Tecogen Continues To Make Heavy Inroads Into The Northeast
We have written several articles about Tecogen Inc (US: TGEN – $2.31 & GER: 2T1 – €2.00) and its success in selling its clean, reliable and efficient energy products to a variety of building owners in New York City and the rest of the Northeastern United States. The Company has once again proven the versatility and demand for its products, this time for the education system. Tecogen sold ten cogeneration systems to a prominent energy services company in charge of providing power to school buildings. Three 75 kW Tecopower cogeneration systems will be deployed for three middle schools and seven 100 kW Inverde e+ systems will be deployed in five high schools in Long Island, New York. Earlier in the week, Tecogen also announced the sale of a 200 ton Tecochill unit to Central Connecticut State University (CCSU).
The efficiency and reliability of Tecogen’s systems have led to both of these contracts being signed as repeat customers. The CCSU unit replaced a Tecochill unit that had been running for over 23 years and includes a renewed maintenance contract. The contract for the Long Island school is a new sale, but the energy services company in charge of the deal is a repeat customer. Both of these agreements are eligible for incentives either from the utility or the State, demonstrating the potential for huge market appeal for Tecogen products. After all, building managers are always looking for rebates or tax breaks in order to lower operating costs.
Tecogen A Long-Standing CleanTech Business Whose Time Is Finally Now
These universities in Connecticut are known to be very progressive so it is not a surprise that they were at the forefront of efficient energy solutions back when oil was selling for less than $20 a barrel. Now that everyone else is catching on, Tecogen has two reliable, repeat, respected and challenging customers to show other prospective clients that it has the leading solutions to their energy needs. If Tecogen can supply solutions to university building managers in charge of containing thousands of people in climate-controlled comfort in a decentralized area, it can certainly supply solutions to an apartment, nursing home, or data center.
One might be surprised to hear that Tecogen actually has a customer in excess of two decades. After all, the Company is a microcap and at first instinct its temperature-controlled and backup energy solutions sounds like emerging technology. If this technology has been around for so long and is so great, why haven’t business owners implemented Tecogen units into their buildings years ago?
The reality is that Tecogen has been developing and refining its products for over three decades and is only now gaining traction as issues like skyrocketing power costs (especially in densely-packed areas) and global warming are in the forefront of people’s minds. This is exasperated by the fact that two emerging industries – cannabis cultivators and date centers – are two power-devouring beasts.
The Company’s push for decades while being mostly ignored by business until recently and ignored by the market until now plays extremely well into the hands of investors who know how to seize an opportunity when they see it.
Tecogen’s Stock Remains a Strong Buy Headed into 2020
After announcing the news of the sale to the Long Island schools, TGEN’s stock price popped but is still well off its highs from earlier this year. The weak stock price doesn’t make much sense to us. The Company has proven time and again that it is making significant steps towards being a dominant player for clean energy solutions for building managers in densely populated, lucrative and progressive New York City. This alone should be stirring significant excitement over the stock. Instead, it is being sold down, though on very light volume. This is an indication that existing shareholders know what they have and are willing to wait until TGEN gets the recognition it deserves.
TGEN is now trading at less than two times its trailing revenue. It’s as if the Company is trading in a slow growth and low margin industry, neither of which are the case. Investors who do a little research on our site and elsewhere are quite familiar with Tecogen’s growing backlog and numerous contract announcements throughout 2019.
Perhaps the catalyst to a significant increase to the stock price will be the demonstration of consistently positive EBITDA and net income, showing favorable earnings multiples that the market can no longer ignore. With each new contract being announced, we attain a higher level of confidence that the next six quarters between now and Q4 2020 will demonstrate profitable growth. We are maintaining our bullish price target and expect significant returns for shareholders who are patient enough to buy and hold TGEN through these next several quarters. Smallcaps Recommendation: BUY.
|Smallcaps.us Advice: Buy||Price Target: $9.41||Latest Company Report (pdf)|
|For important disclosures, please read our disclaimer.|