I thought, given the news today of $600K worth of orders over the past few weeks from Wheeltime for QTWW's light weight natural gas storage systems, that I should offer my current perspective on the company as well as the overall CNG vehicle market.. Wheeltime shows that it has 200 current locations and apparently a pretty good record of customer satisfaction.
finance.yahoo.com
wheeltime.com
When I started this QTWW thread, even then I believed that the company's CNG technology was going to be the game changer. This was when the previous management was fooling around with the Fisker Karma, Wind Turbines, and Solar, all of which diverted it from doing what it does best.. supporting the OEMs car companies with providing turn-key fuel systems for their vehicles. With the departure of the prior management team, and the appointment of the current CEO and restructuring towards meeting the needs of CNG vehicle manufacturing and conversions, we've seen the hidden value of this company become unlocked.
We're currently seeing nearly 100% growth and the company continues to win substantial contracts, while working to off-load it's legacy subsidiaries so that they can focus on CNG. It's a move that I've applauded, and it's rewarded me substantially as an investor.
Quantum's stock was taken to the woodshed a few months back on the news that Agility fuel systems was partnering in a JV with Hexagon to produce it's CNG tanks. And the "market" seemed to believe this would cripple QTWW's revenue stream as Agility is their biggest customer, to date.
But then we find out that Agility would continue to buy Quantum's tanks through the end of 2014 and maybe even beyond, as it takes TIME to build a whole new CNG tank manufacturing plant for their JV. They didn't even have a location selected at the time of that announcement... So they are STILL dependent upon Quantum's tank systems for awhile.
HOWEVER, this announcement effectively nullified the non-compete agreement between Agility and Quantum, so now Quantum could directly compete in Agility's market. And they made some progress by obtaining purchase orders from Dillion Transport, which was also a Agility customer.
So not only is Quantum still selling to Agility, it's also directly taking business from Agility..
And then there is the long-term contract with Ryder, which is taking a lead in converting many of it's rental trucks to CNG, which will save it's customers a lot of money in fuel costs. That's pretty significant in my opinion.
Then we see a contract with a un-disclosed waste truck company, which uses Peterbuilt trucks.. Agility is ALSO prevalent in this market, and Quantum obtained this contract instead of Agility. After all, why go to Agility, which is acting as a middle-man, when you can go directly to Quantum?
Then we see Quantum receiving it's first contract directly with Kenworth.. Holy Crap!!
And I haven't even gotten to Westport-Cummins (WPRT), which is the leading manufacturer of CNG engines for the heavy truck markets. Not to mention that "Guru" investor, Kevin Douglas is the largest investor in WPRT, as well as being the primary financial backer of QTWW... Coincidence?
Oh.. and did I forget the 2015 Chevrolet Impala bi-fuel, about which we're due to soon be hearing some news? The fact that this vehicle can run on both gasoline and CNG could become a major selling point in the event of a disruption in the oil markets.
And in previous CC's we've been told that Ford is a customer as well..
But here's another reason I'm really big on this company.. and I think it will do well, EVEN IF we see a major downturn in the overall stock market (which I'm expecting at anytime, and I'm short the RUT)..
The most likely scenario we see for a market decline is the potential for a serious energy disruption and shock to the global economy, which is already precarious. What is going on in Iraq with ISIS is VERY serious and has tremendous potential to cause serious disruption throughout the oil producing regions. And then we have the Israeli-Palestinian conflict which always has a large measure of unpredictability.. But it's also likely true that many Arab countries would love nothing more than to see Hamas scattered to the winds and a new gov't formed in Gaza (Fatah).. (enough said on that)..
But we've got a ton of oil in the US, right? Just like we do with NatGas.. all due to Fracking etc, etc.. right?
That's very true. And while our NatGas reserves are land-locked and nearly impossible to export in any significant quantities, it's a different story with oil. And in any global oil disruption the US may very find itself having to share some of it's oil resources to meet global demand and keep oil prices under control. This may take the shape of SPR releases, as well as direct exports of WTI crude contracts.
Which means we may have to make up for exposing our oil resources to global market prices, while NG will remain primarily a domestic energy resource. Transportation companies, who are savvy, may be factoring this in right now.. or should be.. and it should be causing them to act more aggressively on any plan to convert their fleet to CNG.. And for those who never considered it, I suspect many of them are reconsidering.
But what if we go into another recession ala 2008... Economic activity slumps even more.. It's possible that oil prices will slump, but so will NatGas. And IMO, transportation companies will be even more desperate to decrease their operational fuel costs in any way they can.
But I'm betting on a Energy disruption and potential widening of regional warfare in the Mid-East, Ukraine, and possibly SE Asia and the S. China Sea.
Now.... there is the unknown factor of ZHRO. Very little is known about them, but they have paid Quantum several million dollars for R&D on their Diesel to CNG injection system. IF, and this is still a big IF.. they actually have perfected this and Quantum remains involved, it suggests that every diesel out there on the road can be converted to CNG at a relatively low cost. That could unleash a HUGE DEMAND for CNG fuel systems and tanks for existing vehicles..
But I say again.. ZHRO has a lot to prove, based upon it's claims. And I've just considered them to be a "paying customer" for Quantum. But I don't believe Quantum would be involved if it were just BS..
So there are the primary reasons that I continue to hold QTWW for now, despite being short the over all market.
Even in a market downturn, those companies which can demonstrate continued high double to triple digit growth will soon recover..
Btw, I do post on Stoktwits (and very rarely now on Yahoo, as Scrutinizer).. So I will be linking this post there.
Hawk |
