By Stephen Leeb, The Complete Investor

Down, but not out. That's perhaps the best way to describe Shaw Group (SHAW), which suffered through a dreadful fiscal 2011. The company lost more than $2 a share as Europe's debt crisis and fears of global slowdown caused many major construction and engineering projects to be delayed or shelved.

The tragic Fukushima disaster, which dealt a temporary blow to nuclear power development, was a further headwind last year. But now Shaw is bouncing back.

While Japan and Germany are rethinking nuclear, other countries, most notably China, are moving ahead. Shaw will benefit from such development.

Here in the U.S., nuclear power is well established, with Shaw an important if overlooked player in nuclear plant construction and maintenance.

Construction permits are pending for more than 25 nuclear power plants (mostly to generate more power from existing nuclear units but for new builds as well), with regulatory approval expected shortly for several of them.

This could push Shaw's backlog substantially higher in the year's second half and give the stock a healthy boost. For now, however, management projects a $22 billion backlog at yearend.

Shaw is also strongly positioned to capitalize on growth in conventional power generation. EPA regulations will require around one-third of U.S. coal-fired power plants to upgrade in the next several years to reduce their emission of pollutants.

The market for flue gas desulfurization units, (scrubbers) represents $35 billion in spending in the next five years, and Shaw stands to capture as much as 20% of that business.

Meanwhile, record production and the dramatic drop in natural gas prices resulting from drilling in unconventional shale formations have prompted more utilities to scrap coal plants in favor of gas-fired plants.

Here, too, Shaw should find lots of work in the estimated $20 billion spending spree in the next few years.

Other steps Shaw is taking to enhance its bottom line include plans to sell off its energy and chemicals business, which has been a drag on the company's results in recent years.

The company also looks to complete the sale of its 20% stake in Westinghouse Electric in late 2012.

Although investors have begun to return to Shaw, the stock has yet to fully reflect the company's cash-flow generating prospects.

Trading at 13 times year-ahead earnings and likely to generate profit growth in the mid to upper teens over the next several years, the company offers investors strong return potential.

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