Top 1%
I don't have the space here to examine the details of each investment choice.
But I'll help by breaking the sector into subgroups and making a few comments about each. Like any investment, you must do your homework. The major subgroups:- Ethanol The booming ethanol market is the easiest to understand and has the most mature businesses. Some, such as giant Archer Daniels Midland (ADM), are poised to branch into biofuels and other biomass recovery. It's a commodity business, so stick to those with size and scale, such as Pacific Ethanol (PEIX) and VeraSun (VSE).
- Fuel cells Fuel cells convert hydrogen to electricity through a complicated process used mostly in stationary plants to support buildings. The technology is promising but is still in the venture stage. Ballard Power (BLDP), Distributed Energy Systems (DESC), Fuelcell Energy (FCEL) and Plug Power (PLUG) are all plays, but none have arrived as proven businesses.
- Solar energy I like solar a lot, but it hasn't reached the mainstream. When I can buy inexpensive plug-and-play solar equipment at Home Depot, we'll be there. Plays in this sector include Energy Conversion Devices (ENER), Evergreen Solar (ESLR) and SunPower (SPWR). Again, none are mature, but Energy Conversion Devices has been around for a while and shows some promise, having ventures in hybrid automotive technology as well.
- Geothermal I see this as a geographically limited niche, but there is one strong player: Ormat Technologies (ORA) is a large and fairly profitable supplier to geothermal plants with some international play.
- Methane Here's an intriguing one -- converting manure and other agricultural waste to methane, the principal component of natural gas. Environmental Power (EPG) has a lead in this fragrant market.
- Wind power Big in this field is General Electric (GE), but it's hardly a pure play. Smaller is Zoltek (ZOLT), a manufacturer of the carbon fiber blades used in windmills and wind turbines (but also not a particularly pure play).
- Mutual Funds: The two choices, the (NALFX)New Alternatives Fund (NALFX) and the (GAAEX)Guinness Atkinson Alternative Energy Fund (GAAEX), are not exactly household names. Costs are high -- the New Alternatives Fund has a 1.28% management fee and a 4.75% upfront load -- so a long-term commitment is required.
- ETF: The Powershares WilderHill Clean Energy ETF (PBW) may be the quickest, cheapest and "cleanest" way to play the sector. PBW follows the WilderHill Clean Energy Index, a broad basket of individual stocks, with holdings of no more than 5% in any one company. Management fees are 0.71% .
This sector is a lot like biotech 20 years ago. A lot of question marks will evolve into a few good and very timely investments. It makes sense to play the field but not overcommit to the sector or any one business. One way or another, getting your foot in the investing door will beat buying windmills or oil wells.
TheStreet Premium Services
Jim Cramer's Action Alerts PLUS:
Trade right alongside a Wall Street pro — enjoy access to his Charitable Trust portfolio and be sent trade alerts BEFORE he makes a move. Learn MoreOptionsProfits:
Get 50+ trade ideas a week from the industry's top options experts. Plus — exclusive commentary on market trends and essential trading tools. Learn MoreReal Money:
Our team of professional Wall Street Pros — including Jim Cramer, Doug Kass, and Nicholas Vardy — delivers intelligent analysis, timely trade ideas, and colorful commentary. Learn MoreStocks Under $10:
Break into the market with small- and mid-cap stocks... all $10 or less! David Peltier tells you exactly which low-priced stocks he's buying and selling. Learn MoreTo begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
blog comments powered by Disqus
| Dow Jones | S&P 500 | NASDAQ | 10-Year Note |
|
|---|---|---|---|---|
| 12,419.86 | 1,313.32 | 2,837.36 | 16.03 |
Oil *
103.16
|
|
DOWN
160.83 |
DOWN
19.10 |
DOWN
33.63 |
DOWN
0.22 |
10 Yr
1.60%
SPDR Gold
151.91
|
|
-1.28%
|
-1.43%
|
-1.17%
|
-1.35%
|
Data delayed 20 minutes |


Connect with TheStreet