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ADA-ES Inc. (NASDAQ:ADES) is an environmental technology and chemical specialty company that has tremendous upside. This swiftly-growing business provides customers (the coal-fired utilities) with technologies that reduce air pollution. According to a senior executive at the company, the good news is that "state air pollution control laws are becoming more stringent."

Most of ADES's growth is in the mercury control market. A national law passed in 2005 called the "Clean Air Mercury Rule" (otherwise known as "CAMR") allowed states to decide whether they want to follow E.P.A. targets or make their own decisions on mercury reduction.

Indeed, many states have adopted tough laws of their own -- and in time frames that require controls to be in place within the next 18 months. According to the company, states that have passed mercury reduction regulation are New Jersey, Connecticut, Massachusetts, Illinois, Maine, New Hampshire and Delaware.

Pennsylvania is expected to be on board within the next six months, a hugely important influence for this sector, since the state has numerous coal-fired power plants. Illinois is a large market as well with approximately 50 to 60 plants in the state.

But the big news is that Texas-based power and energy company TXU Corp. (TXU) is building eight new coal-powered utility plants and will be putting mercury reduction processes in place.

ADES is positioned to grab a fair share of that business as well as the reduction contract for TXU's 15 existing plants. The winning bidder of the mercury control installation and processes will be announced in the next month.

Mercury control is a hot topic and will become hotter in the election-year cycle. The sector should double or triple in the next three years, according the the company.

Type of Company: A rapidly-growing company well-positioned to capture new business that will be generated from sweeping state regulation to reduce mercury emissions.

Stock Price Target: Currently at $16.23, ADES has the potential to double in the next 18 months. I would expect a pop in the next four weeks as the company receives new orders.

ADES 1-Year Chart

ADES One-Year Chart

Source: ADA-ES Inc.: An Environmental Technology Company with Tremendous Upside