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September 29, 2005

Questions about DayStar Technologies

I received an e-mail from a reader that had questions about holding DSTI.

I had some concerns about DSTI. I was wondering if you still believe investment in this company or alternative energy stocks is worth it. If crude oil drops further (let say mid 50s) do you think it will have negative impact on alternative energy stocks particularly ENER and DSTI. I was very happy with the holding a couple days ago, but the performance of DSTI in last 2 days without any news has got me concerned.

Let me answer your question with first a question. What is your investment time horizon? If you are thinking in terms of less than a year, then I would say most of the Alternative Energy stocks are currently over priced and the short term trading profits are going to be harder to come by.

If you have a longer term time horizon of say 3-5 years, then I feel many of these stocks will make excellent investments. The key is to buy them with as low of a cost basis as possible. I have owned DSTI in the past and sold it recently before I started tracking all my portfolio purchases. The lack of news tells me there is nothing fundamentally wrong with the company. With such great gains over the last year, It maybe as simple as profit taking. You also have to keep in mind that the entire market has been in a funk the last couple of weeks. So it could also be acting in sympathy with the general market.

A quick look of the chart confirms that it topped out in early August and has been building a base around the $13 level. It has recently broken down below this base and now currently sits at a minor support level around $11.

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The technical side of me is also thinking it could fill the gap that was created in June and we could very easily see $6. However, a move like this would have to be caused by something fundamentally wrong in the company (i.e. bad news or possibly loosing a contract.)

My plans for DSTI are to hold tight here. I still think it is a good long term investment. The RSI is also starting to show a slight oversold indication so we may have seen the end of the selling. If this $11 level turns out to be some good support, I will probably add more of the stock to the mutual fund. If we see $6 with no news, I will seriously consider averaging down at this level since this is a point of major support. Keep in mind a move $6 is a greater than 50% loss on the initial investment. Most people would not be willing to stomach that type of a loss on a single investment. I am willing to take that loss in the short term if the company stays fundamentally strong. I would be a seller of the stock if they are not able to meet the goals that management has detailed in the most recent operational update.

As to the question about $50 dollar oil (or even $40), I still feel the alternative energy sector is going to do well in the next 3-5 years. We WILL see $50 dollar oil again (maybe even this year) but this is fighting the long term trend in oil and alternative energy sources are here to stay.

Distributed Energy Systems profile on Forbes.com

prtn_logo.gifDistributed Energy Systems Corp (DESC) has been profiled on Forbes.com.

Kenneth Reid, editor of Spear's Security Industry Analyst, recommends buying shares of Distributed Energy Systems. The Wallingford, Conn.-based company creates and delivers a variety of products for the alternative and decentralized energy markets.
. . .
The story of Distributed Energy and other alternative-energy players is a long-term one, say bulls like Reid. With the surge in oil prices this year, the story is resonating with investors. Distributed Energy shares are up 333% in the past year, trading around $8 after hitting a 52-week (intraday) high of $8.09 on Sept. 27. [ more ]

Forbes also has a short DESC video that gives some additional information about this stock.

My take on DESC is that it is a great company to own. I have owned it in the past and sold it with a nice profit in early August. I purposely tried to liquidate the majority of my positions in August in anticipation of blogging about all my portfolio purchases. Many of the names I owned are back on my watchlist and I have been looking for a good re-entry point for a long term hold on this stock. It is currently sitting at a 52 week high and it showing signs that it getting over bought. The Forbes profile hit the net early this morning, and DESC is currently trading above $8 pre-market. Right now I will continue to watch the stock and it is one my short list for purchase. I just want to wait a couple of days to see how the stock price action behaves.

September 27, 2005

California Approves Renewal of Wind Farm Permits

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The Alameda County Board of Supervisors approved renewal permits held by wind power companies like FPL Group Inc (FPL), and other wind generators to produce electricity at the 584-megawatt Altamont Pass wind farm, one of the world's largest wind energy centers. [ more ]

One key stipulation for the renewal is that the wind power companies need to replace over 5,000 windmills over the next 13 years with 500 more efficient turbines with high blades that spin above the birds' flight paths. This may seem like a win for the wind farm utilities, but it comes with a price. They expect this overhaul to cost them over $500 million over the next 13 years.

The true winners of this news are the companies that provide the new turbines and blades (i.e. GE Energy and Vestas) .

Electro Energy Delivers Silent Watch Battery System

eeei_logo.gifElectro Energy Inc (EEEI) announced the delivery of a Bipolar Battery System to the U.S. Army Communications and Electronics Command (CECOM), to be tested and demonstrated under the Silent Watch Program.

The EEEI bipolar battery system was built under the Company's contract with the U.S. Army Manufacturing Technology (Mantech) Program. The EEEI system, comprised of three 1kW modules, could be operated individually or as a complete system with a 3kW power capability, which would provide on-board vehicle electrical power to operate in Silent Watch Mode for three hours compared to the existing lead acid capability of 45 minutes. [ more ]

Technically this release will gather more defense sector interest for this company than anything to do with alternative energy. But you have to keep in mind that the R&D that goes into these types of projects can also be put towards commercial usage in other electric vehicles.

September 26, 2005

Shares of IDA Corp. Purchased

idacorp_logo.gif The fears of Rita have fallen away and the market is finally moving to the upside again this morning. I have been watching IdaTech (IDA) for purchase for a couple of weeks and I had previously mentioned I have been looking for a good entry point on this stock.

IDAcorp is an Idaho power utility with electrical generation using Hydro, Natural Gas, and Coal. They also own IDATech which manufactures fuel cell solutions. I'm waiting on this one until the technical picture of the chart improves. I would be a buyer if we can either get a retest of the recent $29 support level or a break out to the upside above $33.

I may be jumping the gun on this one in anticipation of a bounce from here so I determined to purchase a starting position. I determined a fixed amount of money of the mutual fund I would be willing to invest in this name. I then decided I will take 1/3 of that total and invest it at this point. Shares of IDA were purchased at a price of $30.11.

