Hybrid Technology Investing

Hybrid Technology Investing: Buy this Commercial Hybrid Leader below $0.90
A Taipan Financial News Research Alert
by Jeff Siegel, Managing Editor, Green Chip Stocks
May 13, 2007

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Demand for hybrid vehicles is undoubtedly changing the way car manufacturers do business these days. How could it not?

Ten years ago, while GM and Ford brushed off any possibilities of hybrid integration, Honda and Toyota were moving forward, building hybrid vehicles that would end up becoming so popular that waiting lists would form -- and some consumers would pay more than sticker price.

That's the kind of demand car makers dream about! Investors who got in early have made a fortune.

Today, GM, Ford, and every major car manufacturer in the world offers hybrid options. They have no choice. The fact is, hybrid demand is projected to reach 3.9 million units by 2015, and nearly double that by 2020. And this doesn't even take into account the commercial market for hybrids.

Think the Prius made a lot of money for Toyota? That's nothing compared to the money up for grabs in the commercial market. We're talking school buses, garbage trucks, shuttle buses, the whole nine yards. And you'd better believe we're getting a piece of this action.

Hybrid Technology Investing: The Most Bang for Your Buck

While increased fuel efficiency has certainly been the catalyst for growth in the hybrid vehicle sector, please note that the vehicles with the least efficient drive cycles are not those that U.S. commuters use to get back and forth to work every day, but rather commercial vehicles that use a disproportionate amount of energy compared to personal vehicles.

And while you'll rarely find hybrid technology stories about garbage trucks trumping Toyota Prius and Honda Insight puff pieces, it doesn't mean there isn't a boatload of money to be made in the commercial hybrid sector.

In fact, just a few weeks ago, Azure Dynamics (AZD.TO), a developer of hybrid electric and electric vehicle powertrain systems for commercial vehicles, announced that it had signed a supply agreement for 1,000 new drive systems for Mexico City's municipal fleet.

Of course, only a handful of niche publications even made the slightest mention of the agreement. But the significance was actually quite huge. Mexico City is the third largest city in the world, currently operating about 25,000 Nissan fleet vehicles (the very vehicles Azure supplies the drive systems for) throughout the region.

An agreement to supply drive systems for just 4 percent of the city's fleet pushed the stock up more than 20%. Imagine what happens if the rest of those 25,000 vehicles get the go-ahead for new Azure drive systems!

Granted, "what ifs" really don't amount to a hill of beans for investors. But the fact is, inefficient drive cycles and new, strict emissions standards are creating unprecedented demand in the commercial sector. And Azure, having jumped in to this sector years before oil prices soared and every VC hotshot wanted a piece of the hybrid market, is now in a position to leverage its experience, its proprietary technology and its solid track record to develop specialized powertrain solutions for any possible commercial vehicle.

The company's been at it a lot longer than its competitors -- and it's got the client list to prove it.

Hybrid Technology Investing: Friends in High Places

While there are certainly a few other young commercial hybrid firms in the running for the big contracts these days, Azure's already managed to land some of the biggest. And that's providing the validation savvy investors need.

Take a look at some of Azure's strategic partners:

Purolator Courier, Ltd (Canada's largest courier company)
EnCana Corporation
The Canadian Government
Canada Post
DHL Courier
The U.S. Department of Defense
AM General
Leyland Product Development
Smith Electric Vehicles Group
The United States Postal Service
Manganese Bronze (the parent company of London Taxis International).

Azure also recently announced that its shuttle bus partner, StarTrans, has signed 12 bus distributors across North America to market and sell CitiBus Hybrid Senator hybrid-electric shuttle buses. It's estimated that about 70% of the targeted shuttle bus market in the US and Canada is covered by this distributor network.

Hybrid Technology Investing: Nothing Better Than a Bargain!

While Azure's technology, experience and client list are enough to make the company's CEO pound his chest, it's Azure's current stock price that's bringing investors to the table. You see, the stock topped off around $1.50 back in September 2005. But after last summer's correction, the stock headed south, maintaining at around $0.80 a share.

Then, in early 2007, the stock experienced a further selloff and slipped all the way below $0.40 for a short time.

Now why would I throw all this bad news about the stock at you after talking it up so much? Simple. The early 2007 selloff has provided fertile ground for bargain hunters. The fact is, while those who got in before the 2006 correction panicked and sold, Azure watched its revenue grow by more than 25% from 2005 to 2006. The company also:

• Completed equity financings that raised nearly $32 million
• Established a joint development agreement with Ford Motor Company to develop a hybrid-electric powertrain for Ford's E-series commercial platform
• Signed an agreement with StarTrans for the production of hybrid shuttle buses
• Signed sales and distribution agreements with 12 StarTrans bus distributors
• Signed a memorandum of understanding with Kidron for branding, marketing and sales of a Low Emission Electric Power system (this system is expected to be in production by the second half of 2007)
• Launched the production of the G1 series hybrid shuttle bus and delivery van

Today, the company is moving at light speed as the demand for commercial hybrid vehicles starts to kick into overdrive. And investors savvy enough to realize the potential of this market are loading up on shares of Azure. Because anything less than $0.70 a share for this thing is an absolute bargain.

With oil addiction and global warming pushing voter hot buttons, you won't find a politician out there voting against this stuff. And when those new laws get passed, and those new tax credits kick in, you're going to see an avalanche of government-owned commercial fleets pounding on Azure's door.

By the time 2007 comes to an end, this thing could be trading well over $2.00 a share. And in the short term, I don't think it'll take much more than one more significant contract like the one we just saw with the Mexican government to push Azure to an easy $1.40. And I suspect that one's just around the corner.

Read about more opportunities like this in Jeff Siegel's Green Chip Stocks.

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To learn more about Jeff Siegel's Green Chip Stocks, click here.

Copyright 2007, The Taipan Group, LLC and Dynamic Market Alert, 808 St. Paul St., Baltimore, MD 21201
All rights reserved. No part of this report may be reproduced or placed on any electronic medium without written permission from the publisher. Information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed.

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