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3 Stocks That Should Rally Nicely in 2011

Stocks in this article: NUVA CBK ENOC

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Investors love stocks that are timely, looking to buy ahead of important news or a robust quarter. That's trouble for this clean energy play, which just reported its seasonally strongest quarter. EnerNOC (ENOC) earned $1.67 a share in the September quarter, offsetting about $1.20 a share in losses in the other three quarters of the year. And since EnerNOC's profits won't re-appear until next summer, investors are drifting away, pushing shares down to a 52-week low. And that spells b-a-r-g-a-i-n for long-term investors.

EnerNOC uses its Network Operating Center to provide energy management and efficiency solutions to assist grid operators, utilities and large companies. For example, many utilities must invest in excess capacity to handle unusual demand spikes that may only happen a few times a year. By sharing the load with other utilities and working with large customers to agree to curtail usage at peak times, the utility can save a great deal of money by cutting the need for additional power plants.

The International Energy Agency refers to this as "cost avoidance," and estimates that by deploying enhanced grid intelligence, utilities can save nearly $60 billion in the next 20 years.

Investors are also perhaps negatively focusing on the fact that growth is likely to cool from around 50% this year to around 20% next year. That's still a respectable growth rate, and it can be maintained for quite a while to come as the company signs up new domestic customers and starts to penetrate international markets. EnerNOC recently signed its biggest contract ever with the Tennessee Valley Authority, the nation's largest power cooperative.

As I noted when I looked at EnerNOC back in the spring "young, high-growth companies like EnerNOC may look expensive based on near-term metrics, but can often be real bargains in the context of long-term growth."

Since then, the company has invested heavily in sales and other key areas to handle even more growth in the coming years. And with shares now 20% below where they were when I wrote about the stock in April, and 40% off their 52-week-high, this is a second chance to get in on a high-growth business model.

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