It's fun to be right, particularly when it has to do with stock-picking. Sometimes though, being right can be a real pain in the @#$%. Case in point? U.S. Geothermal Inc. (NYSEMKT:HTM). It was only two days ago that yours truly deemed HTM was a good-looking "buy" for true long-termers. Then today happens... a 27% rally that should have wise investors - even those who stepped into U.S. Geothermal with a long-term mindset - at least thinking about locking in their profits and walking away with a quick score. After all, you can always buy HTM back later.
For those not familiar with the company (though odds are that if you're reading this, you ARE familiar with the organization), U.S. Geothermal Inc. is an alternative energy producer. It finds geothermal hotspots and establishes power-generation plants on top of them, either selling the electricity they produce, or outright selling the plant/land to a utility company. It's not a particularly sexy business model, and it can take months - if not years - for HTM to complete a project; most investors don't want to wait that long. But, the payoff is big, and once the company has enough projects started and/or already sold, life will get much easier for the company, and profits will too.
Well, we may well be at the point where the majority of that market is having that "aha" moment, realizing 2014 looks like the year U.S. Geothermal Inc. is turning that corner. Profit margins should widen to near-normal levels by the end of the year.
Problem: While the company may well be able to justify the current price of $0.63 per share of HTM, the reality is, it's going to be very tough for the stock to tack on more gains from here, in the shadow of today's 24% runup. Take a look.
Don't get me wrong. In my thesis from Tuesday, I expected even bigger gains than that for those investors who were true long-termers with their position. Sometimes though, life throws you a curveball that you can't ignore. Sometimes, unexpected circumstances beyond your control work in your favor, but only of you're willing to take off your investor hat for a moment and put on your trader hat. Yes, what I'm saying is, now would be a great time for anyone who took my advice on Tuesday to lock in a nice gain on U.S. Geothermal, even if you were in it for the long haul. I'm willing to bet we can scoop it up again at a lower price - much lower - sometime later this week or next week.
Welcome to the market.
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