IDA is a solid company with good financials and also pays a 4% dividend. I feel that this is one of the safer investments in this sector. The 3 year chart shown below shows a nice uptrend for the last 3 years and it is currently sitting at the lower end of the upward trading channel.

ida_20050926.gif

I also purchased some additional shares of Calpine Corp. (CPN) today for the mutual fund and also opened a position in my personal portfolio at a price of $2.61. I used a similar 1/3 approach for Calpine when I made my first purchase. This is my second third of the total amount I'm willing to invest in this name. This brings my average cost down to $2.98 for CPN in the mutual fund. This is still a very risky investment and you should use caution with this one.

DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

September 23, 2005

Updates to "should I invest now?"

The more you search, the more you find. Actually right now everyone is asking the question, should I be investing in alternative energy stocks? This is because of the renewed level of intrest brought on by higher gas prices and additional external forces like Katrina and Rita.

As I stated in the past, you need to be careful during times like these. If your a trader, than feel free to play as much as you want.

MarketWatch had an article yesterday where they interview Rob Wilder the creator of the WilderHill Clean Energy index.

Fuel to the Fire
In a mark of how much interest is being given to this often volatile and speculative sector, the PowerShares WilderHill Clean Energy Portfolio almost tripled in assets, to $150 million from $55 million, since Hurricane Katrina hit the Gulf coast three weeks ago and energy prices shot higher.
. . .
As for investing in the sector, Wilder himself is quick to point out that investors should be aware of some important caveats. For example, high oil prices tend to cause a rush to alternative energy companies, but that can reverse when prices ease.

"We're tracking a very volatile sector, with lots of small caps that are in very emerging technologies," he said. "Wind is here now, solar is getting there, too, in terms of economic viability. Still way speculative are hydrogen fuel cells. [ more ]

I agree with many of his points. Sector investing (which is what I'm doing with Alt E) is risky business. I feel like the long term rewards are worth it, but I'm not dumping a bunch of money into the market right now in my personal or mutual fund portfolio in this sector. I feel the risk/reward ratio is heavily waited in the risk category. I prefer to find good entry points in stocks at reasonable levels. These entry points maybe occurring now, or several months from now. I'm in this for the long term and I'm on the constant lookout for these entry points.

p.s. Keep in mind I also thought it was stupid to be buying Google at $200 and it now sits at over $300, so do your own due diligence and keep in mind this is only one person's opinion.

The Katrina/Rita Affect on Stocks

A reader recently submitted the following comment that I felt would be ideal to talk about here.

I am wondering if you have any opinions (hopefully informed ones) about how Katrina, and now Rita, have/will affect PBW's profitability in the near and/or long term? I'm thinking of moving a few thousand I currently have in US savings bonds into a green energy fund.

I can't address whether you should or shouldn't invest your money into PBW since every person has a specific tolerance to risk and I'm not a registered investment advisor. What I can do is try to provide information so you can make your own intelligent choice of what to do.

The first step to answer this question is to find out what companies are in the PowerShares Clean Energy ETF (PBW.) This fund was created using the Wilderhill Clean Energy index. A quick stop at Yahoo!Finance allows you to look up that particular index: THE WILDERHILL CLEAN ENERGY IND (^ECO). One nice feature of Yahoo is that they list all the components that make up the various indexes they track: ^ECO Components.

A look at the PowerShares ETF prospectus shows that they attempt to keep an equal weighting for all the holdings.

So if you take the ^ECO component stocks and break them down into say 7 sub-sectors (Power Supply/Batteries, Chemical Suppliers, Fuel Cell, LED, Solar, Alt Fuel, Wind, GeoThermal) you can try to get a breakdown of what sub-sectors will either go up or down based on this short term news in the market.

Here is how I feel these various sub-sectors will be affected by Katrina-Rita. Keep in mind this is my short-term estimation on these sub-sectors. I'm bullish on all these sectors when you look out over a multiple-year time horizon.

You will see spikes up in the power backup, battery suppliers. Companies like ACPW, CPST, ULBI, APCC (which I may argue shouldn't be in the Clean Energy Index), and others should see some spikes as investors look at ways to keep the power running when the hurricane blackouts hit. Everytime there are major power outages somewhere in the world , the facilities managers throughout the country look at their own power needs. The interest in these power backup solutions increases in the short term. However, in the long term these are all very capital intensive projects and the interest fades away when they look at the costs involved. Since the majority of the capital budgets for most companies are based on the calendar year, you may see capital budgets include these items for next year and may see a pickup in contracts in the first quarter of 2006.

You will also get a similar spike when you look at the fuel cell power backup suppliers. Companies like BLDP, HYGS. But once again these projects are even more capital intensive and real contracts are harder to get.

Overall all alternative energy companies will see some spike up as people look at our reliance on the traditional petroleum based power generation solutions. So you will see renewed and continued interest in solar, wind, geothermal, etc.

Toyota is also reporting increased demand for hybrid cars because of Katrina.

Toyota Motor Corp. has seen a rise in demand for hybrid vehicles in the United States in the aftermath of Hurricane Katrina as consumers seek more mileage out of $3-gallon gasoline, a top official said on Thursday.

"At the end of last month, we had a 20-hour supply of the Prius (hybrid sedan)," Jim Press, head of Toyota's U.S. operations, said at the Reuters Autos Summit, held in Detroit. "We no longer count in days." [ more ]

The companies in this index that will be adversely affected are the actual chemical suppliers: APD, BOX, PX. A large amount of all the Hydrogen that is produced in this country comes from the gulf. So this will be bringing these companies down. A side effect of the hydrogen shortfall is that many of the chip manufactures will be hit hard.

Disruptions seen for epi wafers
Air Products & Chemicals Inc. is still unable to fulfill its orders for hydrogen gas products, which is having an impact on the epitaxial wafer supply chain.

