My EOY review of AMSC
INTRO Here's my semi-annual exercise to see if I remember why I own the stocks I own, and so I can check back and see if their stories have changed. I post in case it helps others too.
AMSC (was called American Superconductor)
AMSC (market cap was $0.160B is $0.106B)
AMSC was originally a company based on the production of superconductor cables and motors. To use the company's analogy, they could do for power what fiber-optics did for telecommunications, provide a new way of transmitting more in a smaller wire. It also means being able to do a lot more in the same space. Two main market needs could be addressed: greater power transmission efficiency, and retrofitting old cities with more capacity without having to dig new conduits. The company also developed a product line of power transmission regulators. They are also part of the Tres Amigas power project that will tie the US's three power grids into one, further increasing their effectiveness. AMSC's most storied division was the auspicious and then unfortunate purchase of a wind turbine support company.
With so much going on, and for so long, it is surprising that the company isn't in the news more, and that they haven't recovered from the misfortune of the wind turbine division. For a while the wind turbine business become the dominant revenue stream. Evidently, a firm in China subsequently stole the intellectual property rights, caused AMSC to lose hundreds of millions in orders, which caused AMSC to drop precipitously. The court case is proceeding favorably, though slowly, and with significant uncertainty considering the international cultural differences and implications.
The company looks like it should be doing well, yet it seems as if the sales and the stock price are waiting on the outcome of the trial. Another possibility is that the company has not figured out how to introduce such an improvement into such a necessarily conservative industry.
Price to Book is less than one. Price to Sales is barely over one. Those aren't the ratios for a high tech company that has passed from research & development to production & sales. The financial statements are all skewed from the significant drop in the wind turbine business. Limiting the view to the rest of the business shows increasing revenues and a return to positive gross profit, which is encouraging.
Doubt breeds doubt. Logic suggests a brighter picture, but I've been wrong about AMSC for long enough that I lack confidence in their ability to realize their potential. The stock is so low that any significant news could cause a dramatic increase, which is why I will Hold.
DISCLOSURE LTBH since 2003 but the first shares were sold years ago, fortuitously in hindsight because I actually made a profit.
(I've also collected links to the other discussion boards and my other stocks over on my blog trimbathcreative.wordpress.com |
