Today, I got the call to give my two cents on Ocean Power Technologies (NASDAQ:OPTT), the renewable energy company with the unforgettable PB3 Powerbuoy that provides customers with an uninterruptible power supply. I last wrote about OPTT stock in late January when it was trading around 83 cents.
Almost nine months later, it’s more than doubled in value. However, it’s been so long since I last wrote about Ocean Power; I had to revisit my article to remember how I felt about the company.
“I think it’s great that it’s pursuing renewable energy. But it’s been 35 years without anything to show for it, so I think it’s time it finds a buyer for its technology,” I wrote on January 31.
“Is the company worth more than 83 cents to a strategic buyer? I couldn’t tell you. What I do know is that if you’re making a bet that it is worth more, I recommend you don’t put OPTT stock in anything but a taxable account.”
The 35 years comment refers to the fact Ocean Power got its start in 1984. It did its U.S. initial public offering in April 2007, selling five million shares at $20 a pop.
It’s now trading at one-tenth of its IPO price. Talk about destroying shareholder value.
Yet, the interest in renewable energy of any kind has bumped up its share price by more than a buck since I last wrote about it.
I’m not a huge supporter of General Electric (NYSE:GE), but if Ocean Power’s product is all that and a bag of chips, I’m pretty sure GE’s renewable energy division would have already acquired the company or its technology.
Would I buy OPTT at $1.82? Hell no. Should you? I’ll leave that to some of my InvestorPlace colleagues to decide.
Put Your Money Where Your Mouth Is and Buy OPTT Stock
None other than my esteemed InvestorPlace colleague, Louis Navellier, is big on Ocean Power’s technology. His Portfolio Grader gives it a “B” rating and considers it a buy.
“The spirit of innovation is really what sets Ocean Power Technologies apart from the company’s competitors. The company just keeps on pushing the envelope when it comes to creating novel ocean energy solutions,” Navellier wrote on Oct. 20.
Navellier highlights two new products, separate from the PB3 PowerBuoy, that point to a bright future.
The first is the PowerBuoy Surface Surveillance Solution, which provides government agencies and other organizations with reliable offshore power. By connecting a communications mast, it becomes a real-time ocean surveillance solution.
The second product is the Subsea Battery, a lithium-iron phosphate battery system with 132 kilowatt-hours of power.
“The introduction of our Subsea Battery marks OPT’s second product launch this year,” Ocean Power CEO George Kirby said in August.
“The ongoing electrification of subsea assets requires reliable power that can scale to meet the needs of the offshore industry. The Subsea Battery joins the recently unveiled hybrid PowerBuoy® and our PB3 PowerBuoy® to form an impressive suite of OPT power and communications solutions for remote ocean applications.”
There’s no doubt this strengthens the company’s marketing efforts. Three products to sell is much better than just one.
But do the two products really move the needle? I really couldn’t say. Nonetheless, the product launches have Navellier thinking about a run to $5.
It hasn’t traded over $5 since early 2019.
Where’s General Electric In All of This?
As I said in the opening, if Ocean Power were the real deal, GE would be all over it. InvestorPlace’s Josh Enomoto even referred to the maker of wind turbines in a recent article.
The major argument in Enomoto’s piece was that scale is the key to Ocean Power’s technology really taking off. Designed for commercial use, the PB3 PowerBuoy failed to attract enough interest from the private sector, so it turned to government agencies to pay the bills.
[W]hat if international government agencies stopped playing around and started taking this industry seriously? It’s interesting to note that Ocean Power originally designed the PowerBuoy for commercial purposes,” Josh wrote on Oct. 22.
“However, that strategy didn’t pan out. It will likely never pan out until the likes of General Electric or other industry giants put their full weight into this market, thereby providing mainstream evangelization of the business concept.”
I’ll admit that sometimes, we investors tend to overthink a situation.
Navellier believes the innovation justifies a higher stock price. My other colleague believes OPTT is a speculative buy. I’m all tied up with the idea that OPTT can’t be an attractive situation if the likes of GE aren’t involved.
Who’s right? That’s what makes investing so interesting. Any of us could be, but we won’t know that until well down the road.
So, getting back to the headline.
If you are a risk-averse investor, I think it makes sense to consider GE, whose renewable energy segment generated $15.3 billion in revenue in 2019, along with a loss of $666 million, down from a profit of $292 million a year earlier.
In the last month, GE stock has delivered a 20% return. It could be the beginning of a real turnaround. As I said, I’m not a big fan of GE, but it’s a much smarter play at this point.
If you’re a speculative investor and can afford to lose it all, I don’t see an issue with Navellier’s recommendation. Buy away.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.