In the current volatile crude price environment, sustainable renewable sources of energy are good news not just for polar bears, but also for investors looking for a stable energy investment opportunity.
Pre-IPO Altek Power Corporation is a renewable energy producer working on a product line considered to be a "revolutionary change in the understanding of the basic building blocks of both the fuel cell and of its power supplies." In theory, Altek's final products will be an intrinsic part of our daily activities; they will power our laptops, provide electricity for our homes and be able to fuel our cars. In addition, they will perform throughout earthquakes, hurricanes and snowstorms, and thus avoid the financial losses due to outages.
Altek's Market Potential
The market for renewables has been much discussed. It makes good common sense to make a shift to something that can be sustained and has a much smaller carbon footprint. However the problem has always been and continues to be the cost and availability. Consider, the electricity on which a truck will run is cheap, but the engine itself is not.
So when a company promises to do all the above with better performance, more efficiently, with a simple and unique design and at a lower cost, one should take notice. The table below shows the cost advantage Altek has over other sources of energy.
The three essential parts of Altek's program consist of the Gas Diffusion Electrode [GDE], the Membrane Electrode Assembly [MEA], and the Altek Fuel Source Systems. Once these products are integrated, the result is a unique power supply system. The inputs used in this technology are fully recyclable, relatively low cost and easily available chemicals and water for the production of hydrogen. The feasibility of this technology is yet to be tested, but the integrated product line means mass production is a possibility.
In a recent company presentation, Altek predicts the market for portable fuel cells at $2.6 Billion by 2012.
The growth potential in that size of a market is substantial. The company has the following predictions.
That being said, no definite call can be taken on Altek without the quantifying details; how much, to whom and at what price. We know the electric car engine equipment makers like Bogwarner (BWA), Honeywell (HON), trade at a 13x, 20x multiple due to their efficiency increasing engines. These engines are seen as the future and these companies are seen are the first movers, which explain the high multiples.
Another reason to look out for Altek's numbers: the market highly values the pioneers. Whats left to be seen is how effective they are with developing this technology, integrating it and mass-producing it.
A market exists and a huge one at that when one considers that all the cars on this planet are a potential user. Let alone the electricity generation.
The US government's Boone Pickens law is looking to provide subsidies to trucks making the shift to Natural Gas as an alternate fuel source. The breakup of thermal coal utilities to Natural Gas utilities has gone down to 63% from 80%+ in early 2000. This significant change shows the willingness to shift to a cheaper, sustainable, less carbon intensive and cheap energy source, if reasonably priced.
Altek is expected to come out with an IPO in the near future, along with a presentation of financials, estimates and forecasts.
When it does, investors should be ready to sharpen their pencils and do their work on Altek. Or better still look out for further pieces from us! We know the polar bears will.
Here's a look at the performance of electric car engine equipment makers Bogwarner and Honeywell, who will be competitors to Altek on the market. Is their performance encouraging?
Performance relative to the S&P 500 index, Click through to use more of Kapitall's free tools:
Altek Power operates as an independent power producer, and according to its company profile, hopes it has all the technology it needs to become a top player in the global electricity market. Altek Power Corporation was founded in 1979 and is headquartered in Kelowna, Canada.
Altek Power is currently a manufacturer of distributed generation plants. It operates a generation facility in Alberta that is fueled with solution gas (a waste product of the petroleum industry). Altek Power also sells distributed generation equipment, including waste gas-fired turbine generators and biomass (organic waste) energy systems. It provides engineering and construction services for power plants and other heavy industrial facilities.
Written by Veethika Gairola
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.