As reported, Hurricane Katrina caused the outage of a New Orleans facility, which is owned by Air Products & Chemicals. The facility produces hydrogen used in the manufacturing of epitaxial films deposited on silicon substrates. These films mainly are used for the manufacturing of discrete, higher-voltage semiconductors employed in power-management applications. [ more ]

This means you will see hits to many of the power control suppliers and chip makers like CREE, IRF, CY, and even KYO will be adversely affected.

One of my hosting clients BillCara.com had a very astute comment posted about this particular problem.

Hydrogen and chips alert, Thurs., Sept. 22, 2005, 7:29 AM
Dear Bill, I am a semiconductor research engineer.

While small amounts of hydrogen are used in most chip process sequences, the hydrogen shortage alluded to will seriously affect only those companies that use epiwafers to make discrete, higher-voltage semiconductors employed in power-management applications.

The power semiconductor group is a fast growing but relatively small part of the overall semiconductor complex. The major companies include Cree, Diodes, International Rectifier, IXYS, On Semiconductor and Fairchild. Of these, Cree would be the worst affected in my opinion since making epiwafers is a huge part of their business.
[ more ]

So if you believe my analysis above and take a look at the specifics of PBW you have a rough breakdown of about 6 companies that will be heading lower, and possibly 30 companies heading higher in the short term on this news driven story. A month or two from now, the story will be gone and we are back to the fundamentals of each one of these companies (are they meeting estimates, getting contracts, etc.) Traders may look at this as an opportunity, investors should be careful.

I know that this is not a complete answer to whether you should or shouldn't be investing in PBW. I just wanted to give you some background, because ANY investment has inherent risk. The more you know, the more you can lessen or at least confront that risk. I just caution people that see that this is an ideal time to try and time this sector by jumping in before the news hits. The problem is the jump in point was weeks (if not months ago.)

If you feel as I do that this entire Alternative Energy sector has a long term future, then you always have the option of stepping into a position over time as well to lessen the impact of short term events in the marketplace.

September 20, 2005

Barron's Report on Silicon Shortage

Tyler Hamilton over at Clean Break has an excellent summary of the Barron's article on the State of the Solar PV market.

A couple of interesting points made in the story, based on data from analysts:
  • Within 10 years solar PV technology will be in cost parity with retail electricity prices.
  • About $100 million (U.S.) has been invested in solar-related ventures in the first half of 2005.
  • Shares of publicly traded solar-focused companies have jumped 150 per cent over the past 12 months.
  • By 2010 solar power production is expected to quadruple to 6 gigawatts worldwide. During the time, the market will grow from $11 billion (U.S.) this year to $36 billion (U.S.).

You can read Tyler's full summary and also a link to the Barron's article over at the Clean Break website.

Shares in Active Power Purchased

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I currently don't have time to do a complete writeup on this stock, but wanted to let everyone know that I purchased shares in Active Power Inc (ACPW) this afternoon for both my personal portfolio and the mutual fund. The average price was at $3.77. I will updated this post later this afternoon with more details.


Updated at 10:00 PM

As I mentioned above I purchased shares in Active Power Inc (ACPW) this afternoon for both the mutual fund and my personal portfolio. Active Power designs and sells battery-free uninterruptible power supply (UPS) systems. They accomplish this through the use of flywheel technology and they have also developed their CoolAirTM DC: Thermal and Compressed-Air Storage (TACAS) technology that uses compressed air and heat to provide clean power backup.

Last week the stock made a bullish technical signal with a golden cross using the 50/200 day moving averages. The stock is currently sitting at some support at the $3.50 level and the potential downside could be all the way down to $2.50 by looking at the technical picture. As a long term purchase, I would be willing to buy all the way down to the $2.50 level. My gut is telling me that we will not see anything below $3 for sometime.

acpw_20050920.gif

However, keep in mind this is a speculative purchase. The company is still not profitable and analyst estimates are not seeing profit opportunities for 2006 either. There is also nobody willing to float an estimate for profits looking out 5 years. The key driver for future growth in this company are more contracts and running the company efficently.

There is plenty of interest in the company and I see positive signs in the company and also the potential for a higher stock price in the future.

On the plus side, there is a history of steady buying of the stock by the Chairman, Mr. Pinkerton. The number of shares short have been steadily declining. They have been making postivie progress on the revenue estimates and also reporting better than expect losses for the most recent quarter. Finally, they have also been securing some large orders recently that have helped the stock on its recent up move.

Active Power Ships Continuous Power System for Use at Chinese National Olympics
announced the shipment of a continuous power system to China for use at the country's National Olympics being held in Nanjing in October. The system integrates an Active Power CleanSource® flywheel UPS, diesel engine generator and transfer switch, all enclosed in a standardized mobile container that allows it to operate in harsh outdoor environments. Control software is also included that allows the user to remotely monitor all aspects of the power system at one central location. [ more ]
Active Power Receives 5.4 MVA UPS Order; Largest Megawatt-Class UPS Order to Date
announced receipt of a new order from Caterpillar Inc. for four 1200 kVA flywheel uninterruptible power supply ("UPS") systems and two 300 kVA UPS systems. The units will be used to protect the state-of-the- art high speed printing operation of a large communications company in the Southeast United States. Shipment is expected to take place within the next two quarters. [ more ]

As I look at this trading for this stock today, I ended up purchasing it at the high of the day and will look for an opportunity in the near future to average down to a better price point for the mutual fund. My plans for my personal portfolio is to let it stand as is.

DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

September 16, 2005

Shares of Capstone Down over 11%

Capstone Turbine Corp (CPTC) shares closed the day with a loss of 11.38%. The company said it may end its OEM partnership agreement for its microturbine products with UTC Power LLC (United Technologies UTX.)

