Alternative energy stocks represent an investment in alternative energy. Alternative energy sources are defined in the web page, and the alternative energy companies involved in the field are discussed. The major alternative energy sources include ethanol, biodiesel, LNG, GTL, solar energy, wind power, fuel cells, hybrid cars, geothermal energy, oil sands, and nuclear energy. The stocks of companies involved in energy efficiency improvements are also included. A few of the scams in the alternative energy field are covered.
Alternative energy company stocks should be considered for every energy stock portfolio, however, caution is advised. If you have a speculative personality, this is the area for you. Persons investing in the "pure" alternative energy areas, e.g., ethanol fuels, solar energy, etc., have made a killing in some stocks. But, if you jump into these areas now, you may be the ones killed as the early birds unload their now over-priced stocks. Rather than the pure alternative energy stocks, A better buy may be in blue chip stocks that have only put part of their capital to work in the alternative energy field. Additionally, investments may be available in the area of new energy sources that don't fit in the orthodox category of "alternative energy sources."
I am conservative in my financial dealings and I have a slightly different approach in this area than most of the literature. I define alternative energy sources as alternatives to the conventional oil, coal, & natural gas products, e.g., gasoline, now in general use . Those three energy sources are non-renewable, that is, when they are gone....they are gone.
To replace the above conventional non-renewable energy sources with renewable energy sources, e.g., solar energy, wind energy, wave energy, geothermal energy, biodiesel, ethanol, etc, we will need "interim" energy sources to keep us going until the renewable energy sources can be developed. The interim energy sources are as necessary in my mind as are the exotic renewable energy sources.
So, the definition of alternative energy sources used herein are the renewable energy discussed herein and, additionally, the interim energy sources.
This definition may be a little screwy but it keeps us from concentrating entirely on the pristine renewable energy sources that may take decades to get going. The conventional energy sources are running out fast and we can't shut down civilization while the renewable energy items are under development.
To me, LNG (liquefied natural gas) is an interim alternative energy source even though, it is really only natural gas in the frozen state. But emphasis is needed on LNG because, if an LNG infrastructure can be developed in the U.S., we will have an ample supply of natural gas for at least the near to medium-term future. Large deposits of natural gas (often stranded deposits) exist throughout the world and will be ideal for use as LNG.
I also define the diesel fuel products that can be produced from the more-available natural gas as alternative energy sources since such diesel products are alternatives to the present diesel fuels produced from crude oil which is in increasingly short supply. The new diesel is largely pollution-free as opposed to the conventional diesel that contains substantial amounts of contaminants. Much of the world is converting vehicle fuel use from gasoline to diesel (better gas mileage) and the potential for such gas-to-liquid (GTL) diesels is unlimited. The afore-mentioned stranded natural gas would be an ideal source for the GTL processes.
Oil produced from oil sands and tar sands is also considered an alternative energy form for the purpose of this web page. Production of oil from these sources is rapidly increasing and the oil and tar sands are a valuable interim energy source.
Uranium is included as an alternative energy for the purpose of this web page. I am convinced that, as oil and gas is depleted, we will have no choice but to turn to heavier use of nuclear energy for generating electricity. The price of Uranium is already reflecting a greatly increased demand (prices up about 1000 % in just a few years). I expect the Uranium price to eventually come down as market supply and demand kicks in. Uranium is much too plentiful to justify the present high prices. But it will take time.
To summarize, I use my own definition of alternative energy because, if we concentrate on pristine "alternative sources" such as solar energy, windmills, etc. to solve our energy crisis, we are going to soon be in a heap of trouble. We need to quickly develop what is actually there and workable and then worry about the long range stuff.
So with my "definition" caveat in mind, let us proceed.
I was shocked to recently see on TV a respected media spokesman discussing the use of the "little green pills" to improve gas mileage. You just put one or more of the expensive pills in your gas tank and your gas mileage is supposed to soar. What really shocked me was that no one was laughing at the time.
