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5

5-Star Stocks Poised to Pop: Fuel Tech

Based on the aggregated intelligence of 165,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, air pollution control specialist Fuel Tech (Nasdaq: FTEK  ) has earned a coveted five-star ranking.

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, Ill. (1987)

Market Cap

$133.2 million

Industry

Pollution and treatment controls

Trailing-12-Month Revenue

$71.7 million

Management

Interim CEO Douglas Bailey

CFO David Collins

Return on Equity (average, past 3 years)

3.9%

Cash/Debt

$21.1 million / $2.2 million

Competitors

Foster Wheeler (Nasdaq: FWLT  )

Hitachi (NYSE: HIT  )

Ashland (NYSE: ASH  )

General Electric (NYSE: GE  )

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 97% of the 1,028 members who have rated Fuel Tech believe the stock will outperform the S&P 500 going forward. These bulls include clif9710 and jsthoma.

A couple months ago, clif9710 tapped Fuel Tech as a rather green way to profit: "There is always a need for more efficient fuel consumption and [Fuel Tech] supplies not only additives that help but also produces burners that do, too. Oil price rises always help [Fuel Tech] and the rises will be coming."

While Fuel Tech has some formidable foes in GE Infrastructure and Ashland, the company believes no real competition exists for its targeted in-furnace injection technology, which destroys the corrosive byproducts released by coal-fired power plants. Moreover, GE and Ashland, along with Fuel Tech's main rivals in clean burners, Foster Wheeler and Hitachi, are already quite large and have their hands in several different markets. For those reasons, CAPS members like jsthoma think Fuel Tech is a particularly pure, albeit more risky, play on increasingly strict air quality standards :

Curbing emissions will continue to gain traction as a worldwide priority and green technologies will take a while to develop and proliferate. [Fuel Tech] can help bridge the gap by improving stack emissions NOW. The inconsistent financials are worrisome but I believe this stock will outperform over the long haul.

What do you think about Fuel Tech, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. 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 January 03, 2011, at 1:29 PM, weiwentg wrote:

    One key risk is how quickly Fuel Tech can get utilities to adopt its technology. The utility industry is very conservative in that they are slow to adopt new technology. FTEK's former CEO was a utility guy, but that hasn't done a lot of good for getting companies to purchase their product. They have additional cultural hurdles to clear in China. I'm holding the stock, but my patience is definitely being tried.

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Fuel Tech, Inc. CAPS Rating: *****

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