Top Stock Pick for 2008 – Beacon Power

By: ispeculatornew
Date posted: 08.25.2008 (9:59 pm) | Write a Comment  (4 Comments)

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BCON – Beacon Power Corporation (NASDAQ) – (Closing Price – $1.30)

Beacon Power is my top stock pick for 2008. Beacon Power is one the verge of commercializing its “flywheel” technology and the company has a ton of positive catalysts going forward. I think this stock could very easily be a multibagger.

Beacon Power’s flywheel energy storage system helps support stable and reliable electricity grid operation. The flywheel system stores excess electrical energy from the grid in the form of kinetic energy via a mechanical battery spinning at very high speeds (>20,000 rpm). When the grid is short on electrical power the motor driving the flywheel acts as a generator and the kinetic energy is converted back to electrical power. (Look at these two short videos from the Beacon website for a better understanding of frequency regulation: video 1, video 2).

Beacon Power’s flywheel based energy systems have a couple of big advantages over lead-acid batteries which are also used for frequency regulation. First, flywheels are sustainable “green” solutions that do not use hazardous materials for production, nor create them during operation. Second, unlike batteries, flywheels operate reliably for many years with little or no maintenance.

The need for better grid operation is going to become very important because our energy needs are going to continue to grow. Also, the intermittent nature of electricity produced by the wind is going to greatly increase the need for frequency regulation.

Beacon Power is one the cusp of having a viable commercial product for this market and I think now is a great time to get in on this stock. Beacon’s flywheel technology has already passed tests in a couple of markets and the company recently announced its participation in an energy storage pilot program in ISO New England.

Beacon expects to have frequency regulation facilities in two locations before the end of 2008 with a total of five megawatts of capacity. Beacon Power has also received a land use permit in Stephentown, New York which it plans as a possible location for the company’s first 20 megawatt frequency regulation plant (pending approval of an active interconnection request to NYISO).

Another major catalyst for Beacon Power, in addition to bringing on line new frequency regulation facilities, is that the company may get a loan guarantee from the Department of Energy for up to 80% of the project debt needed to finance the construction of its first 20-megawatt flywheel frequency regulation plant. Beacon Power has already been named as a finalist for this loan guarantee.

To get an idea of how quickly this stock price of Beacon can jump take a look at the five year chart. Back in 2005 the stock price of Beacon jumped from around a dollar to over four dollars in just a month. The cause of this was an article written by TheStreet.com.

Also, just a few months ago in May the stock price of Beacon jumped from just over a dollar to over two dollars. The cause of this most recent spike was the announcement of the land use approval for the Stephentown site and an analyst upgrade. The analyst gave a price target of $3 dollars which I think will be conservative if all the previously mentioned catalysts come to fruition.

I think the recent price action in May shows that many investors have an eye on Beacon and they don’t want to miss the boat. The price spiked to around $1.70 just on the Stephentown permit news. The stock price of Beacon has sold off since then but I think now would be a good time to buy some shares while there is a lack of news. I think it would be foolish to wait for the news and then chase the stock price up. I am going to give a buy recommendation at today’s closing price.

Disclaimer: I currently own shares of Beacon Power.

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4 Comments

  1. Comment by Robert Rudine — August 25, 2008 @ 10:17 pm

    You left out the frictionless magnetic bearings that levitate these carbon fiber flywheels that allow the Beacon system to spin in a vacuum with little loss of potential energy. Also you should look into MVIS as a potential multi-bagger on the cusp of great things!

  2. Comment by Bullish Bankers — August 25, 2008 @ 10:57 pm

    Nice pick. I wanted to get into a penny stock, and I love infrastructure plays. I will be checking this one out and most likely making a buy.

  3. Comment by Pat Winston — September 17, 2008 @ 4:53 am

    I have been a shareholder in Beacon Power for several years and have added shares from time to time. After many years of research and investment, fruitation is nearby as revenues have been predicted before the end of the year. We know that the system works and with today’s “News Release” showing a series of flywheels are ready for actual grid testing shows the investment community that the many years of hard work by Beacon employees and management soon will produce the first of what we hope are many frequency regulation service plants for the electrical grids located throughout the US. This “GREEN” type of technology can benifit greatly by future “carbon credits” as this service of providing backup or continued electrical capacity for the electrial grids has been performed historically by fossil fuel burning backup generators. It appears that once it is up and running and Beacon moves from it’s first location to a second and than a third and so forth that Beacon Power will become a key player in this industry which also includes wind power and other “GREEN” forms of energy production that will require the services that beacon might be able to provide. This is why many people are excited after so many years to see the company reaching these milestones. The next 12 months will be very exciting.

  4. Comment by admin — September 17, 2008 @ 9:41 am

    I agree. I intend to continue to add to my position in BCON over the next several months.

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