Published: June 2, 2008

Chart Industries (Nasdaq: GTLS, $41.89) manufactures cryogenic equipment used in the production, transportation and storage of hydrocarbon and industrial gases. With three distinct business segments, the firm's products meet the needs of a wide range of customers, from hospitals to biomedical research labs to NASA. However, it's Chart's link in the liquefied natural gas (LNG) chain that has Wall Street buzzing.

Simply put, LNG is natural gas that has been cooled below -260 degrees Fahrenheit, where it conveniently turns into liquid. In that state, the liquid is highly compacted (taking up just 0.2% of the volume of the same quantity in gaseous form), where it can be shipped anywhere in the world. From there, it's a relatively simple process to convert the liquid back to gas (or re-gasify), and it's ready for use.

In years past, natural gas was almost exclusively transported via pipeline. LNG technology has eliminated those barriers, moving natural gas from distant fields, across the seas, and into the hands of whoever needs it. And it comes not a moment too soon. Here in the U.S., natural gas demand is outpacing domestic production, and the Department of Energy is forecasting LNG imports will balloon to five trillion cubic feet per year within the next two decades. Meanwhile, countries like Japan and South Korea have already become almost entirely dependent on LNG.

That's where Chart comes in. The firm makes cold box units and other specialized products designed to handle gas liquefaction, transportation and storage -- not to mention equipment for trucking fleets and other customers using LNG as an alternative to diesel fuel. By acquiring three of the pioneers in the field and merging them under one roof, Chart has carved out a leading position in this niche market. The company has secured more than two dozen patents for LNG infrastructure and installed parts in more than 90% of the world's LNG fuel stations.

It's easy to see why investors are excited about Chart's short and long-term outlook. Over the past three months, the firm's net income has more than doubled, driven by an impressive +41% sales increase in the key "Energy & Chemicals" division. Meanwhile, the backlog for future orders has risen to $470 million, about $125 million more than this same point last year. To put that figure in perspective, consider that the firm only took in revenues of $667 million all of last year.

Given the growing order backlog, management has confidently upped its full-year guidance and is now forecasting sales of up to $780 million, producing earnings of $2.33-2.45 per share. The mid-point of that figure would represent growth of +50% over 2007. Beyond that, Chart will further leverage the trust of major customers like ConocoPhillips (NYSE: COP) and have a hand in dozens of LNG terminals constructed around the world. The company will also be a major beneficiary of the push toward clean coal technologies.

After advancing nearly +75% during the past year, the stock is now closing in on a new 52-week high above $42 per share. However, with LNG capacity projected to rise at a rapid clip for years to come, this market leader is likely to continue rallying.

Nathan Slaughter
Editor
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Nathan Slaughter has developed a long and successful track record over the years by investing primarily in deeply discounted securities. He uses advanced discounted cash flow techniques, along with a host of fundamental research, to uncover quality stocks that are trading well below their actual intrinsic value.

Nathan's previous experience includes a long tenure at AXA/Equitable Advisors, where he provided comprehensive investment advisory services to small businesses and high net-worth clients. He also honed his research skills at Morgan Keegan, where he performed asset allocation, retirement planning, and consultative portfolio management services.

Several years ago Nathan switched gears and decided to devote his time exclusively to financial analysis and writing. He has since published hundreds of articles for a variety of prominent online and print publications, and he now writes exclusively for StreetAuthority.com.

Nathan's educational background includes NASD series 6, 7, 63, & 65 certifications, as well as a degree in Finance/Investment Management. He currently resides in Shreveport, LA with wife Julie and sons Aidan and Riley. 

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