What does the government have up its sleeves this time? While the president is on vacation (playing golf with shady business connections), the White House put out a report detailing how the economy is much worse off than it originally anticipated.

Of course, Wall Street shrugs it off, virtually saying, “Washington was wrong? What else is new?”

Most intriguing, or alarming, is the White House’s latest deficit predictions. Instead of the $7 trillion estimate predicted in May, our executive branch is now expecting a gap of $9 trillion.

It turns out the notion of higher taxes really does decrease revenues.

With a cost of $2 trillion, it was an expensive lesson to learn for the rookie administration, especially as it tries to prove the benefits of a trillion-dollar healthcare overhaul.

Good luck with that

When news like this hits the Street, it is vital to remember, the Obama administration does not do anything unless it has positive political ramifications. You can bet the spinsters are going to turn today’s “dire” figures into a public-relations campaign for even more fiscal stimulus and government spending.

That is horrible news if you are a taxpayer or an American creditor. But fantastic news for the company’s already bloated from suckling on the raw teats of the American taxpayer.

The nation’s auto industry is currently sick in bed dealing with the hangover and rebound shock of the sudden weaning from public assistance.

Now that the $3 billion Cash-for-Clunkers program is officially over, automakers are wondering how long the artificially created dry spell will last.

The pain is just as bad for the nation’s car dealers. Not only are their showrooms going to be empty for the next several weeks or months, their banks accounts will look just as bleak until Uncle Sam finds his check-writing pen.

But not every stimulus-fueled company is forced to deal with the short-term gyrations created by a drive-by government.

Two companies that are in no jeopardy of giving back their recent stimulus-fueled gains are Oshkosh (NYSE:OSK) and Rentech (AMEX:RTK).

Shares of Oshkosh have soared by nearly 400% since I first mentioned the company’s investment possibilities earlier this year.

Thanks to a load of military-backed orders for vehicles suitable for the escalating fight in Afghanistan and the increased demand from infrastructure-related stimulus spending, the company’s top line is growing by the minute.

As a manufacturer of heavy equipment used in the building industry, the military and the public service sector, Oshkosh investors do not have to worry about a sudden turnaround as political attention moves on to the next hot topic.

While another set of triple-digit gains are unlikely, Oshkosh will continue to outpace the overall market, with equal or less risk, every investor’s ultimate goal.

Green with profits

For a little more risk, but plenty more potential in the return department, Rentech is worthy of our attention. Shares of the company are on the move thanks to the ever-increasing talk of a “green” economy.

If you read these pages often, you know I have covered this company several times over the past couple of months. There is a good reason. Its share price continues to rise.

In late July, shares of the synthetic-fuels developer were trading for just $0.50. Today, it will take over $2.00 to get your hands on the up-and-coming company’s revenue stream.

Why the surge?

After years of promising big potential, the $400 million company is finally making good on its potential.

First, the company announced its synthetic aviation fuel will be allowed in commercial-grade blends. The news opened the company to a multi-billion industry.

And most recently, a handful of airlines at Los Angeles International Airport announced they would be using Rentech’s synthetic diesel in the ground-based vehicles. It is a way for them to take advantage of Washington’s “green” kickbacks.

Investors should view this news as the turning point for the young company’s future. It is one of the first big stories that does not mention a “potential” market. Instead it is a fact that Rentech’s fuel will be in their tanks.

While I would be much happier to see these two companies surging in value without assistance from the political machine in Washington, smart investors will take the “green” industry gains and the free infrastructure handouts while they can.

With a public debt estimated to increase to nearly three-quarters of the nation’s GDP in the next decade, who knows how long the government will have the ability to spend?

We might as well get our tax dollars back while we still can.

Source: Two Companies Taking Advantage of the Growing Deficit

This is how giants are born, one small advance at a time. It was just eleven days ago I last wrote about Rentech (AMEX:RTK) and its biofuel industry advances.