The above is probably the worst scam out there in the alternative energy area. The kit for converting cooking oil from fast food restaurants into a fuel for your car is not really that much of a scam since the oil is combustible and can be made to burn in your car; but the idea is probably impractical largely because of the odor of the cooking oil combusting. The odor will probably prevent this "alternative fuel" from getting too popular.
The present heavy use of ethanol is a mixed blessing although I am always a little suspicious when I see huge government subsidies and mandatory regulations necessary for a fuel to compete with ordinary gasoline. The farm states that grow corn love ethanol. On the less cynical side of the coin, it must be noted that Brazil has apparently actually been successful, without huge subsidies, in using ethanol to substitute for gasoline, so maybe it is a more viable fuel alternative than I think. Time will tell.
Another major problem with the ethanol producers in the immediate future is the price of corn from which most ethanol is produced. The price went over $4 per bushel briefly before retreating. Breakeven point for most ethanol producers is a corn price of $4.50 to $5.00, so a significant rise in corn prices would certainly adversely affect the ethanol market.
Archer Daniels Midland (ADM). Put my cynicism about ethanol aside when considering this company. ADM is the largest producer of ethanol for fuel and they make a great effort to maintain quality, etc in the ethanol business. Also, ethanol is just one of many products produced by this world leader in agricultural chemical products. So, an investor does not have all his eggs in the ethanol basket with this huge company.
The market cap is $28 Billion. Revenue = $53 Billion. Net income = $2.2 Billion. Obviously, ADM is not that small of a company.
ADM was down over the past year about 15% but it is still king of the ethanol stocks.
Pacific Ethanol (PEIX). A much smaller and newer company than ADM. It was a highly touted alternative energy stock a year or so ago but, in the past year or so, oil price variations have cooled the stocks of ethanol producers such as PEIX. Market cap is $189 million and revenue is $412 million
Pacific Ethanol has lost 2/3s of its value over the past year.
Another ethanol firm worth looking at is The Andersons, Inc.
First Solar, Inc (FSLR).
First Solar is an aggressive solar company which designs, manufactures, and sells solar electric power modules using a thin-film semiconductor process. According to their web site, the average module efficiency in 2005 was 9 % which was "far superior to other thin film modules."
First Solar is one of the fastest growing companies in the solar energy segment. And the company is already profitable.
First Solar has a market cap of $23 billion and revenues of $504 million. Income is $158 million
First Solar has many detractors who keep saying the company is getting ready to collapse. Instead, the stock keeps advancing. $288 per share!
And I have been cynical about the solar energy stocks! Live and learn!
First Solar is worth keeping an eye on!
Two other solar companies worth watching are SunPower Corporation and Q-Cells.
Calpine Corp (CPNLQ.PK). Before you get too excited about this "green" company, please be informed the "Q" in the stock symbol stands for "bankruptcy." In 2005, the company filed for Chapter 11 bankruptcy.
Why am I discussing a bankrupt company like Calpine for a possible stock purchase? There are several reasons:
1. The company is a real company and a green company. It has 84 power plants generating electricity using "clean" natural gas or "clean" geothermal energy or a combination of the two. It is located primarily in California where the demand for clean energy is high. There are over 2300 employees. So, it does not look like the company is just going to fade away.
2. Recent evaluations of the company have been good and recent stock market activity has been positive. Persons familiar with the company, generally, appear to be positive on its outlook. One evaluator mentioned that a ten fold increase in stock value was possible over the next two years or so. (The stock is up over 300% in the past year!) Some are dreaming of Calpine becoming the new "K-Mart" which made incredible gains when it came out of bankruptcy. (Note: K-Mart had a new stock issue after bankruptcy and that is where the amazing stock appreciation took place.)
3. $5 billion of new financing was recently obtained by the company. To me, that is evidence that, at least, some bankers think highly of the company.
4. The "clean and green" energy angle may put the company in line for some nice government subsidies as the energy crisis deepens and global warming concerns increase.
