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$9.25 -0.59 (-6.00%)
7/3/2008 12:59 PM

Raser Technologies, Inc. (RZ)

CAPS Rating:
*

The Company operates as a technology licensing and development company. Its segment focuses on improving efficiency and power density of electric motors, generators and their associated power electronic drives and controls.

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Avatar toemoe1 (32.04) Submitted: 6/03/07 12:21 AM : Outperform Start Price: $7.73 RZ Score: 37.40

High risk, but about 10 hours of due diligence is compelling me to invest a small amount. To cap off my research, I attended the annual shareholders meeting yesterday which helped to confirm and expand my thoughts. Not sure if I have it all straight, but here goes:
1. Brent Cook, CEO, successfully took “Headwaters” (HW -- formerly Covol) through a very similar situation: HW had good technology but zero revenue. Not that it means much, but HW grew to eventually become a Motley Fool Rule Breakers recommendation.
2. First real revenue will come to Raser from the geothermal power production side. Cook is using the same techniques as he did at HW to leverage tax credit incentives – “monetizing” them by enlisting partner companies to fund the building of the plants and ‘selling’ them the tax credits, creating an ongoing revenue stream. Geothermal power generation costs about $0.05 to produce per KW. Estimated to sell at $0.065 per KW. Government incentive is $0.02 per KW. Government allows you to accelerate the depreciation of geothermal equipment over 5 years. Etc.
3. The motor and alternator technologies are gaining recognition and winning awards, but the process of getting auto parts manufacturers and hybrid electric vehicle makers to review / test / qualify new technology is painfully slow. The geothermal revenue will help fund the motor and alternator side of the business until it can make money.
4. Management has been recruiting the right team to pull it all off, such as a former GM / Delco exec with connections. Also helped on the new hybrid SUV (Tahoe?)

Stock price will likely be very volatile, rumor and short-trading driven, until steady and sizable revenue can be achieved. Risky, but looks promising to me over next 1-5 years.

Tom

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Avatar des52 (73.38) Submitted: 6/23/07 7:17 PM

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Thanks for the info. RZ might become a good investment. However, I am waiting until the risk is lower by their actually getting some geothermo power stations up and running. Until that happens its too risky for me to devote more than time to keep up with the companies progress.

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Avatar toemoe1 (32.04) Submitted: 6/25/07 3:38 PM

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I agree -- risk is high -- and I think I'm in for a very up and down ride until we get more tangible progress (which is why I only invested a very small portion of my funds). But do keep an eye on it for progress. During the annual shareholders meeting we saw a powerpoint presentation and one of the slides they showed had a picture of drilling at a geothermal site, but no mention of specifics. After the presentation someone basically asked, "Well what kind of progress are you making -- I mean that picture we saw of the drilling, is that a Raser site, or just a picture?" They confirmed that it was a Raser site, but gave no more specifics than that. So maybe that one didn't work out, or it did but they aren't ready to talk about it -- not sure. But I'm expecting them to make more substantive announcements sooner rather than later. We'll have to wait and see. The overall theme from Brent Cook was that we could expect to see them moving very fast in order to bring their stated target of 100-150 MW per year online. So I picked up some shares -- enough to be happy if it takes off, but could also add more on a significant price dip.

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Avatar dwot (99.99) Submitted: 7/16/07 3:18 PM

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Very good on your report. One thing that I think distinguishes this stock from many is that we really need this type of technology to go forward.

My university physics made this one a pick for me when most were voting against it. I am Canadian and generally have not been investing in US stocks, or I'd have gone for this one.

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Avatar toemoe1 (32.04) Submitted: 7/16/07 5:54 PM

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Thanks dwot! Unless we get some news to accompany this recent run we may be in for another temporary steep ride down in price. But for the long-term I'm still comfortable (as comfortable as I can be in a risky stock). The awards they received in the past months for their technology helped to give outside support to their claims.

My main question now is how to come up with a simple model for valuing their profit potential when they do start making money. Even a complex model would be nice. :-)

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