Why Capstone Turbine Corporation Shares Lost Steam Last Friday After Rising Through the Week

Despite several orders, Capstone Turbine shares didn't rise as much last week. Is the market getting jittery?

Mar 24, 2014 at 11:13AM

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 (NASDAQ:CPST) continued to rally last week, even hitting their five-year high on heavy trading volumes. But it could've been another blockbuster week had the shares not cooled down on Friday and ended the week with only 5% gains.

So what: March has been a busy month for Capstone so far, with the company announcing yet another set of orders last week. The first was for one C200 turbine from the British Royal Air Force. Interestingly, the order failed to excite the market despite marking Capstone's foray into the United Kingdom.

The market's excitement built up by the middle of the week, however, after Capstone announced multiple orders for nearly four megawatts from oil and gas companies operating in the Marcellus and Utica Shale regions. Two were repeat customers, while one was new. In total, the orders comprised four C600, one C800, and ten C65 microturbines. Just the previous week Capstone had received orders for 50 C65s from oil and gas companies.

Now what: If repeat orders indicate Capstone's growing popularity, especially in the high-growth oil and gas industry, the company is also receiving recognition from the people and organizations that matter.

Last Thursday, Capstone received a certificate from the U.S. Environmental Protection Agency Combined Heat and Power (CHP) Partnership, recognizing the company's efforts in reducing carbon emissions (Click here to view the certificate). The CHP Partnership, participation in which is voluntary, seeks to promote projects that use the CHP technology to reduce green house gas emissions. The certificate can be considered great evidence of how environmentally friendly Capstone's microturbines are.

So it was actually another fruitful week for Capstone, and there was no real reason why its shares should have fallen nearly 5% on Friday. While the company's growing order book, top line, and gross margin may be attracting investors, Capstone still largely remains a trader's game, which explains the volatility in the stock.

But investors should ignore the daily stock price movements and continue to focus on the long-term growth potential of the microturbine maker. Capstone expects to break even on its operating earnings, or earnings before interest, taxes, depreciation, and amortization (EBITDA) by the next quarter; and is targeting a healthy gross margin of 35%, backed by cost control, by the next couple of years. That sounds good enough for long-haul investors to keep Capstone Turbine stock on their watchlists.

Click here to add Capstone Turbine to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Wants big profits minus the volatility? Consider this stock
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!

Neha Chamaria 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information