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After scouring the NASDAQ landscape for a new alternative energy idea we have unearthed a truly diversified, revenue generating company that boasts a leadership team second to none that includes a former U.S. Secretary of Energy. Despite a recent spate of good news, the stock is off its September highs; however, it has since bounced sharply and currently trades comfortably off of its 52-week low. Moroever, it is not far below its 50-day moving average. With solid milestones ahead, opportunistic investors may view the current share price as a favorable entry point.
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Investment and Company Research
Select Research
COMPANY UPDATE
Today we are issuing a research update on a NASDAQ stock that has achieved a new 52-week high on strong volume and is primed to break through its all-time high in the near term. Its business model is innovative and dynamic, its subsidiaries have won major contracts in recent weeks and the Company is actively bidding on contracts worth over $100M. That is why the Company, which services Fortune 500 companies and governments, just broke through our previous price target, prompting us to initiate a new one today.
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FORCEFIELD ENERGY, INC.
Stock Breaks through $7 Target; New $10 Target Price |
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FORCEFIELD ENERGY, INC. (NASDAQ – FNRG - $7.48) |
| Price Target: $10 |
Rating: Speculative Buy |
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COMPANY SNAPSHOT
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KEY TAKEAWAYS
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ForceField Energy Inc. and its subsidiaries comprise a global company whose products and solutions focus on sustainable energy solutions and improved energy efficiency. ForceField is a distributor of LED and other lighting products for a number of premier LED lighting manufacturers; and through its award-winning subsidiaries, American Lighting and ESCO, have completed lighting installations and retrofits as well as energy efficiency upgrades, for numerous high profile concerns in a variety of industries. |
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KEY STATISTICS |
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| Price as of 2/27/15 |
$7.48 |
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| 52 Week High – Low |
$7.49 - $4.44 |
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| Est. Shares Outstanding |
18.1M |
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| Market Capitalization |
$135.4M |
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| 3 Mo Avg Vol |
56,000 |
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| Exchange: |
NASDAQ |
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COMPANY INFORMATION |
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The Bottom Line: In recent trading sessions, FNRG's stock has strongly broken through our previous $7.00 price target and is up 25% since our last update dated September 12, 2014. While the strength of the stock is based upon very favorable fundamentals and operating developments, the stock's technical attributes are also very bullish. The recent gains to new 52-week highs have occurred via steady and increasing volume. Moreover, we do not believe the stock will have much resistance as it approaches its all-time high of around $8.18 and we believe that breaking through that level, along with continued positive business developments, will serve as catalysts to drive the stock to our new target price of $10.
FNRG offers a business model that is dynamic and a valuation that is attractive. A true, diversified green energy provider, FNRG's recently acquired subsidiaries enable the Company to serve as distributors, installers, and managers of large scale LED lighting projects for Fortune 500 companies. Since FNRG does not produce its own products, it can offer best of class solutions and not be subject to current and potential gross margin deterioration of a commoditized product like LED lights, that may plague other companies. Moreover, its "No Money Down" project financing approach has already garnered sizable deals and a hit list of over $100M worth of potential projects in its pipeline, via active bids. This clever model typically fosters greater than industry standard top-line growth, thus justifying a future market cap that could approach $200M in the next 12-18 months.
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Recent Deals Help Fuel Value Rise
Over the last few weeks, ForceField Energy's ESCO subsidiary has announced key events in Connecticut and Massachusetts that serve as a great baseline for future business.
For example, the Company's ESCO subsidiary has entered into letter of intent agreements for two LED street light conversion projects as part of its previously announced selection to participate in the Connecticut Conference of Municipalities ("CCM") municipal "Street Light LED Conversion Program." The installation of the projects in Plainville, CT and Cromwell, CT, is worth an estimated value $1 million+, and is expected to be completed by Q3 2015. The initial installations in both towns will include the conversion of more than 2,600 street light fixtures with an estimated annual savings of approximately $225,000. ESCO is also currently in active discussions with more than 20 communities which make up CCM's 153 member-communities; and currently estimates the revenue generation potential of streetlight projects to be between $25 and $30 million which will be recognized over a three-to-five year period.
