U.S. Geothermal (UGTH.OB)
Dear Bottarelli Research Member,
We’ve had some really nice hits over the last few weeks, especially for those of you who bought Big Cat Energy Corporation (BCTE.OB) and Yellowcake Mining (YCKM.OB) on the dips.
When you see a stock recover so strongly like this, you should certainly have a big smile on your face. You’re now in great position for a 50% to 100% return on both BCTE and YCKM by year’s end, so when you hit these numbers remember to take some of your seed money off the table and let your remaining position ride. In fact, that’s what I recommend right now with JA Solar Holdings (JASO – NASDAQ).
We entered JASO on June 11th for $23.54 and the stock has since traded as high as $30.89. That’s good for a 31.22% return, so please don’t hesitate to take some of these profits off the table. I’ll continue to follow this position, of course, but it never hurts to lock in gains like this. I would consider selling half of your position next week to lock in your short term profits – and then let the remaining half of your position ride.
The same could be said for our “Wish I” pick China Unicom (CHU – NYSE). We entered this position on February 23rd for $13.17 and this week it just hit a new 52-week high at $17.20. With telecommunications stocks once again getting hot (especially telecommunications stocks in China), CHU looks poised to continue its upside march. If you’d like to lock in your gains, don’t hesitate to sell half of your position to lock in the 30.60% gain and let the remainder of your position ride.
I also wanted to once again reiterate my bullish position on our Canadian Energy Trusts (the “cash cows”). Continue to maintain your positions in PVX, AAV, and CNE, as I feel they’ll hand you the easiest money you’ve ever made. Watch them climb and the dollars will keep flowing right into your pocket. Here’s a look at how Advantage Energy Income Fund (AAV – NYSE) is doing:
As I watch these small-cap picks move higher, I must tell you that this is exactly how our inner circle will achieve great success. As I mentioned to Bryan earlier this week, Bottarelli Research Small Cap has become something more powerful and meaningful than even I imagined, and I wanted to take a moment to thank everyone of you for being part of our elite membership. My friend, the gains we’ve witnessed this week are just the beginning of a long and prosperous relationship, so stay tuned! I have some extremely interesting companies headed your way in upcoming weeks, but for now let’s dive right into this week’s newest small-cap gem.
Today’s small-cap recommendation fits right into our country’s quest for green energy, and the upside catalyst is that this company is set to begin production later this year. All of my “buy” triggers are in place, and I’ve just been waiting for a pullback to jump in. The pullback I wanted to see just happened, which means now is the time to strike.
The company is involved in geothermal energy, and they’re moving like a lightning bolt towards being online this November. What really caught my eye was that they’re already putting in transmission lines to serve the Pacific Northwest. Plus, they’ve collaborated with Ormat Technologies (ORA – NYSE), which is a company that has handed me some rather handsome returns over the years, so I’m very familiar with their operations.
This small company now has the financial backing to make things happen very quickly. In addition, they’ve just completed a major funding initiative from private investors – and best of all, the current stock price means that you can enter this company for nearly the same price as the private money investors. This is a huge plus for individual investors like me and you, because we’re paying the same price that the private investors paid!
As I write you today, this company is geared up to produce in Raft River, Idaho, and they also have projects lined up in Oregon. I think we stand a good chance of seeing returns in excess of 50% to 100% this year, and we’d be foolish not to participate in those profits. The company is called U.S. Geothermal (UGTH.OB) and let’s use the recent pullback to establish a position under $2.45 per share. That’s $0.25 above what the private money got in for, offering you a fantastic entry price at current levels.
Sincerely,
A Recent MIT Report Estimated that there is Enough Geothermal Energy in the United States to Supply All the World’s Current Energy Needs for 30,000 Years
Not a Single Geothermal Field has been Exhausted to Date, and this $2.25 Stock is the Premier Geothermal Play in the Country
Before getting into the specific investment opportunity offered to us by U.S. Geothermal (UGTH.OB), let’s take a moment to bullet-point the potential and benefits of geothermal energy. By definition, geothermal power is the use of geothermal heat to generate electricity. Geothermal comes from the Greek words geo (meaning earth) and therme (meaning heat).
High temperatures contained in the earth’s interior are a result of heat trapped during the formation of the planet. These high temperatures also come from the decay of naturally occurring radioactive elements. And when I say “high temperatures” I’m talking about temperatures that can reach 4,200° C.
Now, in certain locations, the combination of circulating groundwater and molten magma in the earth’s crust forces the groundwater to rapidly heat up – blasting it to the earth’s surface in the form of steam or hot water (hot springs or geysers). It’s this heat energy at the earth’s surface that can be utilized as a source of geothermal energy. The image below illustrates how the process works.
Geothermal energy is a renewable source of electricity that’s clean, environmentally-friendly, and sustainable. In fact, as you read this, geothermal energy is already generating 2,000 megawatts (MW) of installed capacity in the Western United States – and this output is forecasted to grow significantly in coming years. After all, since a geothermal power plant does not burn fuel, it can run 24 hours a day with no emissions. With benefits like that, it’ no wonder the geothermal energy market is rapidly growing into a $1.5 billion per year industry!
Since I don’t think I need to explain the worldwide ramifications of increasing oil prices and thinning reserves, the benefits and popularity of renewable energy are quite clear. That’s why the potential of geothermal energy extends far outside the United States.
Right now, for example, geothermal power is generated in over 20 countries around the world including Iceland, United States, Italy, France, New Zealand, Mexico, Nicaragua, Costa Rica, Russia, Philippines, Indonesia, People’s Republic of China and Japan. Canada has 30,000 earth-heaters that provide heat to both residential and commercial buildings – and in 2006 Iceland produced over 50% of its electricity from geothermal sources! But that’s only the tip of the iceberg…
As modern scientific and engineering technology continues to evolve, geothermal systems make sense because they could be sustained commercially for decades. For example, geothermal sites like the Geysers in California or the Wairakei in New Zealand have produced electric power continuously for 40 years. And the Larderello field in Italy has been productive since 1904!
