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YOU MIGHT NEVER

have seen a Honda Civic GX. Yet earlier this year, for the fifth year in a row, it was named Greenest Vehicle by the American Council for an Energy-Efficient Economy. The second- and third-ranked cars, Toyota's Prius and Honda's Civic Hybrid, run on gasoline with battery assistance. The GX uses neither gasoline nor a battery. It runs on natural gas.

Natural gas holds three advantages over gasoline: It's cheap, clean and abundant in and around America. It typically costs 20% to 30% less than gasoline, and the spread lately has widened. Natural gas has 25% less carbon content than gasoline or diesel, which means it creates less smog. And while North America produces barely more than half the crude oil that runs through America's refineries, it supplies nearly all of America's natural gas.

Other perks come courtesy of lawmakers. Like hybrids, natural gas cars qualify buyers for tax breaks. In some states they earn solo drivers entrance into speedy highway lanes otherwise reserved for cars with multiple passengers.

Good luck finding a GX. Honda only makes about 1,000 a year, and only sells them in a few markets in California and New York. But you can have a natural gas system added to your gasoline-powered car a fairly common practice in Europe, where gasoline is much more expensive. One company that makes the parts needed for such a conversion, Fuel Systems Solutions, has seen a surge in demand of late. First-quarter sales jumped 73%. Sales of propane and natural gas systems to industrial customers for forklifts and such rose only modestly, but sales doubled in the company's transportation division, which provides natural gas systems for city buses and conversion gear for cars.

The sales surge helped earn Fuel Systems a spot alongside seven other companiesRun the search anytime you like using SmartMoney's stock screener and the list of criteria It also caught Wall Street by surprise. Analysts expected Fuel systems to produce first-quarter earnings of 18 cents a share. It announced 40 cents a share. The stock's response has been remarkable. In early March it fetched $10 and change. Today you'll pay more than $35.

Fuel Systems seems to have all the makings of an environmental wonder-stock. Apart from the sales gains, there's a push by the European Union to increase its mix of natural gas cars, and the number of special fueling stations in California is rising. Renowned oil investor T. Boone Pickens has even bought a stake in one fueling chain. That sort of buzz could surely push the stock higher. But bargain hunters should probably hold off.

Shares fetch 36 times this year's earnings forecast, a multiple that demands extraordinary growth. So far, though, Wall Street envisions earnings increasing a ho-hum 18% next year. Natural gas cars cost about $5,000 more than gasoline-powered siblings, and after-market conversions cost about the same. The payoff period for that investment might be five years, depending on how much you drive. During those five years, you'll have to think ahead when it comes to refueling. Natural gas provides just half the driving range of gasoline, and despite the recent growth in fueling stations, there are only some 1,500 world-wide. It's possible to set up a fueling station at your home, but that costs more money and might require a permit. For municipalities that do their own fueling, of course, natural gas is a better deal. Hence, its rapid acceptance for city buses.

Personally, I have a hard time believing that natural gas is the next big thing for cars. That role, I'm guessing, will fall to batteries. They're almost good enough now. Their use in hybrids is spurring the research to make them better. Batteries allow the job of power generation to be outsourced from under the hood to your local utility, which can create per-mile efficiencies that trounce those of tiny engines. Also, the acceleration an electric car can provide makes a mockery of combustion engines. See the Tesla Roadster for an example.

I could be wrong, and either way, there's surely plenty of opportunity for natural gas in the near term. I have long advised readers to seek out companies with recent upside earnings surprises and plenty of share-price momentum. Fuel Systems is just such a company. For my tastes, though, its stock seems a bit too expensive.

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Data as of June 18, 2008.

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