In a previous blog titled, “Speculative Stocks – A Strategy for Lowering Risk,” I mentioned the company GelTech (GLTC.OB) as a small cap stock with a pivotal point in their company’s history that was soon to arrive. That point was their ability to become one of the listed companies that the U.S. Forrest Service is contracted to do business with. Their particular product, FireIce, was under evaluation and passed the necessary tests to be one of select products the Forrest Service has at its disposal to fight fires.
The stock moved from around $1 to over $1.80 in the days/weeks after the news broke. Yes, a significant increase in the company’s value has occurred, but does the company still have room to run? I cannot tell you for certain, but I do have one argument for the potential of higher valuations. The advice is based on our current winter season in the Western half of the country.
As you may or may not know, the Sierra Nevada mountains in California (from Northern to Southern) have experienced abnormally high snow falls this year. If you assume we have our regular hot summer, then we’re in for a few major forest fires. Typically these fires occur in August and toward the latter part of the summer and early fall in southern California. The fires may or may not occur, but if they do, extra new vegetation will be ready to add to the blaze.
Whether we have fires in Sierras, Rockies or other areas of the heavily forested Western region, investors will catch wind of the companies that are going to benefit from fire fighting services. One company that will have a big target on their back in such a situation will be GelTech.
If I were looking to establish a position in this company, I’d look for some market weakness to drive the price down and then enter.
Disclosure: No Position