But the investor should be careful! Do your own research! The firm is in bankruptcy so the question is: "Will the stockholder get anything when the company emerges from bankruptcy?" Or will the bondholders get everything? Another question: "Will a new stock be issued as the company comes out of bankruptcy? (apparently that will happen) and how will the old stockholder be affected? Should the investor buy the old stock now or wait for the new stock issue?
Many, many questions but a considerable amount of information is available on the Internet about the company. Maybe you can find the answers there. Send me an e-mail if you pick up some pertinent information. This is one I will be watching.
My eyes always light up when people start talking about ten-fold gains but the investor must be careful here. Despite the company being a real company operating in the right energy business at the right time, and despite good recent reports on the company, the stock is still speculative. Don't put all your retirement money in this stock! Still, it may be worth a small investment!
In my opinion, LNG companies have a bright future as an alternative energy source. I just don't know which of the LNG firms will win out. Some of the active LNG firms are:
McMoRan Exploration Co. (MMR). A small independent oil and gas company engaged in the exploration, development and production of oil and natural gas offshore in the Gulf of Mexico and onshore in the Gulf Coast area.
The most exciting thing about this company is its involvement in the development of the Main Pass Energy HubTM (MPEHTM ). The MPEHTM is an offshore terminal being constructed around the huge abandoned Main Pass Block 299 offshore Sulphur mine and facility off the Louisiana coast. The MPEHTM will receive LNG, regasify the LNG, store the natural gas in the salt dome at Main Pass, and distribute the natural gas to markets via pipelines.
The revenues for McMoRan are $481 million. Market cap = $908 million. The stock price is up about 15% over the past year.
(Note: I worked for many years for the now-defunct parent of this company back when the company was mining sulphur.)
Cheniere Energy Inc (LNG). This small (revenues = only $647,000) independent firm also is engaged in oil and gas exploration in the Gulf Coast area. As with McMoRan, the exciting thing about the firm is its heavy involvement in the development of a liquefied natural gas (LNG) receiving business along the Gulf Coast. Market cap = $1.6 billion.
The stock price lost about one-third is value during the past year.
Obviously, with such a disparity between revenues and market cap, many investors have a very optimistic view of the company's future.
Dominion Resources, Inc (D). A fully integrated gas and electric company headquartered in Richmond, Virginia. Dominion generates and distributes electric power, but more important to this web site, it explores for oil and gas and delivers the oil and gas. Even more important to this web site, is that Dominion is heavily involved in LNG and actually operates one of the handful of LNG terminals presently operating in the U.S. Dominion has several other terminals proposed and has a large expansion planned for the existing terminal. It looks like Dominion is serious about LNG and is getting in on the ground floor.
Dominion's revenues are $16 billion and net profit was $ 2.7 billion. Market cap = $23 billion. The stock lost about 10% over the past year.
Gas-to-Liquids (GTL). GTL processes utilize natural gas to produce a "diesel-type" liquid fuel that is relatively pollution free. Handling the GTL is much easier than handling LNG in that it is non-explosive and easier to transport (does not require cooling facilities or special terminals).
Both LNG and GTL have bright futures. Russia, Iran, and Qatar , the three countries with the largest natural gas reserves, also have bright futures in this area. Bolivia, with natural gas reserves second only to Venezuela in Latin America, would appear to be in good position, however, both Venezuela and Bolivia have been scrapping with the US so fiercely that the verbal conflicts might develop into a problem.
Sasol (SSL). I was not familiar with Sasol before I prepared this web page so it was a shock to see such large, diversified, highly technical company operating out of South Africa. With advanced companies like Sasol working in the oil & gas industry, maybe we can hold off Peak Oil for awhile.
Sasol has well-developed GTL capabilities. A huge GTL facility is almost finished in Qatar. Even Iran and China are apparently going to use Sasol to construct GTL plants in their countries.
In addition to producing liquid fuel from natural gas, Sasol also produces liquid fuel from coal. They also produce many other chemicals and are also involved in oil & gas exploration and production. They are involved in the large offshore Gabon fields.
