Profire Energy ($PFIE) as an investment versus a trade

Profire Energy, Inc. (OTCBB: PFIE) in the last month has traded down from $0.90 since the Company reported record financial results on November 14, 2011 to roughly $0.72 in the last few days.

Flash Player 9 or higher is required to view the chart
Click here to download Flash Player now

View the full PFIE chart at Wikinvest

Why is Profire Energy ($PFIE) down?

Earnings and Growing Revenues - Back in November, PFIE reported record income before tax for the 9/30/11 quarter ending of $1,646,575 on total revenues of $4.5 million. Revenues have more than doubled in comparison to the previous year revenues of $2.2 million, and it has NO DEBT! For the six month period, Profire reported $7.2 million in sales and $2.7 million EBT. How many times do Small-Cap investors hear about "next quarter"? Profire is delivering now.

The Product - Burner Management Systems (BMS): Profire is filling many voids in the safety and efficiency of upstream pipeline flow of oil and gas, while helping the industry reduce its carbon footprint.  Several models have been developed over the last decade, with Profire’s latest model, the 2100 BMS, steadily grabbing more and more market share. With its electronic ignition and series of sensors, the flame is only lit when the pipeline requires, saving countless amounts of fuel and greatly reducing emissions. Any problems with ignition or the unit are remotely relayed, saving manpower and money. Moreover, torches are no longer required, eliminating the risk or injury to employees.

Profire Energy (OTCBB: PFIE)

View more presentations from mws13

Growth Plans - Again the Investor Presentation speaks to growth in the U.S., France, Brazil, and "many other countries."

Management Team - I don't know the management team personally, so I simply say let's judge them on their results and that takes us back to the last quarter's financials which were very good.

Industry - Oil and gas is high growth, high demand industry with numerous stakeholders.  Given the strong balance sheet, revenues and earnings, PFIE seems like a viable option without the risk that comes along with small producers. For existing wells with relatively known production metrics the PFIE units can increase production and improve margins by utilizing their technologies. With increasing energy regulation coming out of Washington, (right or wrong, it is there) Profire is positioned to help companies meet the new energy and regulatory demand.

So why is Profire Energy potentially undervalued? Simply stated, Profire Energy is not well known outside their small niche of the world, and now Management is beginning to reach out to investors to tell their story.

The good news: It is a story based on numbers rather than a "story".

The bad news: Investors will ALWAYS buy earnings per share, and PFIE may not be hidden for long.

See all Profire Energy articles @ Waterville Research

See Profire Energy Corporate Profile @ Waterville Research

Safety, Green Initiatives Driving Burner Management System Industry and Profire Energy ($PFIE)

The oil and gas industry receives plenty of press on a daily basis, as commodity traders thrive on its volatility and as majors such as Exxon Mobil Corp. (NYSE: XOM) help drive the Dow Jones Industrial Average.  There is a component to the oil and gas industry that, while less publicized, plays a critical role in the safety and efficiency of oil and gas production that is garnering more industry attention.  From an investors’ standpoint, this subsector carries a larger upside than the majority of “typical” plays in the oil and gas space.

There are more than one million oil and gas wells in the United States and Canada combined.  Each of those wells necessitates a burner to heat a vessel through which oil and gas travel. The vast majority of those fuel trains still use open, gas fired flames that bring with them a myriad of problems.  For starters, there is no regulation capacity to an open flame, so the flame burns continuously, whether it is needed or not, releasing dangerous (and environmentally-unfriendly) emissions and wasting the source fuel.  Moreover, if the flame is extinguished for any reason, the source fuel continues to flow until it is manually noted that the flame went out.  Hand-held torches are then used to re-light the flame, which is obviously a very dangerous proposition that has resulted in many injuries.

The solution is Burner Management Systems (BMS).  Established in 2002, Profire Energy Inc. (OTCBB: PFIE) is a leader in BMS that is filling the many voids in the safety and efficiency of upstream pipeline flow of oil and gas, while helping the industry reduce its carbon footprint.  Several models have been developed over the last decade, with Profire’s latest model, the 2100 BMS, steadily grabbing more and more market share.

With its electronic ignition and series of sensors, the flame is only lit when the pipeline requires, saving countless amounts of fuel and greatly reducing emissions.  Any problems with ignition or the unit are remotely relayed, saving manpower and money.  Moreover, torches are no longer required, eliminating the risk or injury to employees.

Combining cutting-edge technologies has helped dramatically increase revenue and net income for Profire.  The company’s most recent SEC filings show that revenue surged to $4.5 million and net income jumped to $1.65 million in the latest quarter; up from $2,137,022 and $894,093, respectively, from the same period in 2010.  At its current pace, Profire will top $10 million in revenue for the year.  Savvy investors will also notice that Profire is debt-free, a claim that most OTC companies cannot stake.

A stronger enforcement of both safety and environmental regulations is sweeping across the oil and gas industry.  Coupled with realizations of savings by implementing BMS, the industry is being driven quickly forward, but is only realizing a fraction of its potential at this point.  Conservative estimates place the market value at roughly $4 billion presently in North America alone.  Oversea potential takes the market value substantially higher.  Most industries are flooded with competition, but such is not the case with BMS as the ratio of suppliers to demand leaves plenty of “pie for everyone”.  With its recently increased sales team and growing awareness, Profire could potentially capture three to four percent of the market, which would push revenue in excess of $100 million annually and significantly bolster its 78 cent price tag and tiny $35 million current market cap.

In addition to expanding its industry footprint, Profire Energy is also more aggressively marketing its brand through its social media presence.  Investors are encouraged to “Follow” the company on Twitter (http://twitter.com/#!/ProfireNews)  and “Like” Profire on Facebook (http://www.facebook.com/pages/Profire-Energy/181282608629883) to keep up with industry news and corporate developments.