Equity X-Ray: In-Depth Research #19

Fuel Tech Is Positioned To Clean Up The Data Center Energy Boom

Introduction

Fuel Tech, Inc. (FTEK) has started to become known in the market, and it does not take much imagination to figure out why. FTEK was previously identified by the market as a deep value company, but looking at the company now points to a much better story: an operational turnaround that will lead to a growth stock sitting on the back of some significant secular tailwinds. The company intends to return to profitability in the first half of 2025, has a reasonably solid balance sheet, and is now clearly focused on high-growth market segments, such as data centers. As such, this recent move in the stock price is likely only the trailhead. The days of being able to buy FTEK based primarily on the amount of cash sitting on its books are over, now it is time to shift focus and invest in a profitable, reinvented technology player that is strategically positioned. My work suggests that while some of FTEK's earnings power is in the share price, the market has not fully appreciated this strength, hence the Buy recommendation and the $4.00 conservative target.

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Company Background

Fuel Tech is a technology firm providing recovery engineering solutions for air pollution control (APC) and water treatment, to utility and industrial clients around the world. The firm's solutions help clients to be cleaner and more efficient. Fuel Tech has a suite of technologies which provide benefits to the operators in mitigating nitrogen oxides (NOx), sulfur trioxide (SO3), and other pollutants.

The Catalyst: Cleaning Up the Data Center Boom