Friday, January 18, 2008

Growth Outside Center Ring

This blog is one of many voices extolling the potential investment in alternative energy and environmental clean-up. Investors should not overlook the companies playing outside the center ring - those who provide services to the expanding alternative energy industry.

Take GP Strategies (GPX: NYSE) as a example. GPS was featured in the September 2007 issue of the Small Cap SEARCH Newsletter published by Crystal Equity Research. GPS provides workforce development and management training services. Its target markets run the gamut of manufacturers, industrial sectors, and government agencies. GPS assists its customers in plant, equipment and product launches, provides operations and maintenance practice training, and provides lean enterprise consulting services among a variety of other business processes.

In December 2007, GPS announced the completion two demonstration hydrogen fueling stations for Chevron Technology Ventures. GPS also provided professional design services for over two dozen liquefied natural gas and liquid-to-compressed natural gas refueling stations in the south and western states.

Just this week, GPS unveiled the fourth revision of its training materials for nuclear plant operators. GPS claims a big stake in the power industry with over 20,000 “operator seats” using its GPiLearn training portal. Those seats are spread across 170 power generators.

The company’s work for power generators is not limited to workforce training. Last month GPS announced the installation of twelve of its EtaPRO performance monitoring systems for coal-fired powered plants in Spain and Mexico and another four are scheduled for installation in 2008. The EtaPRO system is used to reduce greenhouse gas emissions in power plants using coal.

The consensus estimates for GPS show an expectation for 25% growth over the next five years. The consensus EPS estimate reflects 37% growth in the next twelve months. A PEG ratio of 1.0 implies a target price of $19.50 (25 times 2008 EPS estimate of $0.78), well above the current share price of $10.00 and change.

I think consistent profits, a strong balance sheet and solid growth drivers combine to make GPX shares a compelling value at the current price level.

Neither the author of the Small Cap Copy web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein. GPX has been profiled with generally favorable commentary in the Small Cap SEARCH newsletter

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