American Superconductor (AMSC)
By Brendan Coffey, Analyst and Editor of
Cabot Green InvestorFrom Cabot Wealth Advisory, 10/12/09 Sign up for free
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A funny thing happened to one of the stocks in the
Cabot Green Investor portfolio last month.
The stock is American Superconductor (AMSC), a designer of wind turbines that also sells the electrical components for its designs. American Superconductor also makes highly conductive electrical wire for utilities.
In late September, an analyst at Kaufman Brothers cut the stock from a rating of Buy to Hold. That sparked a wave of selling that pushed the stock from 37 to 30 in just four days. It also sparked a number of worried emails from subscribers, who are free to email me with questions anytime, wondering whether we should take profits (we bought shares in May at 25).
I told them to hold tight, since our technical analysis predicted AMSC shares would hold fast at 30. I was confident too given the fact that AMSC has been executing superbly of late: It posted its first profitable quarters ever earlier this year, the company just signed a $100 million deal to supply China's largest wind turbine maker with designs and components for 3 megawatt turbines, and over the summer, Korean utilities inked deals to use over 60 miles of its superconductive wire.
Shares held support as our analysis predicted. Then remarkably, just six days after the downgrade, that same analyst shifted the rating on AMSC back to Buy.
I don't want to take the specific analyst too hard to task (because, for one, I haven't analyzed the reports), but it's a reminder that individual investors who follow brokerage recommendations are playing catch up in a complex game being played by institutions. Regardless of the motivations, the last person those ratings are meant to help is you, the individual investor.
As for AMSC, I still believe the stock is a buy over 30. Fundamentally the company is performing without a misstep, while a massive percentage of short sales in the float has set the stage for an explosive short-covering rally.
Plus, the overall alternative energy sector is in full bull market mode according to our indicators, and it's hard for bears to swim against the tide of bullishness that we see.
The Cabot Green Investor portfolio has a 25% profit in AMSC to date, placing it in the middle of the pack return-wise of the seven stocks we now hold.
American Superconductor Corporation
64 Jackson Road
Devens, MA 01434-4020
United States
Phone: 978-842-3000
Fax: 978-842-3024
Web Site: http://www.amsc.com
DETAILS
Index Membership: N/A
Sector: Technology
Industry: Diversified Electronics
Full Time Employees: 519
Brendan Coffey
Analyst and Editor of Cabot Green Investor Brendan Coffey is a member of the Cabot investment team and editor of
Cabot Green Investor. A veteran financial journalist, Brendan has spent more than a decade writing about investing for publications including Barron’s, Forbes, The Wall Street Journal and a number of private-client brokerage newsletters.