4-Star Stocks Poised to Pop: Fuel Tech

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Based on the aggregated intelligence of 120,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, air pollution control company Fuel Tech (Nasdaq: FTEK) has earned a respected four-star ranking. While five-star stocks have been the best performers, our data has shown that four-star stocks still outshine the market by a significant margin and shouldn't be taken lightly; conversely, low-rated stocks have woefully lagged the market average.

With that in mind, let's take a closer look at Fuel Tech's business, and see what CAPS investors are saying about the stock right now.

Fuel Tech facts

Headquarters (founded)

Warrenville, Illinois (1987)

Market Cap

$218.50 million

Industry

Pollution and Treatment Controls

TTM Revenue

$95.54 million

Management

CEO John Norris, Jr. (since March 2006)

CFO John Graham (since June 2008)

Return on Equity (average last three years)

15%

Competitors

Foster Wheeler (Nasdaq: FWLT),

Ashland (NYSE: ASH)

CAPS members bullish on FTEK also bullish on

Apple (Nasdaq: AAPL),

General Electric (NYSE: GE)

CAPS members bearish on FTEK also bearish on

First Solar (Nasdaq: FSLR),

General Motors (NYSE: GM)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, fully 986 of the 1,023 members who have rated Fuel Tech -- some 96% -- believe the stock will outperform the S&P 500 going forward. These bulls include CAPS All-Star whoILMnc and LTContrarian.

Earlier this week, whoILMnc touched on the stock's long-term potential: "If coal has the future I think it does, even though very speculative, it is hard to see how [Fuel Tech] will not share in it."

In an earlier pitch from last month, LTContrarian agrees, stressing Fuel Tech's tantalizing tailwinds:

Although this company's stock price will likely be choppy over the next 6-12 months, right now is probably a great entry point for anyone interested in a long term position. Demographic trends are heavily in Fuel Tek's favor. Management is very solid and the company is becoming the gold standard in the industry with excellent proprietary products. The fact that China will be building approximately 1 coal plant per day into the forseeable future certainly bodes well for Fuel Tek going forward.

What do you think about Fuel Tech, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 120,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Apple is a Motley Fool Stock Advisor pick. The Fool's disclosure policy always gets a perfect score.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 12, 2008, at 12:13 PM, weiwentg wrote:

    Fuel Tech could have a very impressive future, but this is a stock to buy and hold for 5 years, maybe more - unless you think you can trade it. I see a very experienced management team that's pushing an excellent suite of technologies and has been making some interesting acquisitions. The firm also has very little debt and ample cash, so I don't see any financial distress happening.

  • Report this Comment On December 12, 2008, at 12:40 PM, pondee619 wrote:

    "Based on the aggregated intelligence of 120,000-plus investors participating in Motley Fool CAPS"

    "Over on CAPS, fully 986 of the 1,023 members who have rated Fuel Tech -- (some .82% of the CAPS community) -- believe the stock will outperform the S&P 500 going forward" Point 82 percent of the "aggregated intelligence" support the purchase of this stock.

    Can you rationally base any decision of the opinion of less than one percent of a community?

  • Report this Comment On December 12, 2008, at 6:47 PM, GoNuke wrote:

    Germany rejected nuclear power and decided to build wind turbines. Now the power sector is claiming it needs to build at least 15 new coal powered plants to sustain German industry assuming an 8% reduction in demand for power and successfully raising its wind powered electricity generation by another 5%. The public really wants to believe that wind power will obviate the need for nuclear power. In a few years time when it becomes obvious that wind power can't be made to work and blackouts are hitting there won't be time to build nuclear power plants. We will have to build lots of coal and gas fired plants quickly. Unless you think the US consumer is willing to pay 25 cents a kw hour for intermittent electricity. I seem to recall they were not too pleased about paying $3 a gallon for gasoline even though it brought about a great reduction in green house emissions :)

    Even the people promoting wind power know that, at most, it can only provide 35% of the grids requirements because even if all the wind sources are joined together with 1000's of miles of DC power lines there will still be enough fluctuation in power being generated that the grid will need to have 65% of its power supplied by extremely reliable sources like coal, gas, or nuclear.

    Most of the electricity generated today is lost in transmission. Point to point high voltage DC transmission is more efficient than AC but is much more complicated. Linking lots of wind turbines together requires some very sophisticated switching/circuit breaking. Coal is easy and we already have a huge AC power distribution system.

    Naturally I think nuclear power is wiser but I am confident that society will be foolish enough to dally with wind power for some time so I also own shares of Fuel Tech. An interesting wind power play is American Superconductor. It generates its revenues making those complex switches so the wind power bonanza will keep them going until society is ready to invest in zero power loss transmission lines made of high temperature superconducting wire made by American Superconductor, Small nuclear plants near big cities transmitting power underground along superconductors would cut power production requirements significantly or raise capacity enough to recharge electric cars. While folks rejoice about the near term prospect of rechargeable electric cars they might consider how much more electricity we will need to generate to replace the power we derive from gasoline. If GM survives and the Volt is a success there won't be enough electricity generation capacity in the US to keep the Volts operating.

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