Somehow, it just feels odd to write an analysis of a company with the mighty seafarin’ name of Ocean Power Technologies (NASDAQ:OPTT) when its OPTT stock has a price befitting a kiddie pool: $1.67 per share. This, as you may well know, is penny stock territory and tossing pennies in a fountain (or the “Ocean” as it were) is not sound investment strategy generally speaking.
But given that Ocean Power deals in renewable energy as well as offshore communications tech, we could very well face a scenario where today’s penny is tomorrow’s dollar, and the next decade’s sea treasure. If OPTT stock, the company and its sector are still maturing, that may be moot. (Alternate energy, for starters, will likely get a boost with the incoming Biden Administration.)
Yet immature should not be confused with newbie, and Ocean Power has been around for more than three decades. True, shares fetch nowhere near the $61.80 they did just three years ago. That said, small companies often crest or crash depending on any big projects in the pipeline. In the case of OPTT stock, a fabulous wave of ocean green may well be on the way.
OPTT Stock and Its Under-the-Radar Run-up
To a kiddo in search of a candy bar, there isn’t that much difference between 88 cents and $1.64. But investors can well seize the significance as this represents a near doubling, which is exactly what OPTT stock has done in 2020. Yet as recently as early Oct. 7, shares fetched roughly $3. That’s a lot of bobbing on the waves; what’s behind it?
I’m flattered if you listen to this Louis, but he don’t hold a Louie-Louie candle compared to InvestorPlace’s Louis Navellier. If there’s a growth stock opportunity with OPTT stock, he’s going to spot it — and as of Nov. 10, he reported that a connection to a powerful defense-sector client has built Ocean Power’s standing as “a go-to provider of novel ocean energy solutions.”
As you might have guessed, an outfit this tiny (its market capitalization is just $40 million) doesn’t have a boatload of analysts chasing after it but one does rate it a hold. That hardly stands as a mandate, though it could be taken as a sign that OPTT stock isn’t ready to flood the coffers just yet.
Truly, a Buoyed Reputation
But as Navellier and the InvestorPlace Research Staff point out, “If you’re looking for a company that’s making its mark when it comes to ocean-energy research and innovation, Ocean Power Technologies absolutely fits the bill.” To that end, they cite numerous positive developments that include participation with a U.S. Navy project to evaluate a tech-infused buoy mooring system.
My view aligns to this, with the asterisk that this may amount to a slower burn than many growth investors would like. The up-down nature of share prices this year illustrates that OPTT stock isn’t on an incline trajectory based on its overall business dealings. One also needs to factor in that the Biden administration in 2021 might not be as friendly to funding military research projects.
Already, some experts predict decreased military spending and budget cuts. That established, OPTT stock can’t lose out on agreements that the Navy and government contractors have already signed. Meanwhile, what happens under a new commander in chief will depend much on which party controls the U.S. Senate, which we won’t know until January.
Ocean Power Has the Current
Here are the facts, as we know them: From 10,000 feet up, any penny stock that fluctuates will by definition fluctuate greatly. A share price change of just 17 cents would send OPTT stock soaring or sinking by 10%. Zooming closer in, we can see that this company has good relationships with key federal dealmakers.
Defense spending as a whole may drop, but ocean surveillance and ocean energy aren’t exactly markets overrun with competition. In fact, they literally represent “blue oceans”: the economic term that connotes a sector where a company has the waters all to itself. Think of the first smartphones and Apple (NASDAQ:AAPL); the iPhone had no direct rivals for a long time.
Yeah, so I’m liking the name Blue Ocean Power Technologies. On the one hand, I wouldn’t bet on this company to suddenly slingshot 500% and pay for a new yacht. But make us enough profit to fund a nice little sea cruise? Looking out on that boat-floatin’ horizon, chances are we’ll see crews.
On the date of publication, Lou Carlozo did not have (either directly or indirectly) any positions in the securities mentioned in this article.