Fuel Systems Solutions (FSYS): Not a buy right now

By Brendan Coffey, Editor of Cabot Green Investor

From Cabot Wealth Advisory 5/17/10 Sign up for free Cabot Wealth Advisory e-newsletter

I don’t know if the Gulf disaster makes it a good time for it or not, but last Wednesday, U.S. Senators John Kerry and Joe Lieberman introduced their American Power Act. Thanks to a colleague at the excellent renewable energy news blog ThePhoenixSun (http://www.thephoenixsun.com), I was able to read a staff-only internal 21-page summary of the bill.

Found in its pages: Despite the ongoing BP disaster, Kerry and Lieberman stick with the new plan for offshore drilling on areas of the coasts previously off limits; it calls for a speeding up of the regulatory approval process for new nuclear power plants, boosting electric vehicle infrastructure across the country, researching carbon sequestration, creating a carbon reduction system—primarily a cap and trade among the largest 7,500 carbon emitters in the country (with, thankfully, a provision to keep the trading market transparent), and a healthy incentive system for investing in natural gas vehicles and infrastructure.



As editor of Cabot Green Investor, a newsletter that focuses on the technology that will transform our energy future, there is a lot in the bill that intrigues me. The nuclear option could re-energize investing in some stodgy utility companies as well as the significant number of uranium miners and related companies.

Carbon sequestration is a nascent industry—so much so, some would argue it isn’t an industry at all—that holds out the promise of an undiscovered company with revolutionary technology making a lot of investors rich.

Carbon cap-and-trade may benefit some big investment banks, but almost certainly would create new dedicated trading companies and exchanges we could potentially invest in, too.

Right now, the option with the most immediate potential effect on the market is the section on natural gas vehicle incentives. For one, a provision to double tax incentives for the next 10 years will reduce the payback period for the extra cost of a compressed natural gas (CNG) vehicle for fleet operators such as waste haulers and 18-wheelers well below one year.

Natural gas in its compressed state is a fairly attractive alternative to gasoline and diesel powered vehicles. Technology-wise, it doesn’t take a great deal of effort to make a new car or truck run on CNG, or convert a traditional engine to use it and it’s proven technology—a recent estimate showed CNG vehicles accounted for 25% of all new cars sold in Italy, a country that has done the most to encourage CNG use.  

On average, a CNG vehicle emits about 30% of the pollutants of one that runs on diesel. That means right now, trucks using CNG are already compliant with strict new Environmental Protection Agency pollution requirements that went into effect this year, rules that are so strict at least one diesel engine maker decided to exit the business rather than try to meet the new standard. Airports and seaports, under pressure to reduce their carbon footprint and improve their air quality, love CNG vehicles, too. The Port of Los Angeles and Long Beach, for instance, is demanding CNG trucks and forklifts be used on site as part of their plan to meet impending California emissions regulations.

The issue that Cabot Green Investor subscribers received last week features a company that is already a leader in natural gas engines and stands to see its business supercharged by passage of natural gas incentives (and even if the Kerry-Lieberman bill fails, there is a bill in the House to extend similar CNG incentives and tax breaks, and it has 137 co-sponsors). They also learned of a company that uses its technical skill to build an essential part for the next generation of auto and consumer electronic lithium batteries.  I can’t tell you what either stock is, since subscribers need time to build their positions. But I will tell you about an excellent natural gas related stock we’re watching for the future.

It’s Fuel System Solutions (FSYS), a California-based company with excellent exposure domestically and in that CNG hotbed of Italy. It specializes in systems to retrofit cars and light trucks to use CNG and kits it sells to automakers like Fiat and Ford to produce cars that use CNG off the assembly line.

The company has beaten Wall Street earnings estimates seven of the past eight quarters, including most recently when it reported $1.59 per share earnings when equity analysts were expecting just 91 cents! And this is during a time when gasoline prices are actually relatively low—imagine what they may do when gas prices inevitably rise again. For the full year, Wall Street expects sales of $445 million and earnings of $2.42 a share.

We sold our previous position in FSYS ahead of the market correction in January for a 16% profit. We have learned in the growth sector of Green to weigh both fundamentals and the indications given by trading patterns to invest successfully. And looking at FSYS right now, in my opinion it’s not a buy; the market correction at the start of the year did some technical damage and buying power remains low. Shares still need to vault resistance at 35, around which the 200-day moving average sits. Market conditions can change of course, but right now it looks like it if can settle over that level, it should be ripe to buy.

Editor’s Note: To get more from Brendan on the top stocks that are changing our future, subscribe to Cabot Green Investor today! Along with your subscription, you’ll get Brendan’s newest Special Report, “5 Stocks Wall Street Visionaries are Buying Now,” to help you start profiting from the enormous opportunities in the Green sector today. Click here to get started: Introduction to Cabot Green Investor


Cabot Green Investor: 5 Stocks Wall Street Visionaries are Buying Now

Only one sector has the same potential that the Internet did in the 1990s … and it’s starting to take off right now. Smart investors are already taking positions … don’t miss this opportunity to profit from the next big thing. Cabot Green Investor Editor Brendan Coffey has just released his newest Special Report, “5 Stocks Wall Street Visionaries are Buying Now,” to help you start profiting from the enormous opportunities in the Green sector today Click here for more information: Cabot Green Investor

Brendan Coffey
Analyst and Editor of Cabot Green Investor

Brendan Coffey is a member of the Cabot investment team and editor of Cabot Green Investor. A veteran financial journalist, Brendan has spent more than a decade writing about investing for publications including Barron’s, Forbes, The Wall Street Journal and a number of private-client brokerage newsletters.



Fuel Systems Solutions (FSYS): Poised to benefit from new legislation and guidelines in the Green sector

By Elyse Andrews, Editor of Cabot Wealth Advisory

From Cabot Wealth Advisory 12/12/09 Sign up for free Cabot Wealth Advisory e-newsletter

Fuel Systems Solutions (FSYS)  is poised to benefit from new legislation and guidelines in the Green sector.  It’s followed by Cabot Green Investor editor Brendan Coffey, who wrote this when he first recommended the stock in August:

“Fuel Systems Solutions makes the equipment and systems that convert a traditional engine to one that can use CNG, LNG or propane or to an engine that has the option to use either CNG, LNG, propane, diesel or gasoline on demand.

“Fuel Systems grew out of a 50-year-old California company called Impco, which focused on industrial equipment and stationary power, and combined last decade with Italian competitor BRC, which focused on light vehicles.

“Fuel Systems sells to the aftermarket for individuals or companies that want to convert existing engines to use natural gas, and to the original equipment market (OEM), tweaking automakers’ cars and trucks to use CNG or LNG before they are delivered to dealers.  …  Whether OEM or aftermarket, conversion work involves adding equipment under the hood and replacing or installing additional fuel canisters that store the alternative fuel. Fuel Systems customers include Fiat, Opel, Ford and many other major automakers, none of which account for more than 10% of revenue.

“The company has manufacturing facilities in California and northern Italy, and maintains sales offices in the major CNG and LNG consumer regions, Europe, Australia, India and Pakistan chief among them. In Pakistan, for instance, the relative cheapness of natural gas versus oil means only the elite have cars running on gasoline. In Europe, a desire to reduce air pollution steers consumers to natural gas, as does the European union mandate to get 20% of all vehicles running on fuels other than petrol or diesel.

“The big story for Fuel Systems is the potential of the American market. About 80% of revenues each of the past three years have come from outside the United States … a potential boon is a bill introduced by Senate majority leader Harry Reid of Nevada to provide tax incentives to buyers of natural gas vehicles, a plan that has gotten a lot of vocal support from oilman T. Boone Pickens, who owns the majority of natural gas fueling station chain Clean Energy Fuels.

“The bill would boost the tax incentive to natural gas vehicles to as much as $12,500 per vehicle and to $100,000 for natural gas fueling stations. The bill is certain to pass, if the number of its co-sponsors (77) is a reliable indicator, although it may not be addressed until after health care in September. The House of Representatives passed a bill earlier this summer authorizing $150 million to research natural gas vehicles.”

