James: I haven't checked your profile to find out what University you go to, but it must be a good one - you know how to read and think.
Yes, I am a value player, to the extent that the term has any meaning for development stage companies which don't have the low P/E's, high book value and other ratios that most value players hang their hats on. I look at ERC and Ballard, and I see a bizarre disparity in value. Both companies are working in the same promising field. Both companies are aiming at markets that plausibly might generate sales in the billions some time next century. Both companies have alliances with, and are part owned, by Daimler Benz. Both companies have technological, engineering, and economic hurdles that still must be overcome. These elements are what makes them similar and comparable.
But where there are differences between them, ERC comes out ahead more often than not.
1. The market for stationary power, ERC's target, will be huge if ERC can sell its product for a capital cost per kilowatt of $2000 or less. Reaching that goal is a much easier job than the figure of a few hundred dollars per kW that Ballard has stated it must achieve for a fc car engine to be competitive with an internal combustion one.
2. Accordingly, ERC expects to have a commercial product for sale within three years. Although not guaranteed, this expectation is reasonable, given the money ERC has invested thus far and has lined up to complete the project. Taking BD at its word, commercial introduction of fc cars is not scheduled for eight years. In bull markets investors are willing to see over long and deep valleys; in bear markets, they don't.
3. Ballard is betting the farm on fc vehicles. It has no other technology, and its PEM cells are ill suited for stationary power. ERC, independent of its work on fuel cells, also has developed an extremely promising rechargeable battery technology. Corning Glass is a prime licensee and is spending substantial sums to turn it into a major product line. DB, Audi, Sanyo, and others are trying it out for electric vehicle applications. This technology addresses markets worth billions, so even if ERC's fuel cell technology doesn't pan out commercially, the company still has impressive earnings potential.
4. Despite these points in its favor, ERC's market cap is not even US $50 million. Ballard's is around US $700 million. Most development stage battery companies have market caps of $75 to $150 million, despite having technologies that address a much smaller potential market than does ERC's. These valuations, IMO, are completely wrong.
ERC's phone number is (203) 792-1460. It has a website at ercc.com
For those who want to bash ERC, the proper place is probably over at the near moribund ERC thread. But I look forward to criticism anywhere. If I am going to make a mistake in my investments, I'd rather find out sooner than later. And who better to warn me, than people who, through their interest in Ballard, are knowledgeable about fuel cells?
I know that some here would prefer this thread be a cheerleading squad for Ballard, but I would think you could cheer even more enthusiastically if you are able to consider, and comfortably dismiss, any negatives that I or others point out. |
