Thursday, December 28, 2006

Evergreen Recommendation #3

Adding Solucorp to the Portfolio

Hold your breath and consider making this play... We're talking about a small company based in New York that has several major things going for it that could "begin producing some relatively big revenue over the next six to 12 months" according to Money Central.

The company is called Solucorp, and it's listed in the pink sheets, so clearly it's a speculative play. (Even though the great James Brolin is the company's spokesperson.)

However, it could be a tremendous - if rather unsexy - play on industrial cleanup because...

  1. It has a patent on an amazing chemical compound - MBS - that reduces the spread of noxious chemicals from heavy metals at waste disposal sites... Known as a Molecular Bonding System, this compound changes the chemical makeup of such metals in such a way that they cannot leach into the soil, affecting groundwater and destroying soil.
  2. The company just signed a letter of agreement with ENI, an Italian energy conglomerate, that "could potentiallly bring hundreds of millions of dollars of work in the coming years," according to Money Central. Additionally, MBS is being considered for major cleanup programs in Massachussetts and also in Warren Buffett's hometown, Omaha, Nebraska.
  3. The company will be implementing an important test of its technology designed to clean the emissions from coal-fired power plants, in January, and the test results should be reported in February, according to company CEO Richard Runco.
As Runco wrote to shareholders recently:

"Solucorp's patented Integrated Fixation System (IFS) mercury emissionscontrol technology has opened vast opportunities in the multibilliondollar coal fired furnace industry. Mercury pollution is one of themost widely reported and greatest concerns facing the environmenttoday. Solucorp's technology is currently being implemented into aworking coal fired power plant. The commencement of full scale testingawaits delivery of back-ordered parts, and is expected to commence ina dry scrubber operation in mid January and the results will be announced before the end of February.

"Independent testing to dategives Solucorp high expectations for impressive results that will lead to the commercialization of its mercury emission control technology inthe worldwide coal fueled power plant industry in 2007."

Two things to keep in mind here...

A Play on China's Coal Obsession?

The company has successfully marketed its green technology abroad, having signed an important contract with $60 billion Italian firm ENI... This could be important when it comes to exporting its coal-plant-scrubbing technology to, say, China... which will be more than 80% dependent on coal even in 2020, according to the Energy Information Administration.

Second, it has just secured the services of public relations firm Bibicoff & Associates, Inc., to raise the company's profile in the investing world... This is the kind of media savvy that could help a company like this, and shareholders, very quickly.

Plus, the company's leadership is working on updating its auditing and reporting processes to make it more transparent. Some in the financial press are predicting that the company could jump to the Nasdaq soon after its auditing processes and cash flow are optimized.

Taking a small position now could pay off big... The stock is up 76% this year and is beginning another uptrend. But this is a total speculation play... this is for your "fun money."


Buy Solucorp Industries, Ltd. (Pink Sheets: SLUP.PK) at market, which is currently $1.50... Place a 40% trailing stop on the position meaning sell if it ever closes below $0.90... or 40% off any high attained during our holding period.

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