Will the Advanced Emissions Solutions rebound continue?

It has been a good July for shares of Advanced Emissions Solutions (NASDAQ:ADES).

Shares are up more than 50% from the lows of the month hit last week. Buyers jumped in on the announcement of Robert Rasmus as the new CEO.

And there are reasons to remain bullish, according to Courage & Conviction Investing, who leads the Seeking Alpha Second Wind Capital Investing Group.

Speaking to SA’s Investing Experts Podcast, Courage & Conviction said that there is a lot to like even in the wake of the crash in the stock price. (Listen to the full podcast here.)

In “this business, you have to know when you’re wrong. And I don’t think I’m wrong and I wrote a recent piece where I’ve tripled down. But I’ve done a lot more work on this company and behind the scenes … through a Wall Street friend (to) an expert.”

“There’s a lot of great stuff going on here,” Courage & Conviction said. “So just high level. This company is in the environmental space. So they make powder activated carbon, which is used to take out the toxins in coal-fired plants and coal-fired plants are kind of going away.”

“They do have some industrial and soil side, but they’re in the middle of upgrading their plant. So they have this $400M plant that they bought from private equity because private equity in ‘09 made an incorrect calculation that coal-fired generation would stay at 50%, and now it’s 20%.”

“They bought this asset that cost $400 million for $80 million through Apollo,” Courage & Conviction added. “And the capacity utilization was really low and they had all these bad legacy contracts and yada, yada, yada. And they had this great tax credit business with Goldman Sachs and that sunset and that made a lot of cash flow. So the company had a lot of cash.”

They “announced a strategic review and I thought that they were going to sell it because you had one asset, you had all this cash, you had like $5 in cash and the stock crashed … Because they have all this cash and because they bought Arq, they have a 30-year supply of bituminous coal, which is the big feedstock you need to make this next generation product which is granular activated carbon. And they’re in the process of upgrading their plant to get to 60 million pounds of granular activated carbon.”

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