Sasol's annual revenue is about $10 Billion and net profit is about $2 billion. Market cap is about $23 billion.
Sasol looks like a good investment for the long run. The stock is up about 40% over the past year. But will competing GTL processes eventually take some of the wind out of their sails?
Clean Energy Fuels Corp (CLNE). This California-based company has been called a pure play on the use of natural gas (compressed and LNG) to drive vehicles. As far as profitability goes, this new company is still dripping red ink but revenues are increasing dramatically. Boone Pickens is the largest investor in the company - a good sign sign since no one knows the oil/gas business like Pickens. On the other side of the coin, world famous stock analyzer, Jim Cramer, won't rate the company saying it cannot be properly evaluated at this time.
Clean Energy Fuels has 170 natural gas fueling stations operating at this time and these stations service over 13,000 vehicles, e.g., public transit vehicles, etc. The company is presently expanding its operations to Peru.
Vehicles operating on compressed natural gas are more popular in the western states but their use will spread. The cost per gallon of gasoline equivalent is considerably lower than with pure gasoline.
Clean Energy Fuels has a market cap of $572 million and revenues of $118 million. As inferred above, the company is operating at a loss but is forecast to become profitable in a year or so. The stock is virtually unchanged over the past year but, nevertheless, is highly recommended by the stock analysts.
An interesting alternative energy play! It appears that compressed natural gas and LNG have more of a future in fueling vehicles than many of us anticipated. And you get Boone Pickens as a bonus!
Canadian Oil Sands Trust (COS.UNTO - Toronto Stock Exchange). This Canadian Trust is the best way for a pure investment in the oil sands. Canadian Oil Sands Trust owns over 35 % of the Syncrude Joint Venture. Syncrude was formed to develop the Canadian oil sands and has been very successful in that venture. Production of a light oil from the oil sands has been surprisingly high although some equipment outages have occurred. A daily production rate of about 350,000 barrels of syncrude oil is being achieved by the joint venture. Additionally, the production rate is being continually increased and the huge reserves available make it almost certain that production rate increases can continue for the next decade or two.
The success in upgrading the bitumen that is first extracted from the oil sands to a light oil product is remarkable.
I, for one, have been surprised by the success experienced in mining the Canadian oil sands. A year ago, I forecast all sorts of operational and environmental problems. Just goes to show you (me) that the "market system" works. Peak oil may very well be delayed if oil sands mining success continues.
A Canadian trust offers the investor an opportunity to gain via annual distributions of profits and via capital appreciation. Canadian trusts are not as limited in their investment opportunities as are U.S. trusts. Asset growth is much more possible with the Canadian trusts.
Annual revenue of Canadian Oil Sands Trust is about $2 billion and net income is approximately $1.3 billion per year. The stock price has been flat over the past year.
A U.S. citizen wishing to invest in Canadian Oil Sands Trust should contact an investment advisor familiar with the Canadian trusts. I am not familiar with the details of investing in the Canadian trusts, however, these trusts are becoming increasingly popular with investors.
Toyota Motor Corporation (TM). It is unusual to classify a firm as large as Toyota as an alternative energy company. However, Toyota's Prius brand of automobiles has dominated the hybrid car segment. Early on, Toyota jumped out front and cleverly established Prius as the hybrid car. Other firm's hybrid models - often as good or better than the Prius - have taken a back seat. Notably, the hybrids of the U.S. big three auto companies have been in that back seat. As of now, Toyota seems poised to continue to lead the pack.
Toyota has a market cap of $210 billion, revenues of $214 billion, and net income of $15 billion. The PE of Toyota is about 13 so there appears room to grow. Analysts rate the company excellent. Over the past year, Toyota stock is up about 15%.
Toyota concentrates its business on passenger cars and other vehicles including pick-ups. It has world-wide production and marketing facilities.
Florida Power & Light Company (FPL). This is a Florida electric utility which generates electricity using natural gas, nuclear energy, and wind energy. Of interest to this alternative energy site is the use by FPL of wind energy as a major source of electrical power generation. FPL is thought to have about 25 projects lined up for additional use of wind energy for this purpose.
