Thermal Energy International Inc. not providing sufficient evidence of a trend reversal

Dec 29th, 2014 – Comment

The six-month chart isn’t providing much in the way of patterns that indicate a move to the upside.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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TMG LOGO

Hi Lou,

Are you familiar with TMG? It has survived (barely) many severe challenges over the years but it seems to be finally heading for success.

I would appreciate your opinion.

Cheers,
Arnie

 

Hey Arnie,

Thanks for the assignment. Thermal Energy International Inc. (TMG TSXV) is in the business of offering energy efficiency products and services to industrial customers. Any scheme that can reduce energy consumption and payback the cost of the retrofits needed to achieve those savings over a short period of time is worth investigating.

In fiscal year 2014  TMG saw revenue jump to $13.2 million from $8.2 million in fiscal year 2013. Net income for fiscal year 2014 swung to a $634,000 gain from a $2.8 million loss in 2013. If that’s your definition of success great. But if you examine the price of the stock you might have to reconsider your evaluative process.

The shares ran from a 52-week low of  $0.045 in December of 2013 to a 52-week high of $0.14 in May of 2014 but that was as good as it got. Since hitting the high the stock has pulled back to its current price of $0.06. A few other things to consider include a market capitalization of $9.66 million and a thirty day average volume of 57,832 shares. From these few pieces of information it should be clear that TMG belongs in the speculative portion of your portfolio and only deserves to be a small piece of that category.

A review of the charts will inform my opinion of TMG.

 

 

TMG

The three-year chart tells the tale of a choppy trader with not many players lining up for a seat at the tables. If you consider the average volume over 30 days mentioned earlier the stock trades less than $3,500 worth of stock. To me thats an indication that investors following TMG are a devoted but small group. The MACD and the RSI both generated sell signals in May as the stock hit its 52-week high. Currently the momentum indicators are not pointing to a reversal of the downtrend.

 

 

 

 

 

 

TMG2

The six-month chart isn’t providing much in the way of patterns that indicate a move to the upside. There is an established downtrend plus a death cross that formed in November. The close-up of the MACD and the RSI are also not encouraging investors to buy.

TMG is a micro- cap stock with thin trading and few investors excited about buying shares. I would recommend looking for other stocks with more potential in the speculative portion of your portfolio. Clearly TMG has been a disappointment for some time.

Make it a profitable day and happy capitalism!

 

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