Recently, I had the privilege of test-driving a new
Tesla (Nasdaq: TSLA)
electric sports car.
Growing up in the gearhead culture of Pittsburgh, I wasn't
expecting to be impressed. My uncle's business sponsored a
drag-racing team, and I spent many Sunday afternoons watching
from the sidelines as an elementary school student. If you know
anything about drag racing, you know the vehicles are fast, loud
and extremely powerful.
It made every other car I had ever experienced
seem like relics of the past. A giant iPad-like screen
takes center stage with every needed metric and
information being displayed in a clear, faultless
This experience cemented in my mind the notion that if a car
wasn't loud, it couldn't be powerful. Combine this experience
with being a bit of a car nut myself, and there was no way that
Tesla founder Elon Musk's cars -- with their relatively tiny
engines and massive hype -- were going to impress me.
Man, was I wrong.
From the second I sat in the driver's seat, all my negative
thoughts went out the window. The experience was mind-blowing. It
was like sitting in the ideal environment, if a little sparse on
the comfort side. It made every other car I had ever experienced
seem like relics of the past. A giant iPad-like screen takes
center stage with every needed metric and information being
displayed in a clear, faultless fashion. Talk about the cool
Needless to say, the performance was pure perfection.
Acceleration, braking, cornering and just simple driving was
better than anything I'd experienced. This completely changed my
perception of what makes a car great.
Clearly, investors agree, sending Tesla shares on a parabolic
curve higher by nearly 600% this year alone.
My experience with the Tesla drove home one of the investment
theses in StreetAuthority's special report, "
The 11 Most Shocking Investment Predictions Of
" about the "death of the gasoline engine." It's no longer
science fiction. Technology that is superior in multiple ways to
gasoline engines -- cleaner, better and more efficient -- exists
now. The revolution has begun, and it's only a matter of time
until the gasoline automobile engine, as we know it, becomes a
thing of the past.
Tesla has rewarded investors handsomely, but despite the great
product, many investors believe the stock is currently
overvalued. Fortunately, Tesla's electric technology isn't the
only practical alternative to the gasoline engine.
Another top company in the alternative-to-gasoline space is
Fuel Systems Solutions (Nasdaq: FSYS)
Fuel Systems specializes in components and system controls
that manage the pressure of fuels such as propane and natural
gas. Launched in 1958, the New York-based company is far from a
startup. It boasts a $400 million plus market cap, a
price-to-sales ratio of 1.0 and a price-to-book ratio of
Nearly 30% of the more than 20 million outstanding shares are
held by insiders, with another more than 45% in institutional
coffers. Second-quarter earnings per share rose more than 18%, to
$0.13, from the same period last year, beating expectations.
Revenue also rose nearly 2%, to more than $111 million.
IMPCO is the subsidiary of Fuel Systems Solutions that focuses
on the automobile engine sector. It just obtained the first
Environmental Protection Agency (EPA) certification for a 2014
bi-fuel sedan with the Chevy Cruze. Its compressed natural gas
(CNG) system is the only EPA-approved bi-fuel system for 2014
Shares have been in a steady uptrend since April 22 but have
hit solid resistance at $21. There is a double-top formation in
the $21 area, but solid support is evident at the 50-day simple
moving average just above $19.
Risks to Consider:
Although a major change is underway in the automobile
alternative fuel business, it may take quite some time to fully
blossom. Companies in this sector may be volatile in the short
term, but patient long-term investors in carefully chosen
companies will profit from the shift. Always use stops and
position size properly when investing.
Action to Take -->
I like Fuel Systems on a breakout close above $21 with an
18-month target of $32. Initial stops should be set directly
below the 50-day simple moving average at $18.