Echelon Corp. (NASDAQ: ELON)

Echelon Corp. (ELON) engages in the manufacturing of products used in the “smart grid.” The Company’s NES System is the backbone of the smart grid, and is used by utilities to effectively monitor and manage the grid. The Company’s LonWorks Infrastructure products connect devices to each other on the grid and through the Internet. LonWorks is designed to lower energy costs, improve productivity and enhance services to power company end-users. Founded in 1988, the Company is headquartered in San Jose, California.

Source: Reuters.com, SEC Filings.

Financial Summary

Source: Reuters.com, SEC Filings.

Analyst Consensus

The mean of six analysts polled by Thomson Reuters rate shares of ELON an “Outperform.”

Analyst Recommendations and Revisions

Source: Reuters.com, SEC Filings.

Investment Highlights

The inevitable passage of some form of “Cap and Trade” legislation will provide investors with another government-mandated growth industry to invest risk capital. Public and private money will flow into the new “Smart Grid” in ways similar to the rush into Internet companies of the 1990s, but won’t be nearly as well-followed, particularly interesting, or empowering to the public. Smart Grid companies will provide tremendous revenue for the commercial participants, both large and small.

Until nuclear power and “alternative” energy sources come on-line, efficient use of the energy available through the Grid is the most likely target of public and private funds. Nuclear power, wind farms, widespread PV panels and other sources of energy take many years to implement, leaving most of the present growth in these technologies within the government, utilities and a handful of commercial sectors.

The Smart Grid is a system that adapts the present electrical infrastructure to achieve better efficiency, adaptability and multi-source usability. Through the next two decades, utilities will invest hundreds of billions of dollars in infrastructure Smart Grid upgrades, including computers, sensors and networking systems and devices.

The major providers to the Smart Grid will most likely come from General Electric, Siemens, Cisco Systems, Oracle, among other large-capitalized enterprises. Moreover, smaller companies providing leading-edge technologies also will most likely attract significant investor funds looking for “pure” plays.

According to research firm, GlobalData, the smart meter revenue growth rate is expected to reach 24% in 2009 from 2008. Installations of smart meters are anticipated to increase well into double-digit annual rates during the next decade. Inherent technical barriers have discouraged the assimilation of new energy sources into the grid. However, smart grid technologies will lower these barriers and enable the introduction of new energy sources onto the Grid.

The Company specializes in making meters and develops technologies for the “Smart meter,” which will be installed in the home, keeping track of the watts used from the Grid.

The Company has invested heavily in research and development of hardware and software products of the advanced metering infrastructure (AMI) market. The utilities industry uses the Company’s products in its distribution to customers of the power companies as part of the “smart grid.” Company revenue of approximately $166.7 million have been generated from this market, with a substantial level of revenue derived from Enel Contatore Electtronico’s electricity meter management project in Italy.

Analysts believe the Company will be a major competitor in the Smart meter space, with the chance of being bought by General Electric or other bigger competitor.

Technical Analysis

Source: http://stockcharts.com/h-sc/ui?s=ELON

ELON trades below its 13-day moving average. This bearish sign is significant because the 13-day moving average is downwardly sloped.

The MACD for ELON currently indicates a bearish signal. The MACD is below the signal line, a 9-day moving average of the MACD. The MACD is below the critical level of 0, which implies the past price action had been negative. Overall, the chart is bearish.

Comparative Analysis

Source: Thomson Financial

Insider Trading Activity

Source: Yahoo Finance

Report Disclaimer

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice.

The information contained in our report should be viewed as commercial advertisement and is not intended to be investment advice. The report is not provided to any particular individual with a view toward their individual circumstances. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Our newsletter and website have been prepared for informational purposes only and are not intended to be used as a complete source of information on any particular company. An individual should never invest in the securities of any of the companies profiled based solely on information contained in our report. Individuals should assume that all information contained in the report about profiled companies is not trustworthy unless verified by their own independent research.

Any individual who chooses to invest in any securities should do so with caution. Investing in securities is speculative and carries a high degree of risk; you may lose some or all of the money that is invested. Always research your own investments and consult with a registered investment advisor or licensed stock broker before investing.

Information contained in our report will contain “forward looking statements” as defined under Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934. Subscribers are cautioned not to place undue reliance upon these forward looking statements. These forward looking statements are subject to a number of known and unknown risks and uncertainties outside of our control that could cause actual operations or results to differ materially from those anticipated. Factors that could affect performance include, but are not limited to, those factors that are discussed in each profiled company’s most recent reports or registration statements filed with the SEC. You should consider these factors in evaluating the forward looking statements included in the report and not place undue reliance upon such statements.

We are committed to providing factual information on the companies that are profiled. However, we do not provide any assurance as to the accuracy or completeness of the information provided, including information regarding a profiled company’s plans or ability to effect any planned or proposed actions. We have no first-hand knowledge of any profiled company’s operations and therefore cannot comment on their capabilities, intent, resources, nor experience and we make no attempt to do so. Statistical information, dollar amounts, and market size data was provided by the subject company and related sources which we believe to be reliable.

To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information provided in the report, or for any direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of information we provide to any person or entity (including, but not limited to, lost profits, loss of opportunities, trading losses, and damages that may result from any inaccuracy or incompleteness of this information).

We encourage you to invest carefully and read investment information available at the websites of the SEC at http://www.sec.gov and FINRA at http://www.finra.org.

• Need fast service and cheap rates from a broker? Buy stock online at my favorite brokerage
• See today’s top stock picks and market analysis
• Want more? Check out the message board buzz for these stocks
• See what newsletters are recommending these stock picks
• Get breaking news alerts on these stocks: http://thestockmarketwatch.com/
• This newsletter has been helping traders make a killing on these stocks. Click here for a 25% discount offer.

About BeaconEquity.com

BeaconEquity.com is committed to producing the highest-quality insight and analysis of small-cap stocks, emerging technology stocks, hot penny stocks and helping investors make informed decisions. Our focus is primarily OTC stocks in the stock market today, which have traditionally been shunned by Wall Street. We have particular expertise with renewable energy stocks, biotech stocks, oil stocks, green energy stocks and internet stocks. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average daytrader is aware of them.

Beacon Equity Group Disclaimer

This newsletter is a paid advertisement and is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. Beaconequity.com is a wholly-owned subsidiary of BlueWave Advisors.

While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between the any predictions and actual results. Always consult a real licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.