Azure Dynamics Corporation (TSE:AZD) (PINK:AZDDF) is holding the gains after breaking out through the resistance at $0.36. While profit taking on the short-term rally has not yet occurred, the situation is getting tense without further appreciation.The trading volume of over 3.6 million in the last session was well above the average of 787 thousand. There was no harsh retraction as well, allowing for the assumption that the stock can stick to the new value. Further price rise might not be possible though as the market cap is already over 8 times the net tangible worth of the business. The revenues look symbolic in the light of heavy losses and create no additional value for investors.
The stock’s been up for a reason though – the company views tripled annual revenues in 2011 due to a recent large hybrid-electric van order. 600 units were ordered by Purolator Courier Ltd., a logistics company from Canada.[BANNER]
If revenues would actually increase three-fold the P/E would still be over 6 with the current price per share, theoretically allowing for the price to double, but limited by the actual worth of the business. Because of the large amount of shares outstanding, even small changes in price reflect heavily on the market capitalization.
Another development that’s been adding to the commotion was a link to AZD’s products that has recently appeared on Ford’s official website. The company has a collaboration agreement with Ford Motor Company (NYSE:F), under which it is developing a full battery-electric version of Transit Connect vehicle.
