The world and its environment have long been under threat of pollution. Oilfield emissions are adding to the degradation. Regulators and energy producers see the need for responsible practices to reduce emissions. On the investor side, there is clamour too, plus the incorporation of socially responsible investment.
One stock that’s providing both requirements to investors is Questor (TSXV:QST). This small-cap environmental cleantech company is starting to attract investors’ attention because of its potential to leverage green transition in oilfield operations.
For the benefit of those unfamiliar with Questor, the company is a leading provider of 99.99% efficient, safe, reliable, and regulatory-compliant patented waste gas combustion. Although it’s a small-cap stock ($114.3 million market capitalization), it has a crucial role to play.
When you speak of combustion, you are generally referring to combustors, incinerators, and thermal oxidizers. Questor specializes in the clean combustion of waste gases, methane, volatile organic compounds (VOCs), hazardous air pollutants (HAPs), and carcinogenic compounds (benzene for air quality), and greenhouse gas emissions.
After Questor cleans the hot exit gases from the stacks, they are ready for use in other process improvements such as utility heat, power generation, and wastewater purification. Hence, the demand for efficient combustion systems is on the rise.
Questor is experiencing strong secular growth in the middle of increasingly stringent oilfield emissions standards. The emerging industry is focusing on waste methane as well. Questor is also planning to monitor data on air pollution from its emissions control centre in Calgary.
At present, 92% of sales come from the U.S. and only 8% is derived from its home country. Revenue grew by 175% in 2017 and 20.6% in 2018. For this year, the growth estimate is 38.5% and 30.6% in 2020.
According to Questor CEO Audrey Mascarenhas, the company is anchoring revenue growth from the its North Dakota market and its forays into New Mexico, Texas, and Wyoming. Investors should know that Mascarenhas holds about 16% of Questor’s outstanding shares.
Analysts covering Questor are recommending a buy rating. They are forecasting the price to reach $7.25 or a potential gain of 72%. Thus far, the stock’s gain is 26%, which is better than the year-to-date increase of the S&P/TSX Energy Index.
Questor, however, is not without competition from notable and bigger companies. John Zink Hamworthy Combustion, a unit of Koch Industries, is the most noteworthy competitor. There are other companies whose business lines are overlapping with Questor.
Welcome to an anti-pollution stock
Investors should be happy with the emergence of Questor as an anti-pollution stock. The design of its incinerator systems put safety as a priority. Energy producers who are serious in implementing environmentally responsible practices need Questor’s incinerators.
Finally, there is a company that is ensuring the safety of the environment, practising innovation, and fostering trust with clients, investors, and the general populace.
If you’re not ready to buy into the narrative about Questor, keep close watch instead. The company could be the next big name on the stock market.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool owns shares of Questor Technology Inc.