Wind power stocks have demonstrated extreme volatility over the past year and today’s blog subject, Nacel Energy, Corporation (NCEN), is no different.  From an opening 2009 price of around $2.00, the stock dropped below $1.00 on two occasions only to rally back to around $1.50.   August 2009  was the last high (around $1.50).  The stock has declined steadily since that date to now trade around 60 cents.   NCEN has not stopped churning out press releases to keep the public interested and informed, but it hasn’t seemed to work. Even November’s news of a successful capital raise didn’t do anything to raise the stock.

Let’s take the nickel tour of NCEN.  According to the company, they are one of the first U.S. public companies exclusively developing utility class wind power generation facilities. NCEN’s domestic market niche is the development of 10-30 MW projects in Class 4 or higher wind corridors with favorable existing transmission infrastructure.

They have 5 projects that that are currently in some stages of completion (i.e. off the drawing board) - 4 in TX and 1 in AZ.  The Company believes that they could have several of these sites “up and running” by the 3rd Q of 2010 IF things go according to plan.

The capital raise of $750,000 (press release here) was at good terms for both the investor and current shareholders.  It sets a near term value for the shares of 90 cents (with discounts, the floor price could be 75 cents).  The terms also includes warrants that if exercised over the life of the agreement could raise another $3 to $4 Million for the company.  The market didn’t seem to care.

The chart shows a slow decline that is remarkable for how unremarkable that it has been. The price trend for the last 6 months has been down as indicated in the enclosed chart.

I NEVER attempt to call a bottom on a stock.  I cannot say for sure how much farther NECN could fall, but I am going to watch it.   Even though the stochastics are deeply oversold and would appear to indicate that a bounce is possible, the trend is definitely down.  The old saying that “trend trumps oscillators” certainly applies here.

Having said that, I actually LIKE the company.  I think that they are well positioned to succeed.  The combination of wind power dynamics , a successful capital raise, an experienced management team and projects in various stages of completion makes me bullish on NCEN.  By “windpower dynamics” I mean that there is a perfect storm of incentives and reasons for windpower to succeed.  With government subsidies in place, alternative energy quotas being imposed on utility companies, specialized companies devoted to financing wind turbines, the chances for windpower companies like NCEN to succeed increase exponentially.

I encourage my readers to tour their website which has lots of good information in it.

This is definitely a radar stock for me.

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