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Chesapeake Energy [CHK  Loading...      ()   ] CEO Aubrey McClendon made a heck of a case for natural gas earlier on Friday’s Mad Money. The fuel is cheaper, more environmentally friendly and plentiful here in the U.S. He predicted prices at the pump could drop to $2 if only Washington would get behind his plan to get us off foreign oil.

But no vehicles can run on natural gas without the right technology. That’s where Fuel Systems [FSYS  Loading...      ()   ] comes in. This company makes the pressure regulators, fuel injectors, flow control valves, electronic control systems and fuel storage systems needed to turn regular vehicles into those that can run on compressed natural gas or liquefied petroleum gases like propane.

A switch to Fuel Systems’ products lowers emissions, conserves fuel and costs only about half as much as diesel or gasoline systems. Clients like Toyota Motor [TM  Loading...      ()   ], Cummins [CMI  Loading...      ()   ], Caterpillar [CAT  Loading...      ()   ], General Motors [GM  Loading...      ()   ], Ford [F  Loading...      ()   ] and others that make the switch get their money back in only six to 18 months, and Fuel Systems will handle installation before the vehicles are sent to dealerships to be sold.

The switch to nat-gas vehicles is well underway else where in the world, so it’s no wonder that Fuel Systems earns 77% of its revenues from overseas. The company has opened a second facility to accommodate the extra business and expects to double the number of vehicles it converts by the end of the year.

But the U.S. doesn’t seem to be too far behind. California has an initiative on the November ballot that would start a $2.9 billion fund to provide incentives for people buying alternative energy vehicles, starting Jan. 1, 2009, plus invest another $5 billion in projects and more incentives to promote renewable energy and alternative fuels.

Two other names in this space Cramer recommended today were Westport Innovations and Clean Energy Fuels [CLNE  Loading...      ()   ].

Westport, 12% owned by T. Boone Pickens, only trades in Toronto right now under symbol WPT. But the company, which makes fuel systems for commercial vehicles that allows them to run on liquefied or compressed natural gas, is involved with a project at the port of Long Beach, Calif., that will convert the older trucks being used there to newer, cleaner models.

Clean Energy is also part of the Long Beach initiative, but its business is in turning nat gas into a usable fuel. The company has its own liquefied natural gas plant, is building another, and has 175 fueling stations in the U.S. and Canada, including one at the Long Beach port. There are plans to build two more in the area.

Both these picks are as small and speculative as Fuel Systems, though, so the usual rules apply. Use limit orders. Buy in small amounts. This is speculation Friday after all. Use the weekend to do your homework before you decide these stocks are right for you.




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