There is great potential for new investment in the sustainability space next year, said John Quealy, energy technology analyst at Canaccord Adams. He shared his favorite stock picks.
“We’re looking for already established technologies in the energy technology sector—technologies that help the arbitrage between being climate-conscious yet cost-effective,” Quealy told CNBC.
“The sector generally is a risky sector, however, in this franchise, we like companies that are already profitable, unsubsidized; and companies that can compete on product cycle, market share and technology growth.”
Itron—“Itron’s a leader in the smart grid area, both domestically and worldwide,” he said. “We like Itron, it’s been underperforming this year, but it sets for a nice 2010.”
Telvent—“They help infrastructure companies deal with flows—oil and gas flow, traffic flow, agricultural flow, electron flow—almost like an IBM of clean-tech,” said Quealy.
“They have very good growth and visibility. Sixty percent of their business is offshore, so we like that emerging growth profile.”
Nalco—“[This] is one of the world’s leaders already in providing industry water technology and processed solutions,” he said.
“They’re moving into the air pollution control side in a big way in China. We like the coal cleaning space as we move into 2010 and ‘11…Cash flow yield there is over 10 percent.”
Headwaters—“We’re expecting the Obama administration to announce some pretty stringent rules with regards to coal byproducts going into 2010,” he said.
“Headwaters is one of the leading market share companies that help power plants clean their operations, so we think that company, after successful recapitalization, is poised to increase cash flow moving through ‘10 and ‘11.”
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Quealy’s firm owns shares of Itron, Televent and Nalco.
Quealy does not own shares of Headwaters.