This is a very quick look at Adelaide Energy following a positive speculative news article recently.
http://www.news.com.au/adelaidenow/story/0,22606,25200329-913,00.html
http://www.theaustralian.news.com.au/story/0,25197,25444885-23634,00.html
Read those articles for yourselves - my impression from them is that ADE is a good speculative punt. However ......
I started looking at some fundamentals and technicals. Please note that this not meant to be a thorough analysis. But my quick calculations tells me that I would not be touching this stock no matter how good the news is until they get some more cash.
From their recent quarterly statement:
Revenue: $406K - first revenue after their purchase of Katnook Gas Plant from Origin.
Operational Cashflow: -$950K
Investment Cashflow : $1.083m
Cash at end of quarter: $409
Assuming the investment income is once off, and assuming revenue will be steady, if operational cashflow remains similar, say $900K, then ADE won't have enough cash to last the next quarter. At this point, I would stop all further analysis and wait at least to the next quarter results.
In terms of technical analysis, a simple Gann analysis would show that current price has almost reach the level of the last significant high at around 15c. Also that high point is about 11month to 1 year ago - another signficant time period in Gann analysis. This is a point to pause and see if it will break out of the resistance level and go higher.
In summary, although prospects of ADE sounds good, both fundamental and technical indicators suggest waiting before buying into it.
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