Brian: You are right - Ballard has charisma and a decent chart, ERC doesn't. All it has is prospects that are just as good, and probably much better, and a price that is now about one fourteenth as much on a market cap basis.
One thing I learned about the market in my 30 years of investing (40 years if you count my first stock pick as a kid) is that the way to make money is to buy good companies when they don't have any charisma, and sell them when that is mostly all that they have.
Another way of looking at it is this - if at some point ERC picks up 50% of Ballard's charisma and is valued at one half of Ballard (perhaps this will happen, if all goes well, in three years when ERC should be in business commercially while Ballard is still five years away) then ERC will be selling at a market cap of $285,000,000 which works out to about $70 per share, a good return compared to its present $10.
And that shouldn't be its peak, because if the technology succeeds commercially, you are looking at an ultimate market cap in the billions.
In the long run I think both companies' technology will probably succeed. Maybe 20 years from now people will be shocked that it was once necessary for humans to burn fuel in order to create power, when fuel cells can extract more power without most of the pollution.
The investment issue is how much do you pay today for what probablility, of what payoff, when? Ballard has a huge potential payoff, but 100 fold cost reduction necessary makes the probability of success fairly risky. And the payoff is at least eight years away.
ERC also has a huge potential payoff, but is closer to achieving the cost goals and to the payoff itself. I could justify ERC having a higher market cap than Ballard now for those reasons. But it lacks charisma, so it doesn't. But in the long run it is ERC's of the world that make the better investments. |
