Misc Archives


June 27, 2016

Trex: While The Sun Shines

by Debra Fiakas CFA

It appears to be the ‘summer of the small-cap’ as performance in the sector outpaces other sectors on the first day of summer 2016.  In keeping with the adage “make hay while the sun shines”, we shifted into a higher gear to find promising small companies that might participate in the small-cap renaissance.  Trex Company (TREX:  Nasdaq) bubbled to the top of a couple different screens based on growth and return.  There is much to like in a company delivering strong growth.  A bargain price is just icing on the cake.  With a ratio of 0.77 in price/earnings to growth, Trex is well frosted.TREX+Decking[1].jpg

The company designs and manufactures outdoor decking, storage, fencing, stairs and railings, using wood waste and resin composites.  Outdoor lighting is a recent addition to the product line.  Its products are designed to be as aesthetically appealing and longer lasting than natural wood.  The company delivered $54 million in net income or $1.73 per share from $451.7 million in total sales in the most recently reported twelve months.  An impressive $59.2 million of sales were converted to operating cash flow.

The gaggle of analysts who follow Trex closely seem to think there is more of the same ahead.  The consensus estimate for the full year 2016 is $2.16 in earnings per share on $471.8 million in total sales.  Indeed, the group has been busy raising estimates in the last three months, with most of the incremental change weighted to the back end of the year.  If achieve the 2016 hurdle represents 24% year-over-year growth in earnings.  The 2017 consensus estimate of $2.46 in earnings per share suggests a slowing to about 13% annual growth.  Yet in an economy struggling to eke out low single digit expansion a double digit growth rate stands out.

With all this good news it is surprising to find the stock trading at 24.5 times trailing earnings and 17.2 times the consensus estimate.  Investors may be tempting their valuation of the stock because of the highly leveraged balance sheet.  Trex is weighted down with $141.5 million in debt, representing a debt-to-equity ratio of 161.6%.  The current ratio is 1.00, which may seem inadequate even if it has satisfied creditors.

It is also noteworthy that a long position in TREX presents some risk.  The beta measure of 2.40 suggests a volatility that might worry conservative investors.  There is no dividend that might otherwise provide a stipend during a period of price weakness.  Despite the blemishes TREX is a ‘sweet peach’ for the summer of small-caps.

Debra Fiakas is the Managing Director of Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

April 21, 2016

Water Utilities Keeping The Flow In Cash Flow

Fiakas Water Utilities Keeping The Flow In Cash Flow

by Debra Fiakas CFA

After a long series of posts on suppliers of water infrastructure, from fire hydrants to filters and from taps to treatments, it is now time to look at the companies selling water.  The majority of water utilities is owned by municipalities and is beyond the reach of investors.  However, there is a clutch of publicly traded companies that peddle water as a business.

Which water utilities make sense to return hungry and risk wary investors?

A short list of publicly traded water utilities in the U.S. reveals a diverse group of large and small companies.  American Water (AWK:  NYSE) is by far the largest operation after reporting $3.2 billion in revenue in fiscal year 2015. American Water serves 1,600 communities in 16 states in the U.S. and Canada with potable water delivery and waste water collection. The smallest company in terms of revenue is York Water Company (YORK:  Nasdaq), which delivered $47.0 million worth of water to customers in Pennsylvania last year.

Water Utility Market SYM Sales Mill
American States Water California  AWR $458.6
American Water 1,600 communities in 16 states AWK $3,160.0
Aqua America PA, OH, TX, IL, NC, NJ, IN and VA WTR $814.2
California Water Service CA, WA, NM CWT $588.4
Connecticut Water Service Connecticut, Maine CTWS $95.9
Middlesex Water Company NJ, DE, PA MSEX $123.2
SJW Corporation San Jose, California SJW $305.1
York Water Company Pennsylvania YORW $47.0

After all the discussion of water system failure, water contamination and the need to treat water destined for our kitchen faucets, a review of water utilities must include a review of financial strength.  Some investors might scrutinize leverage ratios and profit margins.  I prefer to look at how good a company is at turning sales dollars into operating cash.  After all, it is operating cash that pays for capital investments.  The winner in my contest is Aqua America (WTR:  NSYE), which converted 45.5% of its $814.2 million in revenue in the last fiscal year to operating cash flow.  The least proficient cash builder in the group is American States Water (AWR:  NYSE), which only turned each sales dollar into 20.7 cents.  That is still an impressive cash conversation ratio and goes a long way toward supporting capital spending programs to maintain and improve water delivering infrastructure. 

