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Fuel Tech (NASDAQ:FTEK) provides technologies to reduce pollution, particularly nitrogen oxide emissions generated by coal power plants. Fuel Tech also markets fuel treatment chemicals and technology that improve boiler efficiency and cut some sulfur and carbon dioxide emissions. Coal accounts for 50% of power generated in the U.S., 70% of India's, and 80% of China's power generation. It is the cheapest way of generating power and gaining in popularity in China. In fact, on average, 2 coal-fired power plants are starting every week in China.

Fuel Tech has recently announced its expansion into China. Analysts expect its earnings to rise to $0.42 cents a share in 2007, from an estimated $0.27 cents in 2006, thanks to more contracts with utilities in Europe and the U.S.

The company has no debt and it is cash flow positive, and 20% of the total float of FTEK shares is currently being shorted. The stock has pulled back sharply in the last few days, and is currently sitting just above its 200-day moving average.

Back in December, I posted a bullish piece on Fuel Tech. With earnings out this morning, I recommend watching the price action, and buying around the $26 level.

Full Disclosure: I am long FTEK but my position can change anytime without notice.

FTEK 1-yr chart:

FTEK 1-yr chart

Source: Fuel Tech: Watch Price Action As Earnings are Due Out This Morning