Why Shares of Capstone Turbine Corporation Jumped Today
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Capstone Turbine jumped as much as 14% in early trading today after the microturbine maker announced a new order.
So what: Fifty Capstone C65 microturbines have been ordered for oil and gas shale plays around the country. Capstone distributor Horizon Power Systems secured the orders that will bring its fleet up to 550 units used to support various oil and gas production operations.
Now what: This is an incremental positive for Capstone, but it doesn't make the company profitable. Despite growth in the last couple of years, Capstone continues to report losses, and that's not good for a company trading at five times sales. At that price, the company needs to grow for years to come, and to improve margins dramatically, something I'm not willing to bet on even with this order.
A better play in energy
Imagine a company that rents a very specific and valuable piece of machinery for $41,000... per hour (that's almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report reveals the company we're calling OPEC's Worst Nightmare. Just click HERE to uncover the name of this industry-leading stock... and join Buffett in his quest for a veritable LANDSLIDE of profits!
The article Why Shares of Capstone Turbine Corporation Jumped Today originally appeared on Fool.com.Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.