Coming Week: Alternative Ideas

After Bush's "addicted to oil" comment in his 2006 State of the Union, alternative energy stocks soared en masse, and many traders are looking for a repeat performance from names such as Evergreen Solar (ESLR Quote), SunPower (SPWR Quote), Pacific Ethanol (PEIX Quote) and the often-controversial Xethanol (XNL Quote), which recently got a new CEO. Each was up solidly amid Friday's otherwise lackluster tape.

Meanwhile, alternative energy stocks such as Hoku Scientific (HOKU Quote), the beneficiary of a polysilicon contract with Sanyo Electric, and DayStar Technologies (DSTI Quote), which restructured its debt Friday, were big winners last week, an otherwise difficult period.

Other winners last week included Terra Industries (TRA Quote) and Terra Nitrogen (TNH Quote).

However, one money manager sees these agricultural chemical plays declining in the coming week because they had previously benefited from weakness in natural gas, which he believes will resume Friday's bounce of 57 cents to $6.89 per million British thermal units.

Crude also rebounded Friday, as did energy stocks such as Schlumberger (SLB Quote) and Anadarko Petroleum (APC Quote). Whether the traditional energy sector continues to rebound will be another key theme of the coming week -- and another factor in whether alternative energy stocks can rally, since falling energy prices had previously damaged their appeal.

Indeed, "the big story going into next week is alternative energy -- solar, wind power, ethanol, carbon energy," says the fund manager, who requested anonymity. "People are going to start writing about it on Monday and Tuesday going into the speech, and you'll see nothing but strength going into that."