SYM Sales Mill CFO Mill CFO/Sales
AWR $458.6 $95.1 20.7%
AWK $3,160.0 $1,180.0 37.3%
WTR $814.2 $370.8 45.5%
CWT $588.4 $144.6 24.6%
CTWS $95.9 $37.8 39.5%
MSEX $123.2 $39.3 31.9%
SJW $305.1 $97.3 31.9%
YORW $47.0 $18.5 39.3%



Aqua American may be the strongest in the group in terms of generating operating cash flows, but it is also among the most expensive stocks.  Its shares trade at 6.9 times sales - well above the group average of 4.7 times trailing sales.  The story is the same in terms of earnings and cash flows.  The supplier of water to the San Jose, California community, SJW Corporation (SJW:  NYSE), is the only one in the group that trades below the average in terms of sales, earnings, cash flows and book value. 

AWR 3.2 25.3 15.8 3.2
AWK 4.0 27.0 10.8 2.5
WTR 6.9 28.0 15.4 3.3
CWT 2.3 29.8 9.3 2.1
CTWS 5.4 22.4 13.9 2.3
MSEX 4.7 30.4 14.9 2.8
SJW 2.5 20.1 7.9 2.0
YORW 8.7 32.9 22.4 3.8

Average 4.7 27.0 13.8 2.8

The relative value of SJW is interesting, particularly given the apparent optimism that analysts have for the company’s future.  Analysts have projected slowing growth for water utilities over the next five years.  The average future growth rate for our group of eight companies is 6.6%, but SJW is at the top end of the range with a 14% projected growth rate. Middlesex Water brings up the rear with a 2.7% growth rate projection.

The ratio of Price/Earnings-to-Growth Rate provides a logic check for investors in comparing earnings multiples.  SJW wins this contest as well with a ‘PEG Ratio’ of 1.44 compared to the average of the group of 5.26.   Still the target PEG Ratio is 1.00 so it appears investors are paying a premium for the growth that SJW has to offer.

Earnings and growth are only part of the picture for water utilities.  All of them pay a dividend.  The forward dividend yield for our favorite SJW Corporation is 2.2%, which is exactly the group average.  So dividend yield should be considered right along with growth potential.  Utility stocks also typically offer shareholders lower risk than other sectors, justifying higher multiples relative to yield and growth.  The average beta for our group is a modest 0.42. 

SYM Yield Growth
AWR 2.2% 3.9%
6.58 2.63 1.67
AWK 1.9% 7.6%
3.55 0.82 0.65
WTR 2.2% 5.9%
4.79 2.58 1.87
CWT 2.5% 9.1%
3.29 2.21 1.73
CTWS 2.3% 5.0%
4.49 0.72 0.49
MSEX 2.2% 2.7%
11.24 6.18 3.39
SJW 2.2% 14.0%
1.44 0.34 0.30
YORW 1.9% 4.9%
6.71 3.96 2.84

Average 2.2% 6.6%
5.26 2.43 1.62

Considering dividend yield as well as growth and adjusting each ratio for risk, our favorite SJW still dominates the group.  Its PERGY (Risk Adjusted Price/Earnings to Growth Plus Yield) ratio is 0.30  -  the lowest in the group. The shares of SJW may be the best value in the group, but it is worthwhile to point out that Connecticut Water Service (CTWS:  Nasdaq) with its 2.3% dividend yield is in second place.   Connecticut Water also appears to be a strong operator with a 39.5% sales-to-cash conversion ratio in the last fiscal year.

Debra Fiakas is the Managing Director of Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

April 18, 2016

Water Gleaner Stocks: Value In Sludge

by Debra Fiakas CFA

There are well over 3,000 companies around the world that are involved in some element of wastewater treatment, providing a broad mix of technology, equipment or engineering services to generators and collectors of fouled water.  A small group in this wide field is gaining visibility  -  the ‘water gleaners.’  Like the peasant women picking up stray grains of wheat left behind in the empty field of Millets famous painting, some see value in effluents, sewage and run-off.  In this post we look at three small-companies with novel technologies to harvest water.

New Sky Energy is a private company based in Boulder, Colorado, has developed several waste recycling processes, including carbon dioxide capture, sour natural gas sweetening.  The company’s ‘SaltCycle’ process converts industrial and agricultural brines into useful chemicals that have economic value.  It is an appealing alternative to having to pay for disposal.

