ADA-ES: A Little Help From Washington?

| About: Advanced Emissions (ADES)

Back in January, I wrote about ADA-ES Inc. (NASDAQ:ADES), a company that provides air pollution controls to utility companies. Back then the stock was trading at $16, and I predicted that increasingly stringent air pollution laws would increase demand for ADES technologies and would drive the stock price up above $30 in the next 18 months. Since then the stock has climbed above $23, though it's now trading just below $20.

I still think ADES has real potential. Its revenues continue to grow over prior year figures; with environmentalism only growing stronger, this growth seems likely to continue. And the company may stand to benefit from the energy bill now making its way through Congress. It's not yet clear what the final bill will look like, but the Senate has supported more research into new technologies that might enable utilities to use coal without releasing all its carbon into the air. A significant number of people believe this technology is possible, and that using more coal could be a way of decreasing our dependence on foreign oil.

This is controversial, and many environmentalists believe coal is too dirty to be the answer, but if the bill passes, a company like ADES will certainly benefit. While the technologies would sequester the carbon, utilities will still need to worry about mercury emissions, which is exactly what ADES's products help to reduce. I have met the management of ADES and I am very impressed.

They are aware of their own expertise and have a grasp at what they must do to grab the majority of market share in their respective area of expertise: mercury emission reduction from coal fired utilities. This is a company for the future, and I think it's a real winner.

Type of stock: An environmental-technology company that sells its products to coal-fired utilities.

Price target: ADES is hovering around $21 after reaching above $23, and, because of state legislative changes requiring mercury emission reduction, I believe this is a good time to buy the stock at a discount. If you buy ADES at these levels, I think you'll stand to make 50% on your investment within the next year.

ADES 1-yr chart: