"Fuel Systems (NASDAQ: FSYS), an alternative energy play, could rev up your portfolio," says Elizabeth Harrow, choosing the stock as an "undiscovered gem" in Schaeffer Research.
"Fuel Systems Solutions is hardly a blip on the radar screens of Wall Street, making the stock an 'undiscovered gem.'
"The firm as founded in 1958 and is based out of Santa Ana, California. It engages in the design, manufacture, and supply of alternative fuel components and systems for use in the transportation, industrial, and power generation industries.
"FSYS is a small-cap firm with ample opportunity for growth – the company employs slightly more than 1,000 employees, and carries a market cap of just $540 million. As oil prices continue on their upward trajectory, FSYS stands to benefit from consumers' increased demand for alternative fuel systems.
"Year-to-date, the shares of FSYS have gained an impressive 145%. During the past 52 weeks, the equity is up 128%. The run higher has been supported by its 10-day and 20-day moving averages. Despite this impressive technical performance, many Wall Street denizens have yet to discover FSYS shares.
"Option activity on FSYS is remarkably light; this modest accumulation of speculative interest suggests that the stock could gain as more traders discover its strength. Plus, the few option traders placing their bets on FSYS have doubts about the stock's ability to climb.
"Elsewhere, short sellers emerged en masse during the most recent reporting period, when short interest on FSYS ballooned by 86%.
"Now, these bearish bets account for almost 4% of the stock's available float. If the equity continues to trek higher, these skeptics could be forced into repurchasing their bets on the stock's decline.
"Overall, a short-covering trend could support further gains in the security. And, as the stock's stellar price trend attracts more buying power, the shares seem well-poised to extend their recent rally."