From MarketWatch:

Capstone cited certain breaches, including UTC's failure to meet its sales targets for the year, as reason for the potential termination of their OEM deal. Capstone said it has notified UTC that it has 90 calendar days to cure the breaches. [ more ]

The first question that you may ask is, why would this affect Capstone?

The first way to answer this is that Capstone is in the business of developing and manufacturing their microturbine technology. They realized that their core competency was in creating the products, they were not in the business of marketing and commercializing it. This is why they partnered with United in the first place. If they cancel the partnership with UTX, where are they going to sell their products and who is going to be selling it? They could have the most wonderful and most valued products in the world, but if they can't sell them then the current valuations on this stock are too high. Hence the large decline today.

cpst_20050916.gif

An even simpler explanation is that, this stock has been a huge mover over the last couple of months. It could be as simple as taking profits on your 500% gain from this month?

I still believe in this company and it has been on my short list for purchase. I was just looking for a good entry point. I'm not sure this is it, since it could go much lower. I would love to hear from them about a potential replacement to UTX if it comes down to it. Right now the notice has been sent and they have 3 months to fix any problems so this could all be just posturing.

I will be closely looking at the trading of this stock on Monday after this news and any additional news is digested over the weekend. We shall see.

Shares of Hoku Scientific on Fire

hoku_logo.gifHoku Scientific, Inc. (HOKU) is a recent addition to my stock watchlist. HOKU designs and manufactures membrane electrode assemblies (MEAs) and nonfluorinated membranes for proton exchange membrane (PEM) fuel cells. Basically they are developing the next generation of proton exchange membranes. They have strategic relationships with Sanyo Electric and Nissan Motors and are based in Hawaii.

The company received some good news from some financial analysts this week and the company is up over 50% in the last two days.

Piper Jaffray analyst Jesse Pichel said Hoku is one of the best-positioned component suppliers to the emerging fuel cell industry. Pichel said its proprietary technology has the potential to enable lower cost and better performing fuel cells, thus improving commercial viability. The analyst estimates Hoku is working in a stationary and automotive fuel cell market worth around $150 million in 2005, rising to around $2.6 billion by 2012. [ more ]

I'm not ready to commit money to this name right now. I feel that a 50% move like this in 2 days needs some time to digest in the marketplace. I would feel very comfortable buying this name if it can fill the gap back down to the $7 level. It is also interesting that I have heard about this company from 3 different sources in a 1 week time period, so it has hit the radar of many investors recently. For right now, I'm just watching.

September 15, 2005

Shares in FPL and Calpine Purchased

This morning I purchased shares for the mutual fund in two large utility companies that both have extensive research and power generation via renewable energy.

FPL Group Inc (FPL) is an electric utility that is primarily based in the South East. This company owns Florida Power and Light and has been in much of the recent news due to hurricane Katrina. FPL also owns FPL Energy which is a division that provides wholesale electric power that is generated from Natural Gas, Wind, Solar, Hydro, and Nuclear. They currently produce more Wind generated power than any company in the US and they also own two of the largest solar fields in the world. This stock also pays a 3% dividend and I feel is one of the more conservative investments. I wanted to get some money into this name as soon as possible so I purchased shares in this company this morning for the mutual fund with an average purchase price of $45.98. I plan on averaging down my cost basis over time since it is at the high end of its trading range currently. I will be buying more once it comes back down to its 50 day moving average (currently at $43.)

Calpine Corp. (CPN) is the other utility that I started a position in today. This one is a more aggressive play, but has the potential to generate better results. Calpine supplies electricity from natural gas-fired and geothermal power plants to wholesale and industrial customers in North America. This company has had some serious financial difficulties in the past and is trying to right itself. This is a very speculative purchase and I did not commit very much money into it. I purchased this stock with an average entry price of $3.35 for the mutual fund only.

Other utility companies that I'm also looking at are IDAcorp (IDA) and Endesa SA (ELE). Both of these companies are very stable and also pay decent dividends. I will be adding these two stocks to the portfolio eventually, just not now.

IDAcorp is an Idaho power utility with electrical generation using Hydro, Natural Gas, and Coal. They also own IDATech which manufactures fuel cell solutions. I'm waiting on this one until the technical picture of the chart improves. I would be a buyer if we can either get a retest of the recent $29 support level or a break out to the upside above $33.

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Endesa (ELE) is a Spanish electric utility with an extensive footprint in Europe and Latin America. They are also heavily involved in Wind power generation. They were recently part of some intense hostile takeover interest earlier this month and the stock has actually soared. I'm waiting to see if the stock can hold these new highs or come back to the mean before I purchase these shares.

DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

Iluminated LED Bathtub

illuminated-bathtub.jpgThis has nothing to do with energy efficiency or anything else pertaining to this website. But while doing some additional research on LED's this morning I stumbled onto this amazing use of LED technology. These are manufactured by Generate and they have several LED based products for the home. (Thanks to Strange New Products)

September 14, 2005

Energy Efficiency with Solid State Lighting (LED)

As I mentioned in a previous post (and also a purchase of LSGP.ob), I have become very interested in the potential investment opportunities in companies that are involved in the conversion of typical halogen and incandescent lighting over to solid state lighting (i.e. LED.) With that said, I wanted to pull back the curtain to show you my process and thinking when I enter a new investment space.

The potential returns for the companies in this space can be quite large over the next 10 years. Many municipalities and large corporations are looking at the potential savings that can be had in the conversion to solid-state lighting (or also called LED lighting.) The return on investment for these municipalities and business can payoff very quickly. From a recent article in LED Magazine, they list several case studies on the ROI.

In 2001, the City of Portland replaced 6,900 red and 6,400 green incandescent traffic lights with LEDs. The project resulted in annual energy and maintenance savings of $400,000, as well as 1,400 hours of maintenance staff time, and a net payback in less than three years. [ more ]

An April 2004 Traffic Light study conducted by the California Energy Commission found some interesting details. Here is a highlight of some key data points:

  • 65 percent of the traffic signal modules in California are LEDs, with the red and green being the predominant types, constituting nearly 80 percent of the LED module types installed.
  • 76 percent of those surveyed indicated that their LED traffic signals have reduced utility bills.
  • 56 percent of those surveyed reported that the LED modules have reduced their maintenance cost.

