Tougher Pollution Rules Are Buoying ADA-ES
Control of carbon emissions from coal-fired power plants has long been a hot topic, but states are now slapping limits on mercury output, too. And investors are watching. Illinois O.K.'d a regulation in December that requires power plants to retrofit activated carbon injection on the state's 56 boilers during 2008-09. "We're getting a lot more orders these days," says Michael Durham, president of ADA-ES (ADES ), which provides technology and equipment that help coal plants enhance existing pollution-control systems and improve their efficiency. Today, 12 states have mercury-control rules, and an additional 13 are considering regulations stricter than the existing federal Clean Air Mercury Rule. John Quealy of investment firm Canaccord Adams, who rates ADA-ES a buy, says state legislation is the primary impetus for adopting mercury control systems. That produced solid fourth-quarter results for ADA-ES. The strong sales in its mercury-emission-control unit provided most of the oomph. He sees the stock, now at 17.67, hitting 20 in a year. Another bull, William Burns of investment firm Johnson Rice, expects the mercury-control market to double by 2010. He forecasts earnings of 11 cents a share in 2007 and 18 cents in 2008, up from 2006's 7 cents.
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By Gene G. Marcial