The stock has had a great four weeks after posting excellent quarterly results, and has pulled back to its 50-day moving average in the past two days, so Brendan is urging caution for now. However, Fuel Systems Solutions is bound to benefit from the push for lower greenhouse gas emissions and a focus on alternative energy, so I’d put it on your Watch List. If you want Brendan’s full recommendation, plus continuous updates on FSYS and other Green stocks, check out Cabot Green Investor. It’s the #1 source for Green sector investments that are poised to explode as climate change becomes an even hotter topic. Click here for information on Cabot Green Investor.


Fuel Systems Solutions (FSYS): Could be home run stock in natural gas conversion

By Brendan Coffey, Analyst and Editor of Cabot Green Investor?
From Cabot Wealth Advisory 11/17/09. Sign up for free Cabot Wealth Advisory e-newsletter.??

I was recently mulling the desire to reduce the U.S. carbon footprint and the part-ownership we all have in two of Detroit’s Big Three automakers. Specifically, I was thinking about Chrysler and why it just ended its electric car program ENVI.

Technically, the program was absorbed into mainstream vehicle development being run by Fiat, the Italian automaker that owns a large minority chunk and controls the management of Chrysler.

I don’t suspect that Chrysler is walking away from electric as a possible vehicle platform, but I can speculate as to where I think Chrysler, led by Fiat, is heading: compressed natural gas or CNG.

Now, I don’t believe CNG will replace gasoline, but I think it could be the major alternative vehicle option for Chrysler.

Why do I think this?

For one, Italians love natural gas powered vehicles. One recent report estimated that 25% of the vehicles sold in Italy last quarter run on compressed natural gas (or methane).

That’s an astonishing amount. And that doesn’t include the large number of after-market CNG conversions that are done to cars in Italy, too. As the largest automaker in Italy, Fiat is sending CNG-powered cars into the market. This spring, it announced six models for the Italian market that are able to run on either gasoline or natural gas. Here is a quote from a statement Fiat gave to AutoChannel.com at the time:

“Fiat believes that methane propulsion systems are currently the most appropriate and readily-available technology for resolving pollution problems in urban areas. This is because the use of methane has positive implications in terms of environmental benefits (reduction of approximately 23% in CO2 emissions and reduction of PM emissions to practically zero). Furthermore, methane proves itself to be a valid financial alternative to traditional fuels (diesel and petrol), which are increasingly subject to rising prices.”

Pretty straightforward commitment, right? CNG at the nation’s 800 filling stations is also as low as half the price of petrol in Italy.

Now consider this: the U.S. has the world’s largest reserves of natural gas.

U.S. compressed natural gas filling station company Clean Energy Fuels (CLNE) can bring the gasoline gallon-equivalent to a filling station for $2.50 a gallon wholesale.

The U.S. government is mandating automakers get cleaner vehicles on the road and is a near lock by mid-2010—if not sooner—to pass a law extending significant tax credits to build CNG filling stations and convert gas engines in trucks and cars to use CNG.

The final piece of the puzzle? The leading engine conversion company, both for automakers fitting the conversions on the assembly line and for the aftermarket, is an American company, Fuel Systems Solutions (FSYS). Fuel Systems’ U.S. arm is called Impco and it’s based in California. Fuel Systems also has a major arm called BRC, which is based in Milan and supplies conversion kits to, among others, Fiat.

As I said, this is speculation on my part about the direction of Chrysler. And regardless, FSYS is proving to be a big winner in the market: I got Cabot Green Investor subscribers into the stock in August at 31 and shares have already climbed 55% to 48 thanks to strong European conversion business and an EPA regulation on truck emissions going into effect in 2010 that will make using CNG for truck engines much more attractive.

Consider how well FSYS could perform when gasoline prices inevitably push well over $3 as the economy improves (and as the dollar, in which oil is priced on the international market, remains weak). If Chrysler takes what I see as the logical path to producing a low-emissions car in the near-future, Fuel Systems could be an early leader in the home run sector of the decade before us.

Editor’s Note: Only one sector has the same potential today that the Internet did in the 1990s … Green, and it’s starting to take off right now. Smart investors are already taking positions … don’t miss this opportunity to profit from the next big thing. Click now to get started today: Cabot Green Investor.


