Capstone Turbine Keeps Powering on.

I’ve been following, and sometimes trading , Capstone Turbine Corporation, (symbol CPST), for years. I don’t own, or trade it now, but I keep it on my watch list because I like the whole idea of on-site power generation and I like that Capstone Turbine can help deliver this reality of on-site power generation in conjunction with all sorts of other energy sources, such as bio-gases, methane gas, natural gas, solar energy, wind power, and I imagine, wave power, if they haven’t already figured that possibility out yet.

(Hey Capstone. If that’s a new idea for you, just throw me a golden bone, or a few million dollars, or so, for suggesting it. I’ll send you my PayPal account invoice info when you’re ready to transfer the funds. No cashier, or certified checks.)  I also like the consistent march ahead of implementation of Capstones’ microturbines in buildings, oil and gas platforms and installations, hospitals, hotels, schools, Big Box stores and retailers, stand alone buildings, and other installations in locations all over the world. This is a good thing because that makes Capstone Turbine less vulnerable to the kind of domestic foolishness that we see in Washington D.C. these days coming out of a completely useless congress, that could completely crush, or at least slow down the progress of, companies whose primary customer, and financial benefactor, happens to be the Federal government of the United States. So Capstone is protected from that risk by having established a worldwide client base for their products. Capstone microturbines are also used as primary on site power sources for CHP applications of cooling, heating, and power, for many of the installations and applications mentioned earlier in this paragraph.

There are a couple of things that I really don’t like about Capstone Turbine Corporation, (CPST), and that’s it’s 305 million shares outstanding, with about 303 million of those shares in the float. That many shares in the float kind of turns me off, since the ability to turn over the entire float to really see a breakout in the share price of the stock, will really be hard to accomplish. I also don’t like the numerous negative earnings indicators, like a profit margin that’s a negative -17.5%, and a negative return on equity of -49%. It seems that no matter how good Capstone microturbines are, and no matter how worldwide the market for microturbines is, that Capstone Turbine Corporation just can’t seem to make a profit. Still, they keep powering forward, as a company.

Using a 6 month chart , as far as a few technical indicators are concerned, Capstones’ Bollinger Bands show the share price of the stock to be suspended between the upper and lower bands; basically suspended between technical buy and sell signals. So, it looks to me as if shares of CPST have been under accumulation since August 12th, 2013, after the share price experienced a 15 million share sell-off day that took the share price down to $1.10 on August 9th, from $1.35, just the day before, on August 8th. Ouch ! That must have hurt. But, I still think that as of this rainy October day that the shares do look like they’re under accumulation . The shares are also trading at a 50% Fibonacci retracement level of $1.17, so it would be good to pay close attention to that support level. If the price bounces off $1.17 and starts to move higher, I would be buying, and accumulating shares, just like whoever else seems to be doing so at the time.

Capstone Turbine Company 6 month chart showing Bollinger bands, Fibonacci retracement levels, and average daily volume indicators
Capstone Turbine Company 6 month chart showing Bollinger bands, Fibonacci retracement levels, and average daily volume indicators

Overall, my guess would be that CPST should probably be testing the $1.50 resistance level before the end of December. Breaking above that, and the $2.00 range becomes the next level of very long-term resistance.

Disclaimer: I do not own any shares of Capstone Turbine Corporation, (symbol CPST), at this time.


10/16/2013 update: Four trading days after I wrote this article and suggested that if the price bounced off support at $1.17 that you might want to buy shares, the price is now at $1.28. Some folks don’t think that technical analysis works, because , either they don’t understand it, or they don’t know how to use the available technical indicators to help them make money on their trades. But I do understand it, and the proof is in the higher share price for CPST.  I continue to look for a retest of $1.50 by the end of December.


01/22/2014 update: About a week after I projected a share price of $1.50 a share for Capstone, the share price hit $1.47, and then backfilled all the way back down to $1.17,  about a month later. If I had been trading the stock, I would have sold in the $1.30’s, when I saw a new trading channel developing. But the price target by the end of the year was still in place. Long story short, Capstone Turbine, CPST, broke through resistance in the high $1.40’s, in very early January, and is currently trading in the $1.70 level.

Technical analysis works.

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