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Energy Recovery Soars Without Oprah

Summary

Energy Recovery is a great small technology company and its stock just soared.

This story stock just took me and the market by surprise.

Patience pays when investing in a beaten down company with superb technology.

Energy Recovery, Inc. has a solid future and remains a long-term buy.

The market gave me two pleasant surprises yesterday: the Oprah announcement early that she had purchased 10% of Weight Watchers (NYSE:WTW) and the after hours announcement by Energy Recovery, Inc. (NASDAQ:ERII) that it had just signed an exclusive 15-year $125 million deal regarding its VorTeq technology with drilling giant Schlumberger (NYSE:SLB). Check out this news summary.

The last point in the news summary is quite significant: "ERII CEO Joel Gay tells Reuters the VorTeq system could save SLB as much as $5/bbl on a frac job and could cut the number of pumps needed to as few as four from 20." ERII collects money upfront in this licensing deal AND it will collect royalties as well if the technology continues to meet certain benchmarks. This licensing and royalty model for the VorTeq Technology will almost certainly be the way ERII will write future deals with other companies. The SLB deal certainly gives VorTeq immediate credibility in the industry and this is why we are seeing such a massive one-day move - nearly a triple in the share price from Monday's close.

I have followed Energy Recovery for the past two years and have always liked the company's long-term prospects despite its share price being beaten down (until today). They have domination of market share in the water...


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