The SaltCycle process involves two steps.  In the first step brines are concentrated and purified to produce useful salts such as sodium chloride or sodium sulfate.  Then in step two, the salts are put into a chemical or electrochemical reactor to produce acid, base and sulfate.  Soda ash or bicarbonate can be produced from the base.  Sales of the end products can be used to pay for upstream water treatment or as a power source for the SaltCycle reactor.

 New Sky has focused on the water waste streams of the oil and gas industry.  However, the company has also been calling on mining companies, landfill operations, agriculture, and other manufacturers.  One element that helps the New Sky pitch is the scalability of its systems and the availability of engineering services to help optimize operations. Patents protect the technology behind its three primary waste converting systems.

With all that going for New Sky Energy, there is little for investors.  Management holds its cards fairly close to the corporate vest, making only a few customer announcements and saying little about partners or investors.  Still New Sky Energy is an interesting company to watch for future developments in this expanding market for sustainable industrial processes.

MagneGas Corporaton (MNGA:  Nasdaq) has been a topic of past articles.  The November 2015 post outlined how the company is using its plasma arc technology to gasify carbon-rich liquids such as municipal wastewater to produce hydrogen gas.  The company markets the gas for industrial applications such as metal cutting.  It widely seen as a replacement for acetylene and has been adopted by fire departments emergency situations requiring safer metal cutting tools.  MagneGas2 is being used by two subcontractors in the expansion of the Vehicle Assembly Building at NASA’s Kennedy Space Center.    Most recently the company received an order from a major gas company in Mexico for industrial metal cutting.

As a public company MagneGas provides investors a pure play on wastewater reclamation and reuse.  Unfortunately, ‘industrial sustainability’ is also a ‘small play.’  In the twelve months ending December 2015, the company reported $2.3 million in total sales, resulting in a net loss of $8.8 million.  MagneGas is also still using cash resources to support operations  -  $5.6 million in that same twelve-month period.  With only $2.2 million in cash remaining in the bank at the end of December 2015, a ramp in sales cannot come fast enough for MagneGas.

OriginClear (OOIL:  OTC) was the focus of an October 2015 post.  The company has developed an ‘electro water separation’ process that uses electricity to collect oil and suspended solids in waste water.  The solids are removed with ‘advanced oxidation’ to return clean, decontaminated water back to the industrial system.  OriginClear markets its system has application in settings where oil contaminates water such as in hydraulic fracturing of oil and gas wells.  However, it also has application in the production of algae for fish feed.  Both industries are large water users and benefit from being able to recycle and reuse water rather than having to pay for both water replenishment and wastewater disposal.

Through the acquisition of Progressive Water Treatment based in Dallas, Texas, OriginClear took its first step in the reclamation of foul water.  Progressive brought with it a portfolio of water treatment systems for municipal and industrial waters using reverse osmosis technologies.  More recently the company launched a joint venture with a Malaysian engineering firm, Osmocell Malaysia, which has successfully deployed twenty filtration and reverse osmosis systems for water purification.  The joint venture claims over $1.0 million in proposals and bids in its business pipeline.  Malaysia is the world center for rubber glove manufacturing, which uses water-intensive processes that leave organics and ammonia in process water. 

OriginClear has yet to record significant revenue and still requires cash resources to support operations.  Consequently, its stock is priced in the pennies as an option on management’s ability to conserve cash resources long enough to get the revenue pump primed and generating higher numbers at the top-line.  Cash totaled $695,295 at the end of December 2015.  With a cash usage rate near $250,000 per month, there is some concern about how long OriginClear can last without a dramatic increase in revenue.  That said, the company did have $1.0 million in contracts receivable on the balance sheet, so collections could save the day.  Furthermore, the Progressive Water Treatment operation acquired in October 2015, is expect to add $6.5 million to the top-line in 2016.  

Management of OriginClear is also actively in the hunt for additional acquisition and joint venture partners.  While we expect that large group of over 3,000 companies to consolidate, it is tough to see OriginClear, with it barebones balance sheet, as a consolidator.