FPL is a large company with a market cap of $25 billion. Revenue is $15 billion per year and net income is $1.2 billion. FPL stock price is up one-third over the past year.
Many environmental folks will be watching the utility to see how the wind energy projects go.
(Note: Three other well-recognized firms involved in the wind energy area are: Iberdrola, (IBDRY.PK), a large, aggressive Spanish firm extending its reach into the U.S. by purchasing a U.S. utility for $4.5 billion; Headwaters, (HW), a firm with some new alternative energy technology; and, small but higly-recommended GCTAF.PK. These are foreign firms so information is limited but I was very interested in the large firm, Iberdrola. The company looks like they would like to take over the wind energy business. Additionally, they are big in other utility and engineering enterprises. Maybe you can find enough information on them to make a decision.)
Cameco (CCO.TO). Uranium mining is getting hot again as the world's supply of oil and gas run down. Cameco is the world's largest Uranium ore producer. The company is headquartered in Canada but has mines in Australia and elsewhere.
A neat twist to Cameco is that a majority-owned subsidiary, Centerra Gold Inc, is a major producer of Gold in Kyrgyzstan.
Two hot metals for the price of one!
Cameco has a market cap of about $15 billion, annual revenues of $1.3 billion, and net income of $100 million or so. The stock price is up about 10% over the past year.
I had some difficulty in quickly finding reliable information on Cameco so you will need to do some research before you invest.
Royal Phillips Electronics (PHG). A giant of an electronic firm and a much-neglected firm. Now Phillips, which is part conglomerate, is divesting itself of company parts that don't fit with its new self and buying up firms that do fit. I particularly like the recent purchase of Color Kinetics, a firm that specialized in Light Emitting Diodes (LED's), and it is this acquisition that points out the direction the "new" Phillips is heading. The new direction is toward the alternative energy area ( I say a firm that has, as major products, energy saving devices (LED's), is an alternative energy firm!)
With Phillips, you get a well-diversified electronics firm that appears to be priced substantially below the other giants in the field. (Jim Cramer says it is 20% underpriced - if you happen to follow Cramer!)
In any event, I like the direction the firm is moving. Even Jim Cramer is on the ball sometimes.
Phillips has a market cap of $47 billion, revenues of $36 billion, net income of $4 billion, and an unbelievable low PE of about 5. Don't get carried away by the net income and the PE. As Phillips sells off companies that it owns, it has to report the stock appreciation of the subsidiary companies as profit so you are getting some one-time profits showing up.
The stock price is up 25% over the past year.
Westport Innovations (TSE:WPT). A leading developer of technology that allows engines to run on clean burning fuels such as natural gas. I was particularly interested in their technology which allows LNG (liquefied natural gas) to be substituted for diesel in certain heavy duty truck applications. This and other of their technologies is presently being commercialized. Westport is involved in a joint venture with the big-name diesel manufacturer, Cummins Inc.
Westport's revenue ($60 million) is now growing rapidly and the first quarter of 2007 showed a net profit for the first time. Their market cap is small...only $138 million.
I like their technology, I like their joint venture with Cummins, and I like their rapid revenue growth.
This is one to keep an eye on.
(For an interview with their CEO, go to the top alternative energy blog, alternative energy stocks.)
Xsunx (XSNX.OB). If you really want a long shot in the alternative energy field, Xsunx could be it. Xsunx is strictly a technology company. They develop a technology and then license the developed technology to interested parties. Their "hot" technology at the moment is Power Glass, a largely transparent, photoelectric glazing that can be applied to industrial building window glass, etc. The glass then generates electricity via solar energy. They are working to advance the technology whereby the glazing could be applied to non-glass building surfaces also.
Xsunx says their technology is superior to somewhat similar technology in use in Germany. In Germany, millions are being spent on similar technology.
The Xsunx technology certainly sounds impressive.
Xsunx has made some technology sales but their revenue to-date has been very small.
