Best stock to invest in – Blue Sphere To Start Biogas Commercial Operations



Best stock to invest in –

by Debra Fiakas CFA

The Blue
Sphere, Inc.
(BLSP: 

OTC/QB), stock price has weakened in recent months as investors
registered their apparent frustration with fundamental
developments.  Proposed acquisitions of operating biogas power
plants in Italy have taken much longer than expected and majority
interest in planned biogas plants in the U.S. were sold into joint
venture arrangements rather than held as 100% equity
positions.  Despite these developments, Blue Sphere management
has doggedly moved forward on all fronts and there has been
measurable progress toward first revenue.

Commercial operation dates have been set for Blue Sphere’s first two
biogas development projects in the U.S.  Construction progress
is on-schedule for a 5.2 megawatt biogas power plant near Charlotte,
North Carolina.  The facility is scheduled to be connected to
the local electrical grid on October 27, 2015.  Likewise
construction is on-schedule for a 3.2 megawatt biogas power plant in
Johnston, Rhode Island.  The Johnston plant is on the calendar
for connection to the local power grid the third week in December
2015.  Both plants deploy anaerobic digestion equipment to
convert food waste to energy to heat steam-powered turbines and
electrical generators.

Blue Sphere lined up Austep,
S.A.
of Italy to supply the digestion and generation equipment
for both the North Carolina and Rhode Island plants.  Austep
has also agreed to operate both plants once construction is
completed and has provided performance guarantees to the Blue Sphere
and its joint venture partner in the two plants, York Capital. 
Food waste supply agreements for both plants have been secured and
tipping fees to the joint venture have been finalized.  A
15-year power purchase agreement with Duke Energy (DUK:  NYSE)
is in place for the North Carolina electricity output and a similar
agreement has been secured for the Rhode Island plant. 
Additionally, McGill
Environmenta
l has signed a 10-year off-take pact for
compost by-product of the anaerobic digestion process.

Once operational, Blue Sphere will claim 25% and 22.2% of the
profits from the North Carolina and Rhode Island joint ventures,
respectively.  Since construction of both plants is near
completion, and connection to the electrical grid and power purchase
agreements are in place, we expect both plants to begin contributing
to financial results in fiscal year 2016.

Progress has also been made in Blue Sphere’s bid to acquire fully
operational biogas powered plants in Italy’s famed Lombardy
agricultural region.  The final due diligence and legal
arrangements have been completed, clearing the way for Blue Sphere
to close its pending purchase agreements to acquire the four
plants.  All four plants will be 100% owned by Blue Sphere and
are expected to contribute revenue beginning in fiscal year
2016.  Each plant is separately operated, producing 999
kilowatts that is being transmitted to the contracted power
purchaser Gestore
del Servizi Energetici, S.p.a
., through Italy’s regional power
grid.  Biogas equipment supplier and operator, Austep, has been
signed to operate each plant.  Pending completion of legal and
financing arrangements, Austep is monitoring operations at each of
the four plants.


Our most recent research report on BLSP still cites shallow trading
volume as a potential securities risk for investors in the
stock.  However, the report also notes that average daily
trading volume has increased to 1.2 million shares per day over the
last six months compared to about 800,000 in the previous six
months.  This is an encouraging development that signals rising
investor interest and more efficient valuation of the stock. 
The report also noted that management has made progress in reducing
debt, albeit at the expense of shareholders through the dilutive
impact of debt converted to common stock.  Thus the stock at
its current depressed price remains an interesting option on
management’s execution success.

Debra Fiakas is the Managing Director of Crystal Equity
Research
, an alternative
research resource on small capitalization companies in selected
industries.
 

Neither the author of the Small Cap
Strategist
web log,
Crystal Equity Research nor its affiliates have a beneficial
interest in the companies mentioned herein.  BLSP

is featured in research reports published by Crystal
Equity Research.  Please note the important disclosures at
the end of all Crystal Equity Research reports.  Please
read the important disclosures related to sponsorship and
subscriptions in the final pages of all reports.

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