Schmack Biogas may not spring to mind - or roll off your tongue too easily - when alternative energy companies arise as a topic of conversation.

Nevertheless, they have bucked the trend since going public in June last year, by rising by more than two times their IPO price. I have only been able to find two listed biogas stocks, both of which appear to operate pretty exclusively on in Germany, Europe (Schmack) and the USA (Environmental Power Corp). That’s why the fact that Schmack have taken over their principal German competitor augurs well for the company.

Said Mr Ulrich Schmack;

‘The acquisition of Hese Umwelt’s Biogas division represented an outstanding opportunity for us in that our Group was able to absorb the main competitor targeting the utilities market. With the new company trading under its own name, Hese Biogas GmbH, we will be able to further expand our market shares.’

Someone once said to me it’s the boring businesses that do well in the long run. And if biogas afficianados will forgive me, biogas is not a sexy alternative energy play like solar power or fuel cells. So theoretically, there is less competition and potentially more profits. In other words, clever technology is not always a clever investment. Biogas though as a sector, just might be a good long term bet.

Schmack Biogas AG , gained 1.3 euros, or 3.6 percent, to 37.3 euros. The company’s third-quarter pretax profit more than doubled to 2.1 million euros, after 900,000 euros a year ago. Revenue rose to 29.1 million euros from 12 million euros.

Quite apart from these results, what is impressive about Schmack Biogas is their sense of purpose - just look at their website - so upbeat.

There are 2 biological markets for waste fuels;

1) waste cooking oils for biofuels - I suspect this is not quite as good as is made out - see my previous post

2) waste fuels from agriculture - this I see huge potential in as the huge volume of waste remains largely untapped

If Schmack Biogas could break out of the German market and tackle other countries such as the USA it could establish global leadership. There might be a very good case for a takeover of Environmental Power Corp
- it’s US equivalent, especially with the dollar so weak against the euro right now. Both companies however appear to be preoccupied with their home markets.