This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

An ETF to Plug Into Alternative Energy

Every time CNBC does a segment on how expensive oil, gasoline and natural gas are, my wife asks why we don't have more solar energy. All of the politics notwithstanding, that's the right question.

Alternative energy seems like it has been the next big thing for years. Perhaps now, with the cost of energy so much higher, more car companies making hybrid vehicles and a greater need for alternative power sources such as wind, this could be a time when money could be made by investing in alternative energy.

PowerShares has a year-old alternative energy ETF, the PowerShares WilderHill Clean Energy Portfolio (PBW). The fund has 41 stocks in it, most of which you probably haven't heard of, but as is the case with most PowerShares funds, no one stock has too large a weighting. Its largest holding, at 4.1% of assets, is the carbon-fiber maker Zoltek (ZOLT - Get Report).

Industrials, including a number of fuel-cell and solar-panel makers, account for 37% of the fund's assets. Its second-largest concentration is 30% in information technology. It holds a number of semiconductor companies.

Despite the heavy weighting to industrials and semiconductors, the fund has no real correlation to either sector.

It has had a much tighter correlation to the energy sector over the past year, though it has no oil stocks. I think the reason for this is that whenever we have a panic over higher oil prices, money flows into stocks that offer the chance of reducing our dependence on oil.

The fund's components will likely continue to benefit from this zeitgeist. I think we are probably quite a few years away from mainstream use of solar cells and cars running on sugar, but there will be intense debate and political wrangling about this topic. The hotter the rhetoric, the more capital that might flow into the PowerShares fund or its component stocks.

Alternative in Name, Performance the Same
The PowerShares Clean Energy Portfolio (PBW) has tracked the energy sector at large over the past year, as represented by the Energy Select Sector SPDR (XLE)
Source: BigCharts.com

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
SYM TRADE IT LAST %CHG
ZOLT $0.00 0.00%
XLE $80.13 -0.45%
PBW $5.71 -0.17%
AAPL $132.46 0.82%
FB $81.16 0.85%

Markets

DOW 18,239.16 -46.58 -0.25%
S&P 500 2,128.23 -2.59 -0.12%
NASDAQ 5,092.9980 +2.2040 0.04%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs