TPS Trade Alert – May 14, 2015

Recommendation:

Buy Ascent Solar Technologies (NASD: ASTI) up to $1.10 per share.

 

Trade Rationale:

There’s a standard theme to my trades – I’m sure you’ve noticed if you’ve been a subscriber for any length of time. In a nutshell, I’m looking for undervalued companies with some sort of catalyst for an upward move.

It should be pretty obvious with this type of microcap stock service.

After all, it’s relatively hard to find a stock under $2 per share which is overvalued. Most viable companies trading at this level are in fact, undervalued. The question is… why?

Finding the answer to this question goes a long way towards determining if a microcap is worth investing in. More importantly, we have to find a compelling reason why the stock will go up.

There are numerous reasons why a microcap could see an increase in its share price.

Small companies can get a boost from new sales, new partnerships, and new products. Of course, mergers and acquisitions will almost always give a stock a jolt higher.

But that’s not all…

What about changes in management or new strategies? Depending on what the news is, leadership and/or strategic changes can do wonders for a small (or large) company.

Sometimes, a promising company is just a few good managers away from turning into a breakout candidate.

I believe one such company is Ascent Solar Technologies (NASD: ASTI).

ASTI is a development stage company, which develops photovoltaic integrated consumer electronic products, as well as portable power applications for commercial and military use. Basically, the company creates solar powered and battery powered products for various markets.

Here’s the deal…

What ASTI is now is nothing like what ASTI used to be.

Prior management focused on the rooftop solar market. That’s a very competitive and crowded market and requires significant capital expenditures. In other words, it’s not an ideal market for a small company trying to make it big.

However, new management has taken the company in an entirely new direction.

The new strategy is a far more unique approach to competing in the solar market. You see, ASTI is now focused on being the leading provider of portable solar and power products.

While most solar companies are dependent on creating the lowest cost per watt for solar panels, ASTI is targeting completely different, attractive markets, with little to no competition. That’s why management is focused on consumer products and off-grid power applications.

The flagship product for the new ASTI is EnerPlex. This product line includes an array of portable solar panels, power banks, phone cases, and other accessories. They’re great for outdoorsy people and uses. For instance, there’s an iPhone case which comes with a very efficient battery, and can also be charged by solar panels on the case itself.

For industrial/commercial/military uses, the company is also focusing on portable products. One major product in this category is a solar powered drone. Another product uses solar cells which can be rolled up and carried around easily.

Here’s the thing…

Not only is the new business model not capital intensive, but substantial capital expenditures were already in place from previous management. Those investments should start paying off moving forward.

What’s more, ASTI has a joint venture kicking off with a city in China. A plant in this city will help reduce costs and create an entry point into the huge Chinese market.

Finally, it’s pretty obvious new management’s strategy is paying off.

Last quarter’s revenues jumped 305% year over year. Moreover, 2015 revenue guidance is expected to be double the full year revenue from last year. The company’s balance sheet is also in good shape for a microcap company.

At $0.96 per share, the share price is at the lower end of its 52-week range. It’s been as high as $5 per share over the last year. As such, there’s clearly significant upside potential.

Remember to use limit orders when placing your trades. And stick to your position sizing rules.

 

Key Facts:

Company:                                  Ascent Solar Technologies

Ticker:                                       ASTI

Recent Price:                              $0.96

Buy up to Price:                          $1.10

Market Cap:                               $27.5 million

Avg. Daily Volume (3 month):       1,236,980 shares

 

Chart:

Category: TPS Trade Alert