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

Fuel Tech (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:

Comments

[weiwentg:]

This is no speculative alternative energy play like a lot of the companies out there. Fuel Tech has excellent management with significant ties to the utilities industry. It has real, proven technology that is really pretty mainstream. And as Faisal said, it generates actual cash. The stock is down right now to about the level it was when it announced the partnership with Itochu that would get it access to an experienced salesforce that was based in China. The stock shot up then. The fundamentals haven't changed - no debt and I assume zero subprime exposure.

2007 Aug 06 09:25 AM

[Richie:]

Can you imagine --- on the worst news possible, Roth comes out with a BUY rec??? It will take forever for this outfit to get back on line. SELL !!!

2007 Aug 06 02:05 PM

[Faisal Laljee:]

The stock did go down to $22 pre-market when the earnings came out yesterday, but the earnings call was optimistic and therefore, the stock recovered to $26 at market open. The company signed up 7 new power plants, of which, only 2 were reflected in these earnings. The remaining 5 will show up in their earnings for Q3 & Q4 and the China expansion has just gotten under way.

2007 Aug 07 10:33 PM

[borisb:]

more garbage from Faisal

2007 Sep 30 08:45 PM