As we have noted in previous reports and updates, the primary industry driver of the conversion to LED lights is the substantial projected operating savings provided to operators, as compared with existing lighting solutions. These catalysts are further driven by increased state and federal initiatives such as the President's Challenge for Advanced Outdoor Lighting and the DOE's Better Building Program. Therefore, FNRG remains at the forefront of what are the early innings of a multi-billion dollar market opportunity that is enjoying a migration to switch to high efficiency lighting for street lights and other outdoor applications, with hockey stick-type growth expected over the 2-3 years. Moreover, ESCO's innovative, turn-key Municipal LED Street Light Conversion Program, ensures that FNRG is a candidate for large scale, high profile installations, since it is typically structured with no initial capital outlay required and is completely paid from the savings generated by the conversion thus generating immediate positive cash flow to the municipality.
ESCO has also been designated as a Prime Certified Energy Efficiency Contractor by the State of Massachusetts Division of Capital Asset Management & Maintenance ("DCAMM"). As a Prime Energy Efficiency Contractor, ESCO can now serve as a lead bidder in undertaking larger (in excess of $100,000) projects. In addition, ESCO will now have direct access to DCAMM's bid system with automatic notifications of impending opportunities. Prior to being designated as a Prime Contractor, ESCO had already contracted with DCAMM for more than $1.5 million in comprehensive energy savings solutions across a wide range of facilities.
Conclusion
In our view, the latest trading activity is just the beginning for these shares as the Street wished to see the fruits of FNRG's labors via new contracts from businesses acquired in 2014. Considering ESCO has a history of $10M in revenue and over $1M in EBITDA and American Lighting has an enviable customer base through its 28 years in business, FNRG is primed to take leverage these subsidiaries' operational strengths, and geography to become a dominant force in the multi-billion dollar industry. Plus, the Company's financing model and synergistic relationships with companies like Noveda for its LED Lighting Management Systems, and FNRG's $100M+ in active bids should make for a banner revenue year for the Company as it takes a big bite out of the market.
Recent Trading History For FORCEFIELD ENERGY, INC.
(Source: www.StockCharts.com)
Senior Analyst: Robert Goldman
Rob Goldman founded Goldman Small Cap Research in 2009 and has over 20 years of investment and company research experience as a senior research analyst and as a portfolio and mutual fund manager. During his tenure as a sell side analyst, Rob was a senior member of Piper Jaffray's Technology and Communications teams. Prior to joining Piper, Rob led Josephthal & Co.'s Washington-based Emerging Growth Research Group. In addition to his sell-side experience Rob served as Chief Investment Officer of a boutique investment management firm and Blue and White Investment Management, where he managed Small Cap Growth portfolios and The Blue and White Fund.
Analyst Certification
I, Robert Goldman, hereby certify that the view expressed in this research report accurately reflect my personal views about the subject securities and issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the recommendations or views expressed in this research report.
Disclaimer
This Opportunity Research report was prepared for informational purposes only.
Goldman Small Cap Research, (a division of Two Triangle Consulting Group, LLC) produces research via two formats: Goldman Select Research and Goldman Opportunity Research. The Select format reflects the Firm's internally generated stock ideas along with economic and stock market outlooks. Opportunity Research reports, updates and Microcap Hot Topics articles reflect sponsored (paid) research but can also include non-sponsored micro-cap research ideas that typically carry greater risks than those stocks covered in the Select Research category. It is important to note that while we may track performance separately, we utilize many of the same coverage criteria in determining coverage of all stocks in both research formats. Research reports on profiled stocks in the Opportunity Research format typically have a higher risk profile, and may offer greater upside. All information contained in this report was provided by the Company via filings, press releases or its website, or through our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations.
Goldman Small Cap Research is not affiliated in any way with Goldman Sachs & Co.
The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Goldman Small Cap Research did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company, or other firms. Goldman Small Cap Research relied solely upon information provided by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Such information and the opinions expressed are subject to change without notice. A Goldman Small Cap Research report or note is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed.
This report does not take into account the investment objectives, financial situation, or particular needs of any particular person. This report does not provide all information material to an investor's decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. Neither Goldman Small Cap Research, nor its parent, is registered as a securities broker-dealer or an investment adviser with FINRA, the U.S. Securities and Exchange Commission or with any state securities regulatory authority.
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