MagneGas Corporation (OTCBB: MNGA) has developed a unique technology that creates hydrogen-based fuel through the gasification of liquid waste. Unlike Fuel Tech Inc. (NASDAQ: FTEK) or CECO Environmental Corp (NASDAQ: CECE), the company’s technology offers a solution that addresses both renewable energy and waste management.
Under the direction of a new President, the company is undergoing a change from an equipment vendor to a full service operator. The change enables the firm to transition away from difficult one-off machine sales to easier recurring revenues from operation. Notably, the shift is also expected to result in strong revenue growth near-term profitability.
Unique Technology & Business Model
MagneGas has developed a unique technology that converts a hydrogen-based fuel through the gasification of liquid waste[i]. Using a proprietary plasma arc machine, the new fuel generated is a green alternative to natural gas that potentially can be used in a variety of different markets ranging from the metal working industry to municipal waste markets.
The company is targeting a number of different industries with this technology, the metal working market being among its largest target markets. With five fuel distributors already signed up, the firm will market through established industry wholesalers, trade events and media coverage in industry trade journals, among other things.
Strong Growth, Near-term Profitability
MagneGas has already seen strong revenue growth this year, noting in its 10-Q filing that new and existing customers are showing increased interest. Under its new model, revenues hit $61,253 last quarter, but may be poised to grow sharply in the coming quarters. The firm estimates that it will breakeven by March of 2012.
The company’s balance sheet is also attractive to investors with no long-term debt and a quick ratio in excess of 4x. Combined with current assets of $2.35 million.
A Great Investment Opportunity
MagneGas represents a compelling investment opportunity with its unique technology and new business model. With strong sales growth and profitability on the horizon, the company is uniquely positioned to unlock significant value for investors in the near-term. As a result, this is one stock that green energy investors may want to watch closely over the coming quarters.
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[i] The Company is currently applying for permits to process liquid waste. In the interim, it is using virgin antifreeze to produce fuel .
