Ocean Power Technologies: Harnessing the motion of the ocean
Today's Financial News - Posted October 13, 2009
The power of the oceans has long been known, but Ocean Power Technologies (NASDAQ:OPTT) is proving its profit potential.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): Every small-cap investor is waiting on one thing, that single event that propels a tiny, speculative company into a highly profitable growth machine.
It happens when an unknown biotech gets a major drug approved. It happens when an oil driller hits a big well. And it is happening today as Ocean Power Technologies (NASDAQ:OPTT) inks a big deal with an international giant.
We have all seen the investment potential of the solar, wind and geothermal industries. As oil prices soared and calls for increased energy conservation rang out, alternative energy plays doubled, tripled and quadrupled in value.
The power potential contained in the sea’s never-ending waves has always been known. Just ask any surfer or storm-battered shipwreck survivor… Or you could ask the folks at Ocean Power Technologies.
Profiting from the final frontier
As a $50 million company, Ocean Power was on few radar screens. But that doesn’t mean Lockheed Martin (NYSE:LMT) was not interested in the company’s PowerBuoys, floating offshore power stations designed to generate electricity from the motion of the ocean.
Today’s news follows a letter of intent singed in January to develop utility-scale power projects. As a small, capitally restrained firm, Ocean Power does not have the expertise or the cash to jump from development stage to deployment.
Lockheed Martin and its $28 billion market cap does.
The deal combines Lockheed’s integration and manufacturing prowess with Ocean Powers technology. The shared goal is to develop a 10-megawatt generation station somewhere off America’s western coastline.
There are several reasons investors like this deal enough to send share price up by more than 50% today.
Revenue, revenue, revenue
First, the news involving Lockheed comes on the heals of a recent Navy contract that will add more than $14 million to Ocean Power’s top line over the next four years.
More recently, the company signed an agreement with a group of three major Japanese companies to develop a demonstration generation station in Japan. It is a pivotal play in the company’s strategic growth strategy.
But even more importantly, a successful deal with Lockheed could eventually lead to an acquisition. While it is speculation at this point, the Bethesda-based defense giant is in a strong position to eventually acquire Ocean Power and its technology.
Even with a price tag of $100 million, Lockheed has the ability to leverage the technology and its international appeal to gain a foothold in a burgeoning industry with plenty of political backing.
No matter what, Ocean Power has bright days ahead of it. As it transforms from a demonstration-stage company to an international firm with revolutionary technology, its shareholders will likely be rewarded handsomely.
You can’t stop the motion of the ocean.
Next Article: TFN eNews 10/13/2009: This creates fantastic opportunities!
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October 13th, 2009 at 1:19 pm
Great article. At least the Ocean is a sustainable resource. Mabey this can help move Californias economy rolling in the right direction. joeb