Cramer's Capstone Turbine Back of the Envelope Calculations

[insidemadmoney]

Check out news, commentary, and analysis (coming soon!) at http://www.insidemadmoney.com - an inside look at Cramer's Mad Money.

Capstone Turbines is a buy according to Cramer because of deal with heavyweight Wal-Mart (WMT). Capstone Turbines, a manufacturer of standalone electrical generators, is supplying Walmart with microturbines in an experimental Wal-Mart store in Colorado as the retailer is looking for opportunities to lower its energy costs. Cramer’s back of the envelope calculations yielded a profit to Capstone if around $144,000 per unit. Furthermore, Cramer believes that the run on Capstone is not over as this news is still not widely known.

What is Capstone Turbine’s upside potential? The stock was already up around 10% afterhours before Cramer’s show, suggesting that at least a significant amount of investors were aware of this news. As of now, the stock is up 26.27% in afterhours trading (link: Yahoo! Finance). Is there still more upside? The answer may be yes. A quick search on Google
GOOGLE
$396.97
Change: +6.57 - +1.68%
as of 11/14/2005 4:00pm
, Google
GOOGLE
$396.97
Change: +6.57 - +1.68%
as of 11/14/2005 4:00pm
News, and a few other news sources yields very little about Capstone and the cursory search did not produce anything about its deal with Wal-Mart.


One of the key downside risks is whether Capstone’s deal with Wal-Mart will expand. If Wal-Mart concludes that Capstone’s microturbines are not performing up to their standards, more widespread deployment of Capstone’s microturbines will not happen meaning an immediate drop of several percentage points. On the upside, however, announcement of a nation-wide deployment of Capstone’s microturbines will certainly eliminate the “uncertainty factor” and the stock will trade up.

As for the immediate short-term, however, there may be more upside to this stock simply because investors are still finding out about this news. The question becomes, “How efficient is the market with respect to Capstone Turbine?” One can make the argument that the story is already fully widespread the moment it was broadcasted on Mad Money, but the fact that no or few news articles are found can be used to argue the contrary.

Capstone Turbine represents an interesting stock to watch.

Check out news, commentary, and analysis (coming soon!) at http://www.insidemadmoney.com - an inside look at Cramer's Mad Money.

[deepinwonder]

There isn't anything wrong with Capstone's products, that I can tell, but like the stock OVEN (in re: to Starbucks,) putting one unit in a trial Wal Mart does not make for putting them in all Wal Marts. We had this stock a while back and think it's a good one, but with this big run up in after hours and the hype surrounding this news, I would not buy back in at this level. I would wait... :arrow:

[jacobnbr1]

i cant beleive he has the gull to recomend this again. he said he refuses to eat crow on this one. i guess it is at a point where it can be bought now. look at the charts cramer.

[deepinwonder]

I always did think this stock had potential, but would never buy anything after those jackasses who run stocks way up in after hours get a hold of something. I wait until they withdraw and they usually do, screaming bloody murder because they bought into the top and sold at a loss, during the inevitable profit taking that follows. Then Cramer misled them and yada yada yada. What a dumb country we have now, eh? :lol:

[jacobnbr1]

yep... they never seem to trade like they should when cramer pumps them up. i wonder if he knows what kind of affect he has on stocks.

[deepinwonder]

He definitely knows, because he keeps begging people not to do it on his show, but they do anyway. In this case, I think he was asking for it, though... down 44 cents at this point, to below $4. I figured as much.

[deepinwonder]

Herb Greenberg just did a "Greenberg vs. Cramer on Capstone" article on Marketwatch... said basically the same thing I did (one trial unit in one store) but got real uppity about it, trying to minimize the importance of using Capstone parts in the products, suggesting they are in conflict with the manufacturer, Wal Mart, etc. I noticed he gets that way about other stocks, too, takes the whole thing personally and won't let up. :roll:

Here's a link, but you have to have a free membership at marketwatch to read it. Worth it, really, I go there every day for news:

http://www.marketwatch.com/news/story.asp?guid={fc80cf12-8fae-489b-8225-7ed1a8225360}&siteid=mktw&dist=SignInArchive&archive=true&param=archive&garden=&minisite=

(If the link doesn't work, cut and paste or else check out Marketwatch's homepage.)

[deepinwonder]

Down more in pre-market trading, perfect example of why we shouldn't jump on the after-hours band wagon when Cramer first mentions a stock on tv, do homework and pick entry points carefully. I did make some money on quite a few of his picks, but waited for dips on all of them to get in.... sometimes for weeks or months.

[eman316]

Anyone else just want to beat the s*#! out of Herb Greenberg!
I swear that little weasel just hates this stock and will do whaveter he has to do kill it!
I aws so close to getting back to even and getting out of CPST!
DAMN HIM!!!!!!

[stockviper]

I was stopped out of my 200 shares. Took a loss but am getting use to that. Part of me said, Damn while the other part of me said thank GOD! On to the next play!

[deepinwonder]

I swear that little weasel just hates this stock and will do whaveter he has to do kill it!


Something is wrong with Greenberg's picture, that is exactly what he does to stocks he makes negative calls on, he tries to kill them off to protect his ego (or what?) and won't let up. Hanson's and Overstock are two other examples, I think Overstock even filed a lawsuit against him and look at how wrong he was on Hanson's.