Now is the time to focus on one simple question.
What stocks do I want to own 5 years from now?
The question is more involved than it might sound. This recession will have structural impacts that go beyond this business cycle. Energy price volatility will increase because oil and gas companies are pulling back hard even when depletion rates on new wells are at their shortest. A overshoot on reduced supply is likely. We've transfered leverage from financial institutions to governments all over the world as debt soars. Consumers are executing the overdue pullback and may change fundamental habits. The list goes on.
Governments will make sure that conservation is here to stay. They have many tools to do that, but one is just to make sure that energy prices rise over time as the economy heals slowly. Legislation is another tool.
Enernoc is on target to be a profitable, 200 Million Dollar, marketshare and mindshare leader with a progressive attitude sometime in the next 18 to 24 months.
Forget the daily swings on price or even the overshoot expectations by a penny a share game, the real question is what is the chance they sustain momentum, and if they do how much are they worth long term.
From my vantage point, they are the odds on favorite and are distancing themselves from the competition. Pricing competition is probably the largest risk. They seem to be surviving hypergrowht operational risk well. Corporate Culture is great.
200 Million, 15% Net Profit and growing, Growing 30% a year, spinning off cash. As the economy stabilizes I would think that's a 20 to 30 multiple -- 600 Million to a Billion Market Cap. That seems to be the trajectory however I'm sure the path won't be a straight line.