There are a large number of municipalities that have already converted many of their traffic lights and are seeing similar benefits. The survey above points out some next steps that will enable these cities to complete the conversion for traffic lights. But with 80% of all the LED's installed being just in traffic lights, this shows a tremendous growth opportunity for additional replacements in signage lighting, street lighting, and other lighting needs where they can see similar efficiencies. As an aside, this survey also reports that battery backup systems are also high on the acquisition list, which is good news for several companies in this sector as well. Here is a link to the PDF version of the report. [ more ]

A quick google search for public works conversion to LED street lights nets you over 3 million results. There is definitely some momentum here.

With the signing of the Energy Policy Act of 2005, the potential impact of LED lighting is increasingly gaining national and global attention. A 2001 Department of Energy study estimates a cumulative savings of $98 billion by 2020 once LED lighting reaches the performance crossover with conventional sources.

Part of the new Energy Policy act is an investment in Solid-State Lighting Research. The act allocates up to $50 million annually for the Next Generation Lighting Initiative (NGLI). The first RFP's are already starting to hit the contractors for this work.

Energy Department Announces $4 Million Solicitation for Solid-State Lighting Research August 29, 2005—The DoE announced a $4 million solicitation for research into solid-state lighting (SSL) that has the potential to create light with virtually no heat and double the efficiency of general lighting systems, saving energy costs for consumers and reducing lighting’s environmental impact. Core SSL technologies include light-emitting diodes (LEDs), organic light-emitting diodes (OLEDs) and light-emitting polymers.
"Solid-state lighting advances have the potential to greatly reduce energy consumption in U.S. buildings," said Secretary of Energy Samuel W. Bodman. "This research supports the President’s commitment to increase energy efficiency and conservation, key aspects of America’s overall energy strategy." [ more ]

Typically my first step in conducting my stock research is to find all the companies involved in this space. Then look for the companies that are the leaders and the ones getting the contracts. Typically you will find the 800 pound gorillas in the sector (i.e. Siemens, Philips, etc.) very quickly. The key is to find the smaller companies that provide the value added services, fill a niche, or provide parts and services as a sub-contractor to the larger companies. This is where you best investment opportunities will be found.

Here is a listing of several companies in this space. I have also added all of these to the stock watchlist as well.

Carmanah Technologies (CMH.V) — a Canadian company that specializes in combining solar power with LED lights which are very useful for emergency and outdoor uses.

Color Kinetics. Inc. (CLRK) — An LED lighting systems company that specializes in large scale installations.

Cree Inc. (CREE) — A semiconductor company that produces LED lights.

Cyberlux Corp. (CYBL.ob) — Another LED lighting manufacture.

Emcore Corp. (EMKR) — A semiconductor company that has a diverse product mix that includes PhotoVoltaics and a partnership with GE Lighting to advance LED.

Lighting Science Group (LSGP.ob) — A small company that makes specialty LED lights.

This is not a complete list, it will grow over time. If you find a company that is a glaring omission please feel free to submit a comment below. Now that I'm starting to have a firm grasp of the companies and the future of this space, I will be looking at potential investment opportunities over the next couple of days.

Additional Website Resources:
DoE SSL
DoE Energy Efficiency
Sandia SSL News
LED Magazine

I also wanted to send out a special thank you to Andrea for conducting a great deal of research on this topic. Hopefully you will be hearing more about her soon, assuming this most recent project didn't scare her away.

EERE Launches its Financial Opportunities Web Site

The DOE's Office of Energy Efficiency and Renewable Energy (EERE) has launched a new Web site that lists opportunities for financial assistance. In fiscal year 2004 alone, EERE awarded approximately $506 million in financial assistance. So if your thinking of getting into the Alternative Energy business, or have an idea that only needs some financial backing, you may want to take a look at the EERE Financial Opportunities Web site and here is a listing of the current related solicitations.

Siemens to build 600 MW of wind turbines for FPL

FPL Group Inc (FPL) places order from Siemens to build wind turbines for FPL. They expect to install the new turbines in 2006. [ more ]

Clean Tech Investing Report

Another excellent resource for investment information for Alternative/Clean/Green investing is Clean Break. If you haven't added Tyler's blog to your RSS aggregator, then you should.

I point this out since there is a very interesting snippet in one of his recent posts about future projections for investment by the VC community.

Cleantech Venture Network released its latest data on cleantech investing. In the second quarter of 2005 investments in cleantech grew to $369 million (U.S.), up 9 per cent from the first quarter. In the first half of 2005, investments have jumped 21 per cent to $705 million compared to last year. The venture network is forecasting that more than $1.5 billion will be invested in cleantech deals by year end, a 25 per cent year-over-year increase, due to rising energy prices, after-effects of Hurricane Katrina and cleantech-friendly energy legislation. Indeed, energy-specific cleantech investments in the second quarter amounted to a little more than half of all investments. [ more ]

The VC investment community are usually the front runners to the typical Wall Street investment houses. When the VC's pickup a hot trend, the major brokerages get interested in a hurry, but don't start putting their client's money until it has pr oven itself to be more than a fad. I see the increase in the investments in this space as the first phase to what I feel are the beginnings of a long term bull market in this sector. Time will tell if we (as investors) are correct.

September 13, 2005

Fool.com comments on ENER

The Motley Fool finally had something good to say about an alternative energy stock. It just so happens to be for one I purchased earlier this morning.

Don't look now, but Energy Conversion Devices might just prove to be that rare bird -- an alternative energy play with actual products and a reasonable chance of living up to lofty investor expectations.