Market cap is $62 million, revenue is $7 thousand. The stock is down about 20% over the past year.
Due diligence is advised. This is a development company in the earliest stages. My information on it is extremely limited.
General Electric (GE). For those of you who are not interested in investing in the smaller companies listed above, GE may be of interest to you. GE is jumping into alternative energy in a big way. (Of course, GE is involved in many sectors in a big way!)
Some of the environmentally-friendly products that GE is involved in include LEDs, CFLs, efficient gas turbines, wind turbines, biogas engines, solar energy, etc., etc. Yes, GE is jumping into alternative energy in a big way and they have the proven technology to be the leader in the alternative energy field.
GE, with a market cap of $357 billion, annual revenue of $170 billion and net income of $22 billion, is the bluest of blue chip stocks! The stock is up about 15% over the past year.
Johnson Controls Inc. (JCI). Another blue chip. Johnson Controls is mentioned prominently in the alternative energy literature due to the company segment dedicated to "efficient buildings." The providing of energy-efficient buildings and homes is regarded as many alternative energy experts as the number one way to fight the energy crisis (Peak Oil). But Johnson is also in the battery business - lead acid batteries for vehicles and lithium-ion batteries for plug-in hybrids (joint venture with the French company, Saft). Johnson, of course is well known for its instrument products and systems for vehicles.
Johnson has a market cap of $19.7 billion, annual revenues of $36 billion, and net income of $ 1.4 billion. Johnson stock is virtually unchanged over the past year although it was volatile during that period..
General Cable Corp (BGC). Still another smaller blue chip. I love the chart for this company. It has the type of slow, steady rise that conservative investors look for. The stock seldom retreats.....just keeps inching away! BGC stock is unchanged since last year.
But to get down to brass tacks about the company. It makes transmission cables of all types and sizes and transmission cables are going to be a huge business as alternative energy sources start coming on line and as efficiency requirements tighten along the electrical grids.
The market cap is $3.0 billion, revenue is $4.6 billion, and net income is $208 million.
1. Alternative Energy Sources. LNG, oil sands, solar energy, wind energy, hybrid cars, etc. are all discussed. We need good alternative energy sources in the worst way!
2. Alternative Energy Sources - Solar - Ethanol - Biodiesel - Wind. Focuses on the renewable alternative energy sources - solar energy, ethanol, biodiesel, wind energy.
3. Global Warming. Al Gore may be a pointy-headed liberal but he is right....Global warming is on the way.
4. Oil & Energy Crisis. Peak Oil is just around the corner and an energy crisis and fuel shortages are already developing. What will happen when Peak Oil actually arrives? Better get alternative energy sources developed!
5. Global Warming & Alternative Energy Sources (Blog). Global warming is arriving and Peak Oil is not far away. Renewable energy, anyone?
6. Oil & Energy Company Stocks. With an energy crisis developing, oil and other energy company stocks - both alternative energy company stocks and conventional oil company stocks - should be a good buy.
7. Bakken Formation Oil Field. The hottest oil play in the U.S.......maybe in the world! The North Dakota oil field may have up to 500 billion barrels of oil (and it may have a lot less recoverable oil!).
Alternative energy stocks can be a good investment as the present energy crisis develops. The alternative energy companies include those companies involved in oil sands, solar energy, LNG, GTL, wind power, geothermal energy, ethanol, biodiesel, and hybrid cars as well as those energy companies involved in energy efficiency systems and devices. The era of alternative energy has begun!
Last Updated: 06/07/08
e-mail me @ vanc13@cox.net
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Disclaimer
This web site, titled Alternative Energy Company Stocks, and the information included herein, is intended to provide information only and should not be construed as investment advice. The information provided is meant to broaden your knowledge and enable you to make better investment decisions within your portfolio.
Sometimes I give an opinion on the quality of an investment. This information is based solely on my own investment goals and investment needs and might not reflect your goals and needs and might not be an appropriate investment for your portfolio.
Please consult with your financial manager/consultant/accountant before actually purchasing any of the investments discussed herein.
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