The Market is Starting to Notice Tecogen as it Signs Largest Contract To-Date
The market has been shaky over the past few months, but Tecogen Inc (US: TGEN – $3.80 & GER: 2T1 – €3.18) has been immune to this volatility. It sits just below its 52 week high, up over 20% since the start of October when the market started to nosedive. This is for good reason as the Company continues to develop its clean energy businesses across multiple growing industries, resulting in increased backlog. The latest positive development is an $8.4 million contract in New York City for Turnkey Engineering, Procurement, and Construction Services to install a one MW trigeneration plant at a data center.
This agreement is the largest contract the Company has procured to-date and it calls for Tecogen to install, commission and provide operations and maintenance services for multiple InVerde Combined Heat and Power (CHP) systems and an absorption chilling plant to be installed at the data center. The system will also provide backup power to the complex in the event of a grid outage.
Record Setting Contract in Data Center Industry Could be Just the Beginning
We have previously spoken about Tecogen’s business developments in the cannabis industry, where efficient power and climate control are imperative for maximizing crop yields. The data center business is yet another burgeoning industry experiencing heavy growth for which temperature control is vital to operations. This contract is important not only as the largest one to-date but it also gives Tecogen a chance to showcase its technology to this high-growth industry. CEO Benjamin Locke even referred to this contract as a “showcase project”. If Tecogen’s technology is proven successful in saving on utility costs for this one data center, this could lead to more contracts globally.
Another note to take away from this news release is the tremendous interest the Company is seeing for its products in dense, space-limited areas like Manhattan. Due to population booms in cities, a premium on space and demand for clean and reliable power will be intimately linked. Tecogen has built on its reputation of good quality, efficient clean energy systems for years, and now it is finally paying off as the demand for these products has never been stronger, but will only grow with time.
Former CEO Rejoins Board of Directors
Another recent development is the naming of former co-CEO John N. Hatsopoulos as an additional member of the Company’s Board of Directors at the start of the month. He retired from his position as co-CEO in early 2018 but has remained as an advisor to the Board since. While the move is temporary only to the AGM, it is interesting to note that he will be serving as Lead Director for the purpose of assisting in identifying and evaluating financing alternatives for the Company. With growing backlog, it is necessary for Tecogen to have the resources to fulfill those contracts. It is good to see that Mr. Hatsopoulos feels the same way and will be leveraging his experience to making sure that process goes optimally for the Company.
Conclusion: New Investors are in an Ideal Situation to Profit from this Under-the-Radar Gem
When we say that the market is starting to notice Tecogen, we mean it is JUST starting to notice. While its stock price is up nicely in the past few months, the Company still remains undervalued. Then again, this is actually good news for those looking to accumulate shares while it is under-the-radar. Investors who are new to the story are in an ideal situation. Although Tecogen has been in business for decades, it is now really gaining sales momentum with this record-setting contract in addition to the growing backlog that we have previously talked about. Tecogen’s technology appears to have been ahead of its time, but now the market is growing to appreciate the Company’s product offerings thanks to the rise in demand for data centers, cannabis and global increase in awareness of environmental issues while population density of cities continues to increase.
As demand for its shares increases, the thinly traded nature of the stock should lead to TGEN reaching our target price relatively easily. Every news release builds more buying pressure and puts the Company on stronger operational footing. Eventually Tecogen will release news that causes the stock to spike; whether that is a new large contract, or revenue growth and profits that are indicative of the Company’s recent agreements in an upcoming quarterly report. Smallcaps Recommendation: BUY.
|Smallcaps.us Advice: Buy||Price Target: $9.41||Latest Company Report (pdf)|
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