investingfromtheright

I am retired and take educated guesses on all things financial.

March 21, 2007

March 22, 2007: Rendering an alternative energy stock/Part.3.5


Today,I read a review of a fairly comprehensive New York/ London Alternative Energy Conference held yesterday involving some old and new players in the global warming game. Granted, everyone in attendance had something to gain from assumption of the global warming prediction(s). I remain a skeptic to a degree, pun intended.

What I am in favor of is energy independence from rogue states. Thus the global warming goals and national defense goals have many things in common, IMO.

First, a few comments from transcript readings of the conference:

I, and more than a few analysts believe that we are only at the start of a multi-year, possibly multi-decade, global investment cycle in low-carbon generation and lower energy intensity.

Wind is the most economical, especially in the US (GE best US bet).

Solar continues fast growth in spite of higher costs. Solar thin film is the most advanced.

Gas to liquids is a more compelling energy source than I had thought. Cheniere (LNG) is the play here.

Bio fuel discussions focused on how the next generation of technology could avoid the bio fuels competing with food chain for feed stocks, which leads me to a little know stock which shows excellent prospects:

NOVA Biosource Fuels (NVBF) trading at $2.60/share on decent volume takes animal fats and renderings and processes them into bodiesel fuel using a proprietary technique. The key to NVBF's advantage is the ability to use feed stocks which are high in free fatty acids. Feed stocks which are low in free fatty acids such as soybean oil and corn are extensively used in the human food industry, and therefore much more expensive than feed stocks with limited applications in human food due to high free fatty acids. NVBF claims its final biodiesel product is also cleaner than that produced by conventional biodiesel methods because NVBF distills the fuel as the final step in the production process.Importantly, NVBF has a cost advantage in this process which means it is the ONLY biodiesel manufacturer in the US which is profitable without the $1.00/gallon US federal government subsidy, though it still receives this fee.

NVBF offers a very different and highly profitable angle compared to seed-based ethanol.A company in Finland (Neste Oil) has a similar, slightly less efficient rendering process. Smithfield Foods (SFD) has an extensive biofuels operation, but uses a somewhat archaic process that draws the ire of local residents. You can research NVBF at www.novabiosource.com

Links to this post:

Create a Link

<< Home