For the most part, I like to talk about the companies that I like or the ones that I am invested in. Sometimes though, there are companies I'm not invested in, but advise, and whose stories need to be told.
There are lots of reasons that a company receives or doesn't receive coverage. Perhaps their management team isn't strong, it may not have a customer base, they might be in a market that highly speculative, or the market for its products simply doesn't exist. In the case of Ener-Core OTCBb: OTC:ENCR, none of these conditions exist and thus it deserves your attention.
As you know, investing in OTC stocks can be risky, but as Philip Fisher, investing guru and author of Common Stocks and Uncommon Profits, advised investors not to "ignore a good stock just because it is traded 'over-the-counter.'"
So why do I like Ener-Core? Undoubtedly, there are many energy related stocks that deserve your attention, and a lot of them carry less risk. Unfortunately, a lot of these stocks don't have the upside potential that Ener-Core carries. Let's look at why I believe Ener-Core will outperform its peers over the next 24 months.
Massive Market Potential Returns
Ener-Core business is to take poisonous gases and convert them to energy profitably - and they do it without tax credits and without any other incentives. What takes Mother Nature twenty years to oxidize air polluting gases, takes Ener-Core technology hours. Virtually every factory, landfill, oil refinery or coal mine that produces poisonous gases can potentially use this technology. So the market is big.
The company's $18 million Market Cap is well below market value - their technology patent portfolio alone is worth more than that. So far the company hasn't attracted much Wall Street attention, but savvy investors will find the stock mispriced. Their stock price is also down year over year, but given their recent activity (we'll discuss below), the stock should change direction shortly.
The value proposition is solid
Unlike other green technologies, Ener-Core enables any company flaring a gas to become more financially effective and operationally efficient while keeping the environment safer from greenhouse gases.
In other words, this is a company that takes gases no one wants and converts them to energy that everyone wants.
Their sales pipeline is strong
Ener-Core has a commercial deployment that has proven the technology works which is why multinational industry leader Dresser-Rand (NYSE DRC) has made a strategic decision to license Ener-Core's technology. Given both, their sales team has been able to build a strong pipeline.
Follow the Board
Highly reputable, respected professionals don't join small companies they don't believe in. Their options are much too big. Ener-Core's board includes the former head of the EPA and Senior Executives from Bechtel and Caterpillar. They see something big happening and they don't want to miss out.
It must be noted that Ener-Core has been hampered by capital constraints that have significantly improved in the past few months by capital injections. Because their conservative customer base is deeply concerned with long term viability, that may explain some of the delayed orders that CEO Alain Castro was expecting earlier in 2014.
Going forward, Ener-Core intends to increase its market share by selling a new system that is 8 times as powerful as the current system. That's one of the primary reasons Dresser-Rand moved forward with their partnership. Ener-Core's new challenge will be to educate an untapped market about a new technology that most companies don't know exists. If they can execute on that and sell on the high ROI, this company will be far more valuable than its stock price reflects today.