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TheStreet Open House

Long-Term Value in Recent Clean Energy Selloff

Stocks in this article: MXWL ZOLT ASPW

NEW YORK ( TheStreet) -- Recent selloffs in alternative-energy investments are creating some attractive opportunities for long-term plays in the sector.

The easiest way to gain exposure to the clean energy space is to find mutual funds that are devoted to compiling a green energy portfolio. But many of these funds have expense ratios in the neighborhood of 2% and encounter additional trading costs when high turnover ratios are seen.

Because of this, the highest returns (and lowest levels of risk) can be found in individual companies that use its resources in the most efficient ways. Finding companies that meet this criteria requires some additional research, as many of these options fail to grab as many headlines as some of the more widely covered (but less cost-effective) technologies.

Here, we will look at three individual stocks that are well-positioned to benefit from the recent pullback in market valuations, giving investors some strong alternatives to the clean energy mutual funds that are typically chosen.


Remembering the Broader Trends

Investments in clean energy projects dropped by 11% last year, falling to $268.7 billion in 2012. These declines came largely as a result of reductions in government subsidies. But, at the same time, it should be remembered that 2012 was still the second strongest year on record for the green energy sector. So, it starts to become clear that the latest market reactions are simply a negative blip in an inevitable, long-term uptrend that favors multiyear "buy-and-hold" strategies.

Focusing on the Established Names

One excellent choice is Maxwell Technologies (MXWL - Get Report), which is one of the world's leading manufacturers of the electrodes that are used in ultra-capacitors. Ultra-capacitors have extremely long life spans and store electricity in applications that require high power and low-energy output. Ultra-capacitors are important for a wide range of electricity transmission and distribution applications, and are used in heavy-duty hybrid vehicles (large trucks or busses) and in energy-efficient wind turbines.


Maxwell is trading at an incredible discount (near the bottom of its all-time range), with a price-to-earnings ratio of less than 15. These declines are starting to reach a bottom, however, as Maxwell's stop-start technology continues to be one of the most cost-effective ways to improve on fuel economy for automobiles. Auto manufacturers are having some difficulty meeting the increasingly stringent fuel economy standards set by governments in Europe and the US, and this is a bullish scenario for Maxwell as its products continue to meet rising demand.

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