... It would appear to me that hybrid vehicle batteries are the biggest near-term opportunity. Although the company didn't specify the customers, it has acknowledged receiving production orders for battery packs. [ more ]

They say that timing is everything. I just wish everything I touched worked out this well. Look at the daily chart for today's trading in ENER. Now that I'm in, hopefully its nothing but up from here (knocking on wood.)

ENER_20050913b.gif

Shares in Energy Conversion Devices Purchased

ecd_logo.gifEnergy Conversion Devices Inc (ENER) opened up trading this morning with a gap down to the $33 level. For the last hour it has been steadily rising up from this point.

ENER_20050913.gif

As I said in my earlier post, I have been looking for a good entry point in this company and feel that the near term support of $33 is an ideal area to place an order. The stock has been on a run for several months and it is always hard to take a new position in a stock that has already seen dramatic increases in a stock price. When this happens I have learned to look for short term pullbacks, or a retest of support lines to start new positions.

ENER_20050913a.gif

The fear (and potential downside) is that the support will not hold and you could be looking at a very big loss. This is where you need to look back at the fundamentals of the company. There is alot of good news about the future of this company, and the most recent earnings announcement points to several optimistic opportunities to look forward to.

"...Cobasys' success in winning purchase orders for its proprietary NiMH battery system solutions for the automotive markets is another big plus for our business," continued Stempel. "Cobasys' ongoing work in hybrid vehicle prototype development will hopefully lead to more opportunities down the road."

"ECD Ovonics is well positioned to capitalize upon the current government and consumer focus on new sources of energy," Stempel said. "We're extremely pleased with the pace of production and shipments at United Solar Ovonic. In the fourth quarter, we manufactured a record level 5.7MW of products with a sales value of $18 million and we're now running essentially at our rated production capacity of 25MW." [ more ]

I purchased shares this morning in both the mutual fund and my personal portfolio at an average price of $34.75.

DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

Toyota Says It May Put Gas-Electric Engines in All Its Vehicles

Toyota said it's aiming to increase hybrid production by 60 percent in 2006 and will cut costs and prices to make them more affordable.

"In the future, the cars you see from Toyota will be 100 percent hybrid,'' Toyota Executive Vice President Kazuo Okamoto said in Frankfurt, declining to give a time for achieving the target. "We believe that in 10 years the world will be filled with hybrids.'' [ more ]

Energy Conversion 4Q Sales Disappoint

ecd_logo.gifEnergy Conversion Devices Inc (ENER) announced quarterly results on Monday. They beat Wall Street expecations with a less than expected loss, but did not meet sales estimates. They posted a loss of $6.9 million, or 23 cents per share, for the three months ended June 30, compared with a year-ago loss of $11.5 million, or 44 cents per share. The company's loss from continuing operations was 22 cents per share. Wall Street estimates on the loss were 26 cents a share.

The stock is currently trading down over 4% in pre-market trading. I have been looking for a good entry point on this stock and will see how trading continues throughout the day.

September 12, 2005

NY Times article on Solar Investing

The alternative energy investing stories continue to be written. The most recent was published on Sunday by the NY Times. This article specifically mentions Evergreen Solar, DayStar Technologies, Energy Conversion Devices and Spire, and SunPower.

"The solar market is projected to grow 35 percent a year for the next three to five years," said Walter V. Nasdeo, managing director of Ardour Capital, an investment bank in New York that specializes in energy companies. "As these technologies get better, we're seeing things being developed like solar panels integrated into roofing tiles. That way, they don't look like a science project hanging on your roof." [ more ]

September 09, 2005

Quantum Fuels Loss Widens

qtww_logo.gifQuantum Fuel Systems Technologies Worldwide Inc (QTWW) is currently down over 11% today on the release of its Q1 earnings reports. The loss of 15 cents a share was greater than expected and almost double its last years quarter loss of 8 cents a share.

In yesterdays earnings press release the company attributes the shortfall to lower sales and the incorporation of the recent acquisition of Tecstar Automotive.

Although we reported significant revenue growth during the first quarter due to the Tecstar acquisition, we did experience a shortfall in development program revenue. The costs of revenues, particularly on the development programs, were higher than expected and this impacted our overall operating results. The activity on hydrogen-related development programs remains strong and we are optimistic that these programs will result in increased hydrogen fuel system product sales during the second half of fiscal 2006, compared to the first half of fiscal 2006. [ more ]

The stock has been trading down for since November '04 and it doesn't look like this news will be helping its future prospects.

qtww_20050909.gif

I will keep my eye on this stock for future entry points, but would like to see if it can build a base and these new lows. I would also like to see some good news coming from the company in the way of new sales and contracts to help the fundamentals as well.

Shares of Daystar Technologies Purchased

dsti_logo.jpgDayStar Technologies Inc (DSTI) has been on my radar for some time and the recent operational update created some renewed interest in the company. The stock traded up nicely over the past couple of days and it is now trading back down to the near term support due to some profit taking on the news. I have been looking for a good entry point on this stock and I feel like today is the day to make the move. Technically, the downside of this stock is that it may not be able to hold its currently levels and could be facing a sharp +30% decline below the $10 level. The cause for this type of decline would have me reevaluate my long term hold on this position.

Currently the company is trading at 5x book value and holds little debt. They are not close to showing a profit, but the prospects of California solar initiatives and the new energy bill are stirring some interest in this company. They are a growing company and plan on adding new manufacturing space and employees to keep up with the research and demand of their products and services.

Today I purchased shares in this company at an average price of $13.46 for both my personal portfolio and the mutual fund. I will continue to be a buyer of this stock below the $15 price level.

DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

Shares of Hydrogenics Purchased

hygs_logo.gif
Hydrogenics Corp (HYGS) is a developer of fuel cell technology and hydrogen generation. They are also working with wind farm technology in the generation of hydrogen. Back in January of this year they successfully completed the purchase of Stuart Energy which compliments their product portfolio.

Shares of the stock have been under pressure for the last couple of months due to missed expectations on Q1 revenue results. There is also some major concern about an increase in product backlog.

hygs_20050909.gif

In August, HYGS issued their most recent quarterly earnings and are attempting to reassure the shareholders that they are making great strides in incorporating the Stuart Energy division and also working on fulfilling the backlog of orders.

"We believe that the increase in revenues, combined with synergies derived from the Stuart Energy acquisition, will accelerate our path to profitability," continues Rivard. "All in all, we believe we are delivering on the commitment we made at the beginning of the year to achieve renewed financial performance for our shareholders by applying discipline and sound business fundamentals." [ more ]

I have successfully owned this name in the past with some nice gains in one of my trading portfolios. Right now I feel it is poised to move to the upside for a long term uptrend and I purchased shares in both my personal portfolio and my Marketocracy mutual fund portfolio at an average price of $4.00. The stock is currently sitting right against some resistance at the $4.00 and I think it has the momentum to take it out to the upside. The stock has some nice support at the $3.50 level and I would be willing to average back down if it comes back down to this price level.

There are also some other Marketocracy gurus adding this stock to thier portfolios as well, which may (or may not) be a good sign. [ more ]

For those of you that are adventurous, the HYGS MAR 2006 5 Calls look good here if you can get a fill in the $0.50-$0.60 range. There is very little open interest for options on this stock and getting a fill at a decent price may be difficult.

DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

Inflation Adjusted Gas Prices

20050909.gif

Chartoftheday.com always has some interesting charts and information. This was today's. You will see that on an inflation adjusted basis, we are near the all time high for gas prices.

September 08, 2005

Virtual Mutual Fund at Marketocracy.com

I finally got around to setting up a virtual mutual fund at Marketocracy.com. This virtual fund gives me 1 million in play money to prove my worth. If they like what they see, they will set up a real fund.

Just like every real mutual fund you need to setup an investment charter and style. They will report on performance once you have maintained the mutual fund compliance rules.

In a nutshell they are as follows:

  • No position can exceed 25% of your total portfolio value.
  • Half your portfolio must be comprised of positions under 10% each.
  • Your cash position isn't limited by this guideline, although you must be 65% invested.
  • No fund can hold more than 25% of invested assets in Exchange Traded Funds (ETFs) for a majority of the quarter.
  • Once you setup an investment style, you can't drift into another style during any specific reporting period.

Once you have met these compliance rules, you will start to be eligible for tracking. The next quarter starts on October 1st. Since I want to run this portfolio like it was REAL money, I feel hard pressed to become within compliance in that short of a time. So I'm going to aim for full compliance starting on January 1st and I will have all of 2006 to prove myself and the value of this investment style.

The style I want to follow with this money is primarily conservative in nature with minimal trading. I plan on keeping a minimal cash position. The main difference and value added I think I can provide compared to the PBW ETF is that I can rotate holding percentages into the various sub-sectors (i.e. Fuel Cell, Solar, Wind, etc.) So if I feel that I will get more bang from my investment buck, I may sell some holdings in the Fuel Cell sector to add to the Solar as an example.

I will start to place my trades in the coming days and will detail each of the trades and why I like them here on the website. Some of these trades will overlap with the real trades I make with my real portfolio and I will detail the specifics here as well along with more details about this program.

As an aside, I tried to place a trade in LSGP when I purchased it in my portfolio. They would not allow a purchase of this stock since it trades so thinly. So some of these early stage development companies will not be included in the mutual fund holdings.

Lighting Science Group Purchase

lsgc_header.gifLighting Science Group Corp. (LSGP.OB) has been on my watchlist for several months. They design and market energy efficient lighting solutions with long lasting LED bulbs that can be quickly deployed in existing lighting applications and produce immediate cost savings and environmental benefits.

Some key events that have attracted me to this company:

  • They recently moved to the OTC BB off the pink sheets.
  • They recently received a private placement of almost $7 million
  • After a several year absence they are finally a fully reporting company
  • They are currently far from being profitable, but the trend on the balance sheet is a vast improvement.

I am also starting to see their products in local stores and restaurants. A recent visit to a local restaurant chain led me to discover that they have retrofitted all of their tables with LSGC's LED votive candles, which are now available from their new LSGC webstore.
candles_teaser.jpg

This stock is very thinly traded and the limit order I placed on Wednesday didn't get filled until today (you don't want to do market orders for these type of stocks because you will end up paying more than you need to.) Today I made an initial purchase of this stock at $1 to start an ownership position in this company for the long term. Even though this company is not a pink sheet, it should be considered a very risky investment and the recent price action has not be favorable. If you are planning on making a purchase of this company, don't pay anything above $1.05. If you have patience, you can probably get a limit order filled under $1 over the next couple of days.

I do believe in its long term prospects of this company and others in this LED conversion space. They are just one nice contract away from some nice gains in the stock price.

Today they just issued the following press release:

Lighting Science Group Corporation today announced that it entered into an alliance with Amtech Lighting Services, a subsidiary of ABM Industries Incorporated (ABM) , a multi-national facilities services leader, to install Lighting Science's Optimized Digital Lighting (ODL(TM)) Low Bay lights and fixtures in facilities that ABM services. The Low Bay product is designed for widespread, high volume use in parking garages, and other applications that require high efficiency, long lasting light. [ more ]

The number of cities and public works agencies converting to LED lights for street and traffic lights is amazing. I'm continuing the research in this LED conversion space and plan on adding more of these companies to my portfolio (i.e. companies like CREE) over time. Technically these are not alternative energy companies, but energy efficiency companies. I still like this space and the less energy that is used requires less traditional energy generation (which is my end goal.)

DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

September 07, 2005

DayStar CEO Issues Operational Update

Dr. John Tuttle, Chairman and CEO of DayStar Technologies Inc (DSTI) released a very extensive operational update detailing fundamental progress that has been made by DayStar over the past several months.

