Only one thing is pushing up the shares mf Urethane Technologies--and it isn't earnings. The company has yet to make a penny. What's firing up the stock that has bounced from 6 a share in early December to 13 1/2 on May 11 is a bicycle tire--the tubeless, airless type.
"There seems to be heavy accumulation of Urethane's shares in recent days, and they have been rising on increasing volume--a very positive signal," says Mark Leibovit, who edits the market newsletter Volume Reversal Survey. "Our charts indicate that the stock could rise as high as 22 over the short-term."
The company doesn't actually produce tires, but it has developed specially formulated liquid-chemical compounds and manufacturing equipment for making certain polyurethane-based products. Among them: a nonpneumatic, or airless, bicycle tire with a foam inner core that, insists the company, rides virtually the same as pneumatic tires and lasts longer.
Urethane sells the polyurethane compounds and casting equipment to tire makers such as Green Tyre in Britain. Urethane has also signed a licensing agreement with Fore Better International Development of Taiwan for exclusive production rights using Urethane's airless tire technology in Taiwan, Shanghai, and other nearby provinces in China. Fore Better has taken a 3% stake in Urethane, worth $2 million.
"We are in talks with other tire makers for licensing agreements in other parts of Asia and Europe," says Chief Operating Officer and Treasurer Jim Frakes. He says if all goes as planned, the company will be in the black by the end of this year.
GENE G. MARCIAL