Shares of the company traded for just $0.62 on the day I wrote, “If done well, Fischer-Tropsch technology could be the transitive fuel source this country needs as it seeks its energy independence.”

Today those same shares traded as high as $2.24. That is a 260% gain in less than eight trading days.

The news keeps getting better for this company. Two weeks ago I was writing about its breakthrough in the aviation industry. A standards-creating board gave the go-ahead to use the company’s fuel in aviation-grade jet fuel.

It was a major step forward for a company that has been working to prove its fuel-source capabilities for several long years.

Selling what they don’t have

Today’s news comes from the aviation segment, but it involves vehicles that will hopefully never leave the tarmac.

Rentech just inked a deal with eight major airlines to provide its synthetic diesel, RenDiesel, in airport-based ground service equipment working out of Los Angeles International Airport.

Starting when its production facility is finally online in 2012, the company will begin supplying 1.5 million gallons of diesel each year to the various airlines.

The equipment will be the first of their kind to run the low-emission fuel source that boast a near-zero carbon footprint that meets California’s stringent fuel standards.

As I have always said (usually with a negative, political connotation), “It starts in California and heads east.”

This time, starting on the Left Coast is good news. It will set a precedent for the nation’s other large airports as they work to lower their emissions and qualify for tax credits and other incentives.

Of course, the news is not without risk. Any $350 million company that was a $150 million company two weeks ago is going to be filled with various levels of risk.

In Rentech’s case, it will come down to the company’s proposed Rialto, California production site.

Yes, the facility that is expected to make all of this diesel and jet fuel is not on line just yet. In fact, the ribbon cutting is still over two years away. Heck, ground breaking isn’t even scheduled for at least another fifteen months or so.

A lot could happen during that time to jeopardize those future revenue streams investors are betting on today. Getting rich off of Rentech’s success is far from a sure thing, but it is more possible today than it was yesterday.

Remember, no giant was ever born an oversized monstrosity. Even Exxon Mobil (NYSE:XOM) started as a mere notion of a business plan several evolutions ago.

Rentech appears to be taking the steps it needs to grow into a large, successful firm.

It is a company worth watching and, if you can afford some risk in your portfolio, is a company worth engaging in some due diligence. I’d start with Rentech’s latest earnings report.

That quarterly profit figure sure is intriguing.

Source: Airline Cutbacks? Not for Rentech

It is good to see one of my old followings in the news this week. Sure, it has taken several years for the company to do anything remotely strategically oriented, but it is better now than never.

I first started tracking Rentech (AMEX:RTK) in 2005 during the first leg of the nation’s latest alternative-energy boom. As speculation about the company’s Fischer-Tropsch technology grew by the minute, shares of the tiny firm surged. The investors that timed it perfectly had a shot at gains of 400% or more.

Gains on speculation typically are not sustainable. Eventually the company has to produce results.  Rentech was far from successful in that department.

That is until Wednesday of this week when the company announced news that would send shares up by as much as 85%. For investors that had given up on the speculative penny stock, it was a sharp wake-up call.

The sudden surge in the company’s value comes from a breakthrough in the aviation industry. A committee at the standards-creating agency ASTM unanimously approved a measure that would allow commercial aviation jet fuel to contain up to 50% synthetic Fischer-Tropsch fuel.

The news means Rentech’s synthetic fuel, RenJet, now has a shot as a player in a very big industry.

If you are not familiar with the kind of technology Rentech is using, Fischer-Tropsch is a process that takes gas from coal, coke, even biomass and turns it into a liquid hydrocarbon product, like jet fuel, diesel or naptha.

It is old technology (the Nazis used it) that was historically too expensive to be considered profitable. But now with higher energy prices and lower input prices, Fischer-Tropsch is slowly making its way into the mainstream.

Succeeding where nobody else ever has

With the market wide open, Rentech chief focus must be to take its product from a demonstration stage to a production stage. The key variable, of course, is whether the company can do it with any sort of profit margin.

