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Editors' Note: This article covers a stock trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

ClearSign's (NASDAQ:CLIR) business thesis addresses a worldwide problem: improving air quality.

Nearly two thirds of the world's total energy consumption is accounted for by combustion of hydrocarbon and other fuels in boilers, furnaces and kilns and turbines. Operators of these systems are continually installing, maintaining and upgrading costly process control and air pollution control systems.

Therein, lies ClearSign's market opportunity. The company is developing powerful new combustion control techniques while significantly improving the economics of air pollution control. The economics are easy to follow. 35,000 industrial burners are installed in the U.S. annually at a cost of $300,000 to $ 600,000 per unit. Each unit is replaceable in five years.

To the end user the company's technology is adaptable, but there is the prospect for even greater upside. What makes ClearSign's technology potentially disruptive is it makes it possible for zero parts per million of NOx and zero parts per million of carbon oxide in a packaged boiler refinery heater. Thus, when you look at the marketplace for ClearSign's product mix the company is changing the cost structure and efficiency of cleaning up the environment.

Per the company, ClearSign's ECC technology is the only combustion technology that exists today that has the ability to simultaneously improve emissions control performance and meet regulatory standards, for multiple systems, while yielding a significant increase in energy efficiency. ECC can be adapted to various fuel levels and multiple systems sizes and configurations and can be deployed on both a retrofit and new build basis. Based on internal estimates the company believes the total addressable market for ClearSign's ECC technology in the four targeted system types to be between $ 5.4 billion and $12.8 billion in the U.S. alone.

Additionally, when you factor in the market potential in China the authorities intend to spend $164 billion alone in cleaning up toxic pollutants in Beijing alone. China also has connections to state owned enterprises and regional governments as well. India and Japan are other market opportunities for the company.

As ClearSign produces orders and begins to capture a reasonable portion of the U.S. and international market the long-term upside for potential investors certainly bodes well as the company is in a dynamic sector and is well positioned for long-term growth. The company does not have biotech risk of getting its product approved by the FDA. The risk it has is delta risk of how long it takes its product to be accepted into a burgeoning market.

Investing in small cap equity by definition bears risk from both a dilution and liquidity standpoint. It is my belief that the long-term reward outweighs the risk in ClearSign's business model as the company has managed dilution risk well to date and can offset further dilution risk by increasing order flow.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: ClearSign Of Upside Potential