Carbon Reduction Companies
The Pollution Profits No One Knows About
Mostly though, we've discussed the various trading schemes being inaugurated and implemented around the globe. We used carbon markets as an indicator for companies that would make additional revenue from the commoditization of carbon.
The logic is that, as the price of carbon goes up, so will the perceived value of renewable energy companies that inherently reduce emissions via their day-to-day activities.
Until recently, I've been hesitant to discuss one of the more direct paths to carbon emission reduction because it involves cleaning up the dirtier side of power generation via fossil fuels.
Now, with the Alternative Energy Speculator well under way, we have an outlet to profit from opportunities that sometimes aren't considered green, but reduce harmful emissions nonetheless.
Plus, the domestic market for carbon credits is rapidly approaching being mandated and regulated. In fact, just last week Environmental Protection Agency Administrator Stephen Johnson said the agency will issue proposed rules "later this spring" on "the specific effects of climate change and potential regulation of greenhouse gas emissions from stationary and mobile sources."
So there's no time to waste. Even if the regulations aren't finalized by the end of Bush's term—which they probably won't be—all three presidential candidates seem to favor a mandated carbon reduction program.
Carbon Reduction Companies
The opportunity I want to cover is a company called CECO Environmental Corp. (NASDAQ: CECE).
CECO brings to the table more than 30 years of pollution control experience, in which they've designed systems to meet numerous OSHA and EPA air quality standards.
The company is attractive because of all the sectors it is capable of serving.
You see, emissions just don't come from power plants. They also come from drywall (gypsum) manufacturing, refining, rubber making and various metal industries, among others. Plus, the technologies used to reduce those emissions go way beyond solely carbon capture and storage.
And CECO works with companies in all of those sectors, in addition to the power generation side of things.
Just yesterday, the company announced 33 new orders, the largest of which was worth $2.5 million. Although the total price of the new orders wasn't disclosed, I put the value at no less than $9 million. Not bad for one day's work.
But new orders aren't the only indication this one is on its way up. Last week CEO Phillip Dezwirek picked up 40,000 shares at about $6.75 per share.
The last time he bought shares was all the way back in September 2005. He sold them less than seven months later for a 200% profit. I'm betting he has the same types of gains in mind this time.
And not only that, CECO recently acquired Fisher-Klosterman, Inc.—another supplier of pollution control equipment.
That acquisition brought with it Fisher-Klosterman's 40,000 sq. ft. sales and manufacturing facility in Shanghai, China. So in addition to cornering the domestic emission reduction market, CECO is now positioning itself for participation in the booming clean-up efforts in the Far East via the Clean Development Mechanism of the Kyoto Protocol.
I don't how high it's going to go. But it's climbed about 25% in the past five days, from $7.40 to about $9.20. Take a look:
The last time the insiders bought, they sold in the $12 range. But this one has seen levels above $15 as recently as last October.
Of course, there are a few more companies operating in this space that I'm following very closely. If they hit their target entry price, they could be entered into the Alternative Energy Speculator portfolio as soon as next week.
A carbon reduction play would be the most recent in a string of companies we've used to generate what we like to call "Clean-Air Cash-Outs," or the profit generated from successfully playing a cleantech company.
If you're interested, follow this link to learn more about "Clean-Air Cash-Outs."
Until next time,
Nick