After shares soared earlier in the week, they have since dropped significantly. As I write, investors are buying shares at a 12% discount to yesterday’s closing price.

Folks interested in the company should focus on Rentech’s upcoming earnings figures on August 11. With liquidity a major variable going forward, you can bet the Street will focus on cash flows and balance-sheet improvements.

If word is positive from the company’s executives this week’s action could be a strong foreshadowing of good things to come. If done well, Fischer-Tropsch technology could be the transitive fuel source this country needs as it seeks its energy independence.

Source: Rentech: Getting Ready to Fuel an Industry

It now applies to a wide variety of similar processes for converting coal, biomass and other carbon intensive feed-stocks into usable products such as diesel and jet fuel.

These two scientists at the Kaiser Wilhelm Institute invented the process because of a petroleum shortage, increased demand and skyrocketing prices – similar to what the United States faces today. During World War II, Germany used the technology to keep Hitler’s war-machine running.

By 1944, Germany’s annual synthetic fuel production reached more than 124,000 barrels per day from 25 plants. After the war, captured German scientists continued to improve the process in the United States.

But the technology faded after the 1980s. That’s when Congress passed the Energy Security Act, which birthed the Synthetic Fuels Corp (SFC). SFC spent over $88 billion in government loans and incentives, with the goal of creating two million barrels a day of synthetic oil within seven years.

SFC was launched in 1980 and it folded in 1986 after spending billions without providing any fuel. In the grinding recession of the early 1980s, oil prices sunk from more than $39 a barrel to less than $8 a barrel. Synthetic oil became a financial bust.

Now the economics have changed…

With Oil Trading at $130 per barrel, Synthetic Fuel is a “No-Brainer”

The process works like this: Coal is broken into its components by subjecting it to high temperature and pressure, using steam and measured amounts of oxygen. This leads to the production of synthetic gas.

Because the United States has benefited from years of low price petroleum, the leader in synthetic gas grew up in South Africa. The global leader is Sasol (NYSE: SSL). Sasol uses coal and natural gas as a feedstock to produce a variety of synthetic petroleum products. Sasol produces most of South Africa’s diesel fuel using a modified Fischer-Tropsch process.

This process helped South Africa to meet energy needs during its economic isolation under Apartheid. Sasol’s process has received recent investor attention because they produce a low-sulfur diesel fuel, which minimizes the environmental impacts. As a result its stock has soared.

In the United States, a small firm named Rentech, Inc. (AMEX: RTK) provides technology to produce ultra-clean synthetic fuels and chemicals. It licenses its proprietary derivative process from the Fischer-Tropsch method.

It converts synthesis gas derived from coal, petroleum coke, biomass, natural gas, or municipal solid waste into liquid hydrocarbon products. This includes ultra clean diesel fuel, jet fuel, naphtha, specialty chemicals and other fuel products. Rentech also manufactures anhydrous ammonia, UAN, nitric acid, carbon dioxide and granular and liquid urea.

The US Air Force has been a leader in the utilization of these fuels. Most of the fleet is being certified to fly on a blend of synthetic and jet fuels. Recently, a B-1 Bomber became the first plane to break the sound barrier flying with a mixture that included synthetic jet fuel.

In addition, Rentech has a joint development agreement with Peabody Energy Corporation for the co-development of CTL projects that convert coal into ultra-clean transportation fuels using Rentech’s Process.

As with many companies focused on research and development of new technology, Rentech has yet to post a profit and its shares have traded in a small range for over a decade. RTK is still a highly speculative investment in one of the many potential solutions to our rising fuel costs.

So while the media hype is focused on solar, wind and even tidal power to solve our energy needs, the likely successor to petroleum will be refined from a black, sooty fuel that has been used since ancient times – coal.

I am happy to report that the United States has lots of coal, and companies operating in our free enterprise profit-incentive world are perfecting the technology to cleanly burn it in our planes, trains and automobiles.

Happy investing,

Floyd

Source: How These Two German Scientists Are Solving Our Energy Crisis