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Ceramic Fuel Cells & This Week's Stock Tips

by The Wrinkle | June 25, 2010

Well they say a week can be a long time in politics. Last week we used Kevin Rudd as an example of the dangers of a leader disconnecting with their core power base or team. Kevin Rudd now joins the Bob Hawke club of one as a sitting Labour prime minister removed from office by his party.

It’s interesting that one of the “triggers” appears to have been Rudd canvassing backbenchers behind Julia Gillard’s back as to whether or not she was going to move on him. Not exactly a team play, and again a reflection of the disconnect of an outsider “looking in” who doesn’t feel attached to, or within, the team.

This week we might drop back into things a little more mundane, in my first blog The Wrinkle tipped GGP a junior oil producer with a 12 month to two year window. I should perhaps have been a little clearer in stating that The Wrinkle expects this stock to at least double in value during this time. Please note all the legal disclaimers about advice, etc. apply. Most of the stock picks The Wrinkle makes will be unsuitable for “widows and orphans”.

The Wrinkle would like to offer up another tip that he expects to double in price in one to two years. The stock is Ceramic Fuel Cells (CFC), The Wrinkle picked up 30,000 at an average price of 21.5c in January and February this year, currently they are trading at 16.5c (widows and orphans remember). At this level The Wrinkle believes they are even better value.

Unfortunately this stock is a bit of a “sad” local story and as such is running under a lot of trader’s radars. The Wrinkle believes this will change over the coming year, the stock was tipped in an investor’s newsletter in mid-June as a potential “ten bagger”, i.e. a stock that increases by more than ten times. Typically these stocks tend to be in the energy, mining, oil, and gas sectors with the odd bio-tech thrown in.

The company was also featured on the 7.30 report on ABC on Wednesday night. The reason for this is while the company has independent testing from the CSIRO that its household BlueGen units will save 33 tonnes of carbon dioxide per year, per household, compared to brown coal power station outputs. Because it runs on gas the federal government simply isn’t interested. It seems to be the policy of the day that the method of saving is far more important than the savings themselves. Hasn’t anyone in government heard the age old commercial adage of “substance over form”? Seriously, even accountants have enshrined it in their standards.

Anyway how the units work is that they use natural gas to produce electricity, the other advantage is that the heat by-product can be used to heat hot water. Plus they can also obviously feed power back into the grid, and due to the advances in technology they’ve developed, this is at a cheaper generation cost than large power stations. So effectively you have a triple winner.

There are prototypes currently being tested in Victoria (for those unaware there is a natural advantage in Victoria over NSW as they have better access to natural gas), on average the gas cost per household in NSW is $120 more per year. Obviously in countries with even more expensive power costs like Europe and Japan the units are even more attractive. These units are far more efficient than what currently exists in Japan, and in countries like Germany there is a well developed (and government promoted and supported) market for buying household power back into the grid.

Due to the lack of local support the company has set up a state of the art, robotic manufacturing plant in Europe. While it will take a while to get production up and running due to the complexity of the process. Once fully operational, The Wrinkle believes the issue will be keeping up with demand, not finding clients.

So in summary CFC has cutting edge technology developed over many years, a brand new production facility ready to go, numerous prototypes with various major companies and countries around the world (review their reports). Frankly The Wrinkle believes it’s only a matter of time before this stock takes off.

We are almost out of June, and the local tax malaise should be behind us soon. Here’s to a good earnings quarter in the US through July and an extension to the US federal housing stimulus to avoid a double dip recession in the US housing market.

Have a good week.

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