"Since my last communication of this nature, we have made great progress towards establishing our first product-based revenue opportunities and have announced two new exciting customer relationships. Specifically, on June 9, 2005, we reported signing a purchase agreement with Blitzstrom, GmbH, a PV system integrator of Megawatt-scale PV power plants and a distributor of photovoltaic systems and components in Germany and the EU. This agreement, which could yield over $60 million in revenues to DayStar through 2008, calls for delivery of up to 30 Megawatts of our proprietary TerraFoil(TM). On July 11, 2005, we also announced the signing of a purchase agreement with China-based Micro Energy Group providing for delivery of up to 500 kilowatts of our proprietary TerraFoil-sp(TM) solar cells. [ more ]

Dr. Tuttle is painting a good picture of growth and prosperity for DSTI. The stock market is also liking what he is saying as well with the stock currently trading up over 6%. This company has been on my watch list for sometime. It has a nice stairstep chart pattern and it looks like its ready to make another up move.

dsti_20050907.gif

September 06, 2005

Electro Energy Receives U.S. Dept. of Energy Contract to Continue Development of Bipolar Nickel Metal Hydride Batteries for Energy Storage Applications

eeei_logo.gifElectro Energy Inc (EEEI) announced receipt of a $1,050,000 contract with the U.S. DoE for the further development of its Bipolar Nickel Metal Hydride energy storage battery.

These 2nd generation prototype test units, rated from 150 Volts, 20AHr to 500 Volts, 6AHr, will be constructed and tested at EEEI, and subsequently delivered to Sandia for further testing. Units of this size have potential applications for utility, wind, solar and customer side load regulation and back up power. [ more ]

This stock has been in a long term down trend and this contract was a much needed win to help the company turn the down trend around. The stock is currently trading up nicely with a 20% gain today on the news. A quick look at the long term chart of this company shows that this move may be a potential bounce off the $4 low.

I have been recently looking at all the stocks I cover in this sector and have been specifically looking at the companies that have not been moving over the last couple of weeks. Today this stock decided to make its move due to the announcement. I added this stock to my potential buy watchlist today and will do some further research into the fundamentals for a potential purchase.

My Alternative Energy Portfolio

I'm continuing to make changes to the site behind the scenes.One major change that I'm going to institute is to provide greater transparency in my own Alt E portfolio. The goal of this change is not for ego but to prove that this sector can be profitable for your portfolio. In future posts you will see everything, the winners, the losers, and also the what and why of each investment decision. This was one of the most frequent requests made by many website visitors. The news stories will be fewer and more focused. This will give me more time to research potential companies to be included in the portfolio.

However, keep in mind the following:

BIG OLD DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Please take the time to view the full disclaimer here.

I currently have brokerage/investment accounts with the following companies (Schwab, Fidelity, OptionsXpress, ProFunds, BuyandHold.com) for my various family IRA's, Rollover IRA's, E-IRA, 401K, etc. It just so happens that one of my rollover IRA accounts with Schwab currently holds the majority of the money I use for investing in the Alternative Energy sector. I have always found that its easier to treat each separate account with its own investment charter (just like a mutual fund.) So each account I have has its own goals and investment style. It may sound like a lot of work, but since the majority of these accounts only have activity 1-2 times a year, the maintenance is not that difficult.

So starting after this post, I will be posting all of these portfolio trades here to show you exactly what I'm doing with this sector and why. Later today I will have the portfolio page up and running as well that will show my existing holdings.

I have also started to investigate the creation of my own virtual mutual fund at Marketocracy.com. This is a test of their system and also a test of myself. Once I figure out this Marketocracy system, I will put up a link to this portfolio as well. My biggest fear is that once I setup this mutual fund, it will mark the official top in this sector, which is very likely:-) However, my investment time horizon for this sector is many years out and if this marks the short-term top to the long-term trend, then so be it.

New 2006 Civic Hybrid

Green Car Congress has an excellent writeup about the recently announced Honda 2005 Civic Hybrid.

Compared to the 2005 Civic Hybrid, the 2006 model with the new IMA is 18% more powerful than its predecessor while delivering a combined EPA estimated fuel economy of 50 mpg US compared to 47–48 mpg US of the 2005 hybrid. The new IMA also adds the ability to cruise only under the power of the electric motor. [ more ]

honda_logo.gifHonda Motor Co (HMC) has been playing catchup with Toyota in the hybrid marketplace and they are looking strong with this new offering. Our family is planning on replacing one of our cars next year and we have been researching our various options. This new Civic is now at the top of our list.

[update] TreeHugger has more information about this new civic here [ more ]

September 01, 2005

Optionetics Story on Alt E Stocks

Fredric Ruffy from Optionetics.com has written a cautionary article about investing in Alternative Energy stocks.

If alternative fuel companies made lots of money, there would be no energy crisis today. Unfortunately, most of these companies don't.

You will start to see more and more stories about this sector now that gas prices are starting to cross the $3 per gallon mark and head even higher. As I said in a previous article, this sector is currently in a trading market. While he cautions investors that are looking for the long term viability of this investment, he can certainly see trading opportunities.

However, before taking a position in an alternative fuel company, investors will want to mull over the company's long-term prospect carefully. Many fuel cell companies are struggling enterprises, solar start-ups are risky investments, and there are not many choices among the wind power companies either. Yet, at the same time, many of these stocks also have options. Therefore, it is possible to create trades that can profit from the long-term appreciation in the share prices, but limit risks (or even create profit opportunities), if the alternative fuel stock takes a trip southward instead. [ more ]

This is where I differ from his opinion. I do believe in the long term future of these stocks. However, I do believe that if your going to start new positions or are thinking of adding money, you should wait for better buying opportunities ahead as the mania of this sector settles down.


« August 2005 | Main | October 2005 »

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