How Good Is the Surf in Ocean Power Technologies Stock?

Are you looking to ride a “blue wave” into a greener investment? Some are seeing dollar signs in Ocean Power Technologies (NASDAQ:OPTT). That said, let’s take a look off and on the price chart of OPTT stock before making a risk-adjusted determination regarding how seaworthy a purchase today might really be.

a light buoy in the middle of the ocean
Source: Shutterstock

It’s human nature to dream big. And right now a continued lead in the U.S. Presidential election has many investors bidding up alternative or green energy stocks like there’s no tomorrow. Or more aptly, one that includes a re-commitment to the planet and technologies to make it happen.

Overall, Wall Street’s buying campaign of alternative energy companies the past few months has allowed more than a few smaller and mid-capitalization stocks to surge in price and move quickly up the valuation ladder. Some shares have even morphed into full-blown large-cap stocks, as well as familiar trading vehicles and sometimes even better longer-term investments.

Wall Street and Green Stocks

Companies like SolarEdge Technologies (NASDAQ:SEDG). Enphase Energy (NASDAQ:ENPH). ON Semiconductor (NASDAQ:ON). Plug Power (NASDAQ:PLUG). Ballard Power (NASDAQ:BLDP). Nio (NYSE:NIO). Those are some of today’s rising stars. Investor appetite for alternative energy stocks has also led to a resurgent First Solar (NASDAQ:FSLR). And of course, already dominant and well-established large caps in this diverse arena like Tesla (NASDAQ:TSLA), Nextera Energy (NYSE:NEE) and Brookfield Renewable Partners (NYSE:BEP) have grown even larger.

So, could OPTT stock be a part of this exciting blue wave? To some degree it certainly is. Ocean Power Technologies manufactures the PowerBuoy and Subsea Battery. The products work together as a wave-powered buoy battery system for private offshore projects within the energy industry. They can also be used in critical sea-based operations by government agencies for drug trafficking and other national security issues. Great, right?

The technology Ocean Power brings to the table certainly sounds the part or at least resides on the periphery of the market’s rising tide for green stocks. And as InvestorPlace’s William White recently wrote, there’s more to what might look attractive when considering a purchase of OPTT stock. In fact, there’s a sizable list of benefits supporting the company’s products as one additional way to help reduce the planet’s carbon footprint.

Alternatively, and in an effort to be non-partisan, OPTT stock also checks many of the boxes which emphasize a stock purchase that is still highly-speculative. Micro-cap? Check. Late to 2020’s green energy party on Wall Street? Check. Recent reverse split? Check. Recent significant insider sale? Check. Red ink. Check. Heavy reliance on paid press releases for promotion? Check. Negative operating cash flow relative to cash? Check.

I think you get the picture.

OPTT Stock Daily Price Chart

Ocean Power Technologies (OPTT) reeling in bulls with promising triangle pattern
Click to Enlarge
Source: Charts by TradingView

I love the promise of buying a stock that could be a ground floor opportunity. But bottom fishing in OPTT is highly-unlikely to produce the next Apple (NASDAQ:AAPL) or Netflix (NASDAQ:NFLX). Sorry.

And in case a common lure such as, “did you buy NFLX stock at $2?” strikes your fancy as a reason to make a purchase, remember or know this: Nobody did.

AAPL stock, NFLX stock and virtually any stock that’s a revered investment were never available for purchase in the low single digits, let alone as micro-caps. Sure, there’s Advanced Micro Devices (NASDAQ:AMD) less than a handful of years back as one stock to counter this argument. There’s always going to be an outlier. Almost universally, though, if seeing is believing when looking at current market giants from years ago, you’re probably ignoring regular stock splits and a stock price, way back when, which was always significantly higher.

Technically speaking, right now there’s no denying a daily price chart of OPTT stock put shares on the radar of some traders. It’s happened. However, I also can’t say I’m not drawn to the stock’s tightknit symmetrical triangle pattern and one associated with continuation moves. I am. But rather than closing with an additional disclaimer this sort of investment is only appropriate for the highly-risk tolerant with sufficient risk capital that can be siphoned out of their accounts, the recommendation is for investors to watch safely from the sidelines and thank me later.

On the date of publication, Chris Tyler holds, directly or indirectly, positions in Plug Power, Nio and Advanced Micro Devices, but no other securities mentioned in this article.

The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.

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