Xebec Adsorption (XBC.TO) Buy, Sell or Hold

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Xebec Adsorption (XBC.TO)

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0.51

+0.01 (2.00%)

as of Sep 28, 2022, 7:58:24 pm Market Open.

246 watching

BUY

A past top pick. Still likes it for being in the renewable natural gas industry. Governments are forcing more RNG in the pipelines in the coming decade which Xebec has the expertise to do. A few quarters ago, management guided higher, but they missed, so the stock plunged. He was stopped out. Shares are about to rise again, based on his metrics. Hold if you own. This has a long future, of 5-15 years of tailwind.

DON'T BUY

An American study ranked the at the top of their research list. Fundamendentals: they've never had positive free cash flow, which is a red flag, and they're diluting shares with an issuance. Doesn't know how their business model will perform long term, especially without government support. Now, our governments support green energy, but what happens if this vanishes overnight? Can their product sustain itself without subsidies? If you own this, own only 1-2% of your entire portfolio.

BUY ON WEAKNESS

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. The recent price drop adds to its potential. Overall, business conditions remain good. The stock is probably oversold. It is a show me story at this point, and it could take some time. Still offers decent potential. Unlock Premium - Try 5i Free

PAST TOP PICK

(A Top Pick May 27/20, Up 7%) It did very well last year until earnings disappointed. He got stopped out. Risk management is important in small-cap companies. They're in renewable natural gas that will enjoy tailwinds from governments in the coming decade. They got a little extended, partly due to Covid, and missed earnings. He's watching it. In time, this stock and space will move much higher.

DON'T BUY

It was flying high with a robust valuation, then issued equity and made acquisitions. They really disappointed. These aren't easy contracts to deliver on. The sector got really caught. XBC couldn't deliver. Results disappointed. Valuation remains wildly high. Wait a few quarters.

HOLD

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. The earnings release and conference call had overall no surprises. The company has lots of cash and the business outlook remains unchanged. The issue was operational and management so it could be in the doghouse for 2 - 4 quarters. Could be dead money for a period of time. Unlock Premium - Try 5i Free

HOLD

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. There remains a lot of uncertainty following today’s announcement of a big revenue hit. The stock is probably oversold but many questions remain. More information will be available on March 25, but more volatility is expected. The news items add significant new risk. Unlock Premium - Try 5i Free

BUY ON WEAKNESS

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. There was no negative news to account for the correction. It may just be due to a bad market day. The stock has done well so it is natural to see some pullback. It could be a good occasion to add to your position or to start one. Unlock Premium - Try 5i Free

WATCH

A very interesting name. Last year, this company was practically unknown. It benefits from trends in recycled nat gas, ESG, and hydrogen. The challenge is executing their big plans and ideas. However, he has been wrong in the past and has watched this run up from $2.50. The rise has been phenomenal. In his view the stock got ahead of itself but raised equity capital to build out business lines. The rising stock price is good since it allows them to reinvest capital and execute. A great story but the price is not right for him even with the pullback. Will probably grow into its valuation in the coming years.

RISKY

Allan Tong’s Discover Picks Most people know what wind and solar power are, but few have heard of renewable natural gas (RNG). In a nutshell, Xebec produces RNG (and to growing extent, hydrogen) by capturing methane from garbage dumps and ship the RNG through pipelines. A small-cap at $1.5 billion, Xebec typically trades 965,000 shares each day with a 1.35 beta. Currently, seven analysts signal a buy and one a hold with an average price target of $11.36, or 12.7% upside. As you can see, Xebec is not without risks, but its wider outlook is positive. Read 6 Promising Green Energy Stocks for our full analysis.

HOLD

XBC-X is an interesting company. They get a lot of money from the ESG flows. There is lots of growth on the Bio side as well as the hydrogen side. They are rolling out local service providers to give them scale. You could hold it in case it is a home run stock. He prefers Ballard power as well.

BUY

If you want more torque and beta, and you want to play hydrogen, a name like Xebec Adsorption is better than Ballard. Mostly renewable nat gas, but expanding into hydrogen by buying a uniquely profitable company. It's still expensive, but much cheaper than Ballard.

BUY

A past pick and he still likes it. Many tailwinds in this sector will last for years. They're into renewable natural gas by recycling garbage then distributing nat gas in pipelines. Governments are mandating for 5-10 years a minimal amount of renewable natural gas in their pipelines. XBC is a leader here in building systems. However, XBC can be volatile. Over time, this will rise higher.

PAST TOP PICK

(A Top Pick Dec 09/19, Up 191%) They make renewable natural gas: They take methane gas from garbage dumps, feed lots and other sources and turn that into natural gas that's shipped through a pipeline. They do this worldwide, building and designing these facilities. He sees strong tailwinds here for the next decade as governments demand more natural gas to be renewable. Example: California wants 10% of nat gas by 2030 to be green vs. 0.5% now. XBC's technology leads the world. He continues to buy this.

BUY

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Comes with risk but has good potential upside. 5i likes it quite a lot. A good medium term hold. Unlock Premium - Try 5i Free

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Xebec Adsorption (XBC.TO)