Fuel Tech To Benefit From the 'Green Push' - But Now is Not the Time to Buy

May. 1.07 | About: Fuel Tech, (FTEK)

Echo To All submits: After listening to ‘Bulls & Bears’ Friday morning, specifically the guy from S&P (I think Pat?) talking about Fuel Tech (NASDAQ:FTEK), I got interested and decided to look into FTEK.

When I looked into the name, I found it to be a very interesting company and concept. I kept thinking about the ‘Green’ push from California, and how this company will benefit.

I wanted to relay a few things that I found interesting regarding FTEK (the stock).

In an interview with Neal Dikeman, FTEK's CEO, John Norris, stated:

Personally I think this is a great buying opportunity (and I just recently did so in my personal accounts). If you believe that we can and will execute our business plan and grow this company rapidly and profitably, then today’s stock price is not over-valued at all. If you don’t believe that we can and will execute and achieve the results, then the stock price is already too high. It all depends on what you believe about the Fuel Tech team.

So the CEO is basically saying (in a round about way) that he thinks the company will continue to grow rapidly and profitably. That is a good thing, but if it does not, the stock will hick up in a big way. FTEK needs to grow earnings by some 40-45% to justify its current stock price, and even more for any upside. (But the CEO said they can do it.) OR, since it is a momentum play of sorts, FTEK needs to beat Revenue growth of 27%. (This is the high end of management estimated Rev. growth.)

On the TA front, FTEK looks a bit over extended, and the 50SMA may act as resistance. So a buying opportunity may present itself later.

FTEK 1-yr chart

FTEK