Nevertheless Headwaters is in three compelling businesses; construction materials, coal combustion products (CCPs), and alternative energy. The most interesting is Headwaters Energy Services develops technology for the synthetic fuels, alternative energy, and clean coal industries. In addition, Headwaters Technology Innovations Group develops technology to improve natural resource usage. It seems like "clean coal" should be huge and allow for a growing list of clients here and abroad.

AOL Money & Finance provides the following intriguing metrics. The P/E is 5.94 and although there have been earnings projections indicating a 50% cut over the next 12 months, that would still give you a P/E under 12 when its average P/E over five years has been closer to 18. If you want some figures that are screaming out at you, consider that the P/S is 0.63 and the P/B is under 1 as well, at 0.73. (These figures include a heavy dose of good will and intangibles so it is not a pure number from a value perspective.) HW does not pay a dividend and it is rare that I would spend much energy reviewing a company that does not, but this one is almost a start up in some respects given it's evolving technologies and heavy R&D spending. Standard & Poors made positive comments about Headwaters position in non-residential construction, an area that they see as expanding with increased commercial development and government spending on infrastructure like highways, waterways, bridges, and airports, to name a few.

A subsidiary of Headwaters, Covol Engineered Fuels is building its third new coal cleaning facility and this should improve the bottom line once complete and demonstrate strength in a very important area given our dependance on foreign oil and our huge reserves in coal. If coal has any meaning to Warren Buffett of Berkshire Hathaway Inc. (NYSE: BRK.A) in his acquisition of railroad stocks than perhaps HW should have greater meaning as well. In addition, it would seem to me that forming foreign partnerships in China would expand HW's opportunities tremendously given what I read about pollution in China from coal burning power plants.

Headwaters is not a core holding. That would be a company like Berkshire, see Serious Money: Safe havens -- T-Bills or Warren Buffett? posted yesterday. However, it is worth considering as a bet for inclusion in a diversified portfolio. Standard & Poors current lists HW's fair value at $20.20, halfway back to where it was. If it takes two years to achieve what they say is today's value than there is a 30% gain. If it attains it's past glory than the sky is the limit. Check it out for yourself.

Disclosure: I own shares in BRK.B.
To verify my track record, including bad calls, read Chasing Value and Serious Money.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.