Fuel Systems Solutions (FSYS): Growth stock that’s hitting new highs

By Timothy Lutts, Chief Investment Strategist and Editor of Cabot Stock of the Month Report?
From Cabot Wealth Advisory 11/9/09 Sign up for free Cabot Wealth Advisory e-newsletter??

The long-term market trend remains up, and it appears as though the intermediate-term correction of the past month MAY be over. Yes, I know the Dow hit a new high today, but the Dow’s not the market. Don’t be fooled.

But don’t be dissuaded either.  If you’re in the mood for buying, you should take a good hard look at growth stocks hitting new highs.

One I like a lot is Fuel Systems Solutions (FSYS), which was recommended back in August by Cabot Green Investor. In that issue, editor Brendan Coffey wrote the following.

“Fuel Systems Solutions makes the equipment and systems that convert a traditional engine to one that can use CNG, LNG or propane or to an engine that has the option to use either CNG, LNG, propane, diesel or gasoline on demand.

“Fuel Systems grew out of a 50-year-old California company called Impco, which focused on industrial equipment and stationary power, and combined last decade with Italian competitor BRC, which focused on light vehicles.

“Fuel Systems sells to the aftermarket for individuals or companies that want to convert existing engines to use natural gas, and to the original equipment market (OEM), tweaking automakers’ cars and trucks to use CNG or LNG before they are delivered to dealers. … Whether OEM or aftermarket, conversion work involves adding equipment under the hood and replacing or installing additional fuel canisters that store the alternative fuel. Fuel Systems customers include Fiat, Opel, Ford and many other major automakers, none of which account for more than 10% of revenue.

“The company has manufacturing facilities in California and northern Italy, and maintains sales offices in the major CNG and LNG consumer regions, Europe, Australia, India and Pakistan chief among them. In Pakistan, for instance, the relative cheapness of natural gas versus oil means only the elite have cars running on gasoline. In Europe, a desire to reduce air pollution steers consumers to natural gas, as does the European union mandate to get 20% of all vehicles running on fuels other than petrol or diesel.

“The big story for Fuel Systems is the potential of the American market. About 80% of revenues each of the past three years have come from outside the United States … a potential boon is a bill introduced by Senate majority leader Harry Reid of Nevada to provide tax incentives to buyers of natural gas vehicles, a plan that has gotten a lot of vocal support from oilman T. Boone Pickens, who owns the majority of natural gas fueling station chain Clean Energy Fuels.

“The bill would boost the tax incentive to natural gas vehicles to as much as $12,500 per vehicle and to $100,000 for natural gas fueling stations. The bill is certain to pass, if the number of its co-sponsors (77) is a reliable indicator, although it may not be addressed until after health care in September. The House of Representatives passed a bill earlier this summer authorizing $150 million to research natural gas vehicles.”

Well, today the bill has not yet passed; the House has been busy with the health care bill and other matters.  But Brendan’s subscribers don’t mind. When he recommended the stock back in August, it was trading at 30. It hit 37 in September, and then marked time for a while, letting its 50-day moving average catch up.

Late October brought a sharp dip below that moving average, shaking out weak holders, and then last Thursday the company announced excellent third quarter earnings results and the stock gapped up to new highs on seven times average volume, hitting 45. And since then it’s kept climbing!

We know from experience that stocks that gap up on earnings on heavy volume tend to keep running and that’s what FSYS has done. You could still buy it here, though downside risk is clearly bigger than it was a week ago.

Editor’s Note: One of the keys to successful growth stock investing is this: You must be early, before the crowd. So now I’m telling you, Green investing is just heating up, and if you want the best advice on investing in Green growth stocks, you should listen to Brendan Coffey. His latest issue, published just this week, recommends two stocks. I’ll wager most of my readers have never heard of either one of them. But while the mass media is running headlines about big old has-beens like General Motors, Bank of America and Conde Nast, investors in these up-and-coming growth companies are getting rich. And I want you to get rich with them. Click here to get started now: Information on Cabot Green Investor