In fact, not a single geothermal field has been exhausted to date.
That’s an amazing display of longevity and clean energy-generating potential. But if you think that’s impressive, consider this:
A 2006 report by the Massachusetts Institute of Technology (MIT) studied the potential of Enhanced Geothermal Systems (EGS), and it concluded that geothermal energy would be able to generate 100 gigawatts of electricity by 2050 in the United States alone. The MIT report also concluded that the world’s total EGS resources are over 13,000 ZJ. The unit ZJ is a zettajoule, which represents one joule of energy times 10 to the 21st power. And a joule is a mechanical equivalent of heat equal to the number of units of work in which that unit of heat can perform. For all you non-MIT math geniuses out there, here’s the translation…
TRANSLATION: Using only Enhanced Geothermal Systems that reach at least 10 km below the earth’s surface into hard rock, MIT estimates that there is enough geothermal energy in the United States to supply all of the world’s current needs for 30,000 years. Yes, you read that correctly. The amount of geothermal energy in the U.S. alone is enough to provide all of the world’s energy needs for several millennia.
I’m not going to lie. When I learned this statistic, I was shocked.
What’s more, the key characteristic of an Enhanced Geothermal System is that two holes are bored into the ground. Water is pumped down one hole and steam rises up the other hole – and here’s the interesting part: This rising steam should be able to feed right into existing coal-, oil- or nuclear-fired generating plants. Just think what that means for today’s coal, oil and nuclear plants.
The geothermal energy that’s harnessed would be sustainable, since the hot water used in the geothermal process can be re injected into the ground to produce more steam.
It would also allow geothermal energy to be sold to outside sources, such as neighboring countries or private businesses that require energy.
And it also offers a high degree of scalability, since large geothermal plants can power entire cities and small geothermal plants can power more rural areas.
Make no mistake, the benefits of geothermal energy are tremendous and the technology is now finally starting to make sense from an operational, environmental, and financial standpoint. And this leads us directly into today’s new small-cap gem, U.S. Geothermal (UGTH.OB).
Founded in 2002 and based in Boise Idaho, U.S. Geothermal operates two geothermal projects. They own 100% interest in their first project called Raft River, which encompasses 660 acres of private property and includes geothermal production and injection wells, monitoring wells, a heavy equipment building, a warehouse, and a 300,000 gallon water tank. The photos below (which were just taken this past month) show the progress of this project.
Their second project is called the Neal Hot Springs project. It’s located 90 miles northwest of Boise in eastern Oregon and consists of 9.6 square miles of geothermal energy and surface rights (which they lease). A photo of this project is shown below as well.
The investing thesis is simple. U.S. Geothermal believes that the Raft River and the Neal Hot Springs projects are ideally located to make an important geothermal power contribution to the power needs of the Pacific Northwest. Now, that may sound to you like a tiny market, but the Western United States (where UGTH’s geothermal reservoirs are located) have had the greatest increase in population in the U.S. over the last decade. So the potential market is quite large – and growing larger by the day.
Making the investment story even better, the Bonneville Power Authority (BPA) ranked UGTH’s Raft River location as the #1 geothermal location in all of the Northwest! This means huge potential for early shareholders.
And aside from the growing global popularity of geothermal energy and UGTH owning the #1 geothermal location in all of the Northwest, you also have two more upside catalysts working in your favor.
First, it’s a fact that Chevron Corporation (CVX – NYSE) is the world’s largest producer of geothermal energy – and Chevron Minerals drilled at UGTH’s the site in the late 1970s and made a discovery of a commercial geothermal resource at a depth of 2,820 feet. This drill hole encountered high temperatures within the geothermal zone, which indicates the potential for prolific energy production. If UGTH can successfully capitalize on this, its share price will get a very strong upside boost. In fact, I would not be surprised if Chevron considers a buyout or acquisition if UGTH’s initial results come in positive.
Also don’t lose sight of the fact that the United States is the country with the greatest geothermal energy production, which means UGTH is operating in a niche market within a rapidly growing segment. As geothermal technology continues to evolve, investing in UGTH today puts you at the right place, for the right price, at exactly the right time.
What’s more, there are only two publicly-traded geothermal corporations that exist today. Both of them are listed on the Toronto Stock Exchange and neither play is as well-positioned as UGTH. For example, one company has drilled only one test hole and is in the very early stages of development. The other company has an advanced project with numerous test holes, but they’re operating in a mountainous area 70 miles from any major power grids. Access is very difficult and the cost for interconnecting power lines will be substantial.
On the flipside, U.S. Geothermal already has an established reservoir at Raft River with production and injection wells in place. Plus, their power transmission lines are already linked to the Idaho Power and BPA electrical grid, making UGTH the premier geothermal play in the country — if not the world. When other investors realize this, you could see a great deal of U.S. investment dollars all flowing into this one single $2.25 stock. I feel this incredible supply/demand imbalance alone could push shares up at least 100% in 2007, with the potential for a lot more.
AND REMEMBER: Mark noted that UGTH plans on being online this November, which means you could experience renewed investor interest (and increasing share prices) as we head into Q3 and Q4 of 2007. Let’s get positioned now – ahead of the crowd – and ride the upside momentum leading up to the November trigger date. For only $2.25 per share, the risk/reward scenario is well in your favor, so let’s add shares of U.S. Geothermal to our small-cap portfolio now!
PLAY: Buy shares of U.S. Geothermal (UGTH.OB) at or under $2.45, good for the week.
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
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