. Dave, it looks like Cramer poured a little water on the FRE fire. Personally, I'd stay away from FNM, but I thought FRE was good to $2.00 as my earlier post mentioned. I think all bets are off once it hits that area. If I was a holder of FRE I'd set my limit sell to $2.00 take my profits and look for the next winner. The runs in Fannie and Freddie usually don't last as many days as AIG's runs (I've been keeping tabs of a correlation between the 3 for about a year now) so be careful if you decide to hold on for more.

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  27. Here's a heads up for the possible trade of the day being RWC. Currently, it's at 2 bucks a share (pre-market is at $3 though). 11 million shares in float, released a blowout quarter of 15 cents EPS, and announced another million dollar government contract. It could move huge!

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  28. Hey guys, keep an eye out on EMMS. It's currently going through one of those "LEE after earnings" shakes. It's another one of those media stocks that had been on fire, but people are finally beginning to take profits once it hit $1.00. I think it would be a nice pickup in the high 60s/ low 70s cents range. If it gets there sometime tomorrow, I'd be a buyer. I like ROIAK too as a multi-bagger, but the low volume bugs me.

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  29. Hi Card, congrats on LEE going over 2 dollars. I hesitated and now I'm kicking myself - it's almost at 2.50!
    I would appreciate your opinion on biotech CRXX. It seems very undervalued and starts moving up.

    GLTY

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  30. bighoper, I don't know a lot about CRXX, but it looks pretty good from a technical standpoint. It looks like it's definitely worth checking out though.

    I left a comment on the LEE post that the CEO of LEE just bought 20,000 shares at around $2.22/share yesterday. If the CEO is buying at that price, it generally bodes well for the price to move higher.

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  31. If you don't feel the market is going to go completely into the tank, today may be an excellent day to buy. I'm looking at doing a post this weekend on a radio stock. Really, at this point it doesn't matter which one I pick because they are all going to do well the next 2 months. The fundamentals are just to strong.

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  32. One more thought for the day. GRH has a reputation as a multi-day mover. After a good earnings report, I don't think the move today is over. Keep a close eye on it. I bought it a little earlier. Less than 5 million shares in the float. Could be 4 bucks by Monday afternoon.

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  33. Hi Card,

    I bought a bunch of ETLY at $0.23 ...now it s 0.14. I know the company has a great potential...but do you think:
    it's still good to buy now?
    or wait until it drops further?
    or just not buy now at all ? :-)

    Thanks
    J

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  34. This comment has been removed by the author.

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  35. Jenny, after ETLY broke 20 cents, I no longer felt good about the stock. I still feel good about the company, but not the stock. Sometimes the two don't go hand in hand. Another example of that is the stock CCTR. It's got killer earnings, but the stock just continues to get crushed. I haven't seen any filings suggesting ETLY's insiders are selling, so my gut tells me that there's probably a lot of naked shorting going on. That can kill a stock in the short term.

    Personally, I'd wait until the stock hits 10 cents, before I'd even consider buying it again. However, the smartest thing may be to chart the stock's progress and wait until you see a definitive uptrend before buying. I've been wrong on the stock so you can probably take that suggestion with a grain of salt.

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  36. Jenny, I'm now seeing that ETLY has had a lot of insiders dumping. It looks like they sold 12 million shares this month. That's why the stock has tanked.

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  37. Nice discussion topic that you have post. I have seen some important lines of stock related. Thanks for those informative tips of stock market.

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  38. Yes I am also agreed for this uniqueness. Its really a good one.

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  39. Glad to see this information.its very useful for everyone.thanks for sharing this post.
    Stock Tips

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