Questor Technology is a cleantech winner, this fund manager says

Clean tech name Questor Technology (Questor Technology Stock Quote, Chart, News TSX:QST) has had an up and down year in 2019 but with the current regulatory environment promoting energy efficiency the company has a bright future ahead.

So says Robert McWhirter who spoke to BNN Bloomberg on Monday about the stock.

“Questor makes incinerators that deal with the excess gas that typically goes off when an oil well first comes into production. Because it’s basically methane, there are increased restrictions in place which helps its business as well,” says McWhirter, president of Selective Asset Management.

“Overall, the stock is $4.25 and the earnings estimates for 2020 are $0.60 [per share] so it’s trading at approximately 8x,” he said.

Calgary-based Questor has climbed a long way over the past couple of years as their business continues to ramp up. The stock stood at $1.25 at the midpoint of 2017 and climbed to as high as $5.36 earlier this year before falling back over the last few months.

The company is taking advantage of stricter controls on oil and gas production which make Questor’s closed combustion systems more in demand for companies both in the US and Canada.

“They also have a new product which is that they take the heat and use that to get rid of water so instead of having to haul the stuff away they can basically just vaporize it and they use another source of heat to produce electricity,” said McWhirter.

“Overall, we think that the outlook for the company continues to be strong. We don’t own it but it ranks very well in our models,” he added.

Questor reported its third quarter earnings earlier this month, featuring revenue of $8.3 million, up from $5.8 million a year earlier, and earnings of $0.07 per diluted share, which was the same as a year ago.

President and CEO Audrey Mascarenhas said the company is on pace for another record year in revenue and earnings in 2019.

“The strong performance in the third quarter of 2019 is a result of great effort by the Company to secure sales contracts in Mexico, Texas, and NE British Columbia. Equipment sales during the three months ended September 30, 2019 increased $2.8 million versus the same period of 2018,” wrote Mascarenhas in a press release.

Mascarenhas pointed to the new regulatory environment in Colorado as an indication of things to come across the industry. Colorado was the first US state to regulate methane emissions from oil and gas sites in 2014, while this year, legislators toughened standards for all aspects of oil and gas from drilling to processing.

“Colorado is ground zero for a combination of oil and gas production and environmental stewardship,” wrote Mascarenhas. “Large operators are changing their approach in Colorado, recognizing they are dealing with a new social reality.”

“Responding to that social reality includes community engagement and altering drilling plans by adding cleaner, quieter technology,” she said. “[Our] company expects demand for its emissions control equipment will increase in 2020 as Colorado clients respond to the new regulations.”