Debra Fiakas is the Managing Director of Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

April 14, 2016

Water Treatment Stocks

by Debra Fiakas CFA

In a game of word association many investors might respond Veolia Environmental SA (VIE:  P or VEOEY:  OTC/PK) at the mention ‘water reclamation.’  General Electric (GE:  NYSE) and Siemens (SIE:  DE or SIEGY: OTC/PK) might be next choices.  These three companies have been ‘go to’ sources for water treatment by municipalities and industry.

Indeed, it may take a behemoth to address water issues.  In January 2015, the World Economic Forum declared water as the number one crisis impacting the world, recognizing the dire circumstances of water supplies.  Over 660 million people  -  one in ten people  -  around the world do not have access to safe water for drinking, cooking and bathing.  For some it is a matter of inadequate water supplies and for others economics prevent them from accessing quality water sources.

Some might be confused by this circumstance given the wide expanse of world waterways.  Unfortunately, 97.5% of the planet’s water is saltwater and another 1.75% is trapped in ice.  Only the remaining 0.75% is available for drinking water, coming from a mix of underground wells, rivers and lakes.  The amount of water supplies will not change, but we are expected to see an increase in fresh water demand by as much as 40% by the year 2030 as developing countries seek to improve quality of life for its citizens and new industrial and commercial processes rely on water.

The inadequacy of good quality, affordable waters supplies renders precious every water droplet, shedding light on why water treatment is big business and not just business for a few big companies.  The best water is called ‘potable water’, which historically has been provided through natural sources.  Sometimes even Mother Nature falls short of goal, leaving impurities in drinking water supplies or nature is simply overwhelmed by man-made pollution and misuse.  The need to treat water has given rise to a large market for separation, filtration and treatment solutions.

Pentair Plc. (PNR:  NYSE) is a growing player in the water treatment industry.  Unlike the big companies named in the opening paragraph of this article, Pentair is exclusively focused on water.  With corporate headquarters in the United Kingdom, Pentair keeps its primary business office in the U.S.  Among a mix of other water-related products, Pentair offers ultra-filtration and nano-filtration solutions to purify liquids.  Its products are used by water system owners, industry and homeowners.

In the fiscal year ending December 31, 2015, Pentair reported $6.5 billion in total sales and a net loss of $65 million or $0.42 per share.  Excluding a non-recurring charge of $554 million related to the write-off of intangible assets, operating income for continuing operations was $2.63 per share.  Operations generated $739.3 million in cash flow in the year, leaving $126.3 million in the bank at the end of December 2015, after investments and pay-down of debt.  Pentair has relatively leveraged with a debt-to-equity ratio of 117.49.  Management seems to have no trouble in juggling cash and debt, devoting some operating cash flows to a regular dividend.  Current yield is around 2.5%.

A true small-cap play on water treatment can be found in Calgon Carbon (CCC:  NYSE), a supplier of a broad mix of filtration and purification solutions for fluid and gas streams.   The company is probably best known for its activated carbon materials, which are widely used by water system owners to filter out contaminants.  Calgon also offers ultraviolet irradiation and ion exchange technologies for waster systems.  The company recently opened a new plant in the U.K. for the reactivation of spent carbon used in drinking water applications.  Capacity at the plant has been increased to 10,000 tons per year from 5,800, providing some insight into the promise Calgon sees in the water market for its carbon products.

Calgon also offers a dividend, but its yield of 1.4% is not as appealing as that of Pentair.  However, Calgon shares are trading at an interesting 12.9 times forward earnings, making it a relative bargain given the projected earnings growth of 19% in 2016.

Calgon reported $535 million in total sales for its water quality solutions, providing $43.5 million in net income.  That represents a net income margin of 8.1%.   The conversation of sales to operating cash was an even more impressive 13.1%.  The company is a consistent generator operating cash flow, which is probably why the company has a relatively low leverage position.  The debt-to-equity ratio is 28.3 for Calgon compared to a 90.6 ratio for the greater pollution control and treatment industry.

Debra Fiakas is the Managing Director of Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

April 13, 2016

Water Quality Stocks

by Debra Fiakas CFA

Pipes, pumps and values are only part of the drinking water story we began telling last week.  The Ecological Society of America estimates that the U.S. spends more than $2 billion annually on clean water projects in an attempt to prevent pollution and clean contaminated water.  Water quality is a diverse market, beginning with projects to promote natural ecosystems which are the ultimate ‘water filter.’  The market extends to water treatment facilities, filtration systems and purification technologies among other solutions to ensure that our drinking water is safe.

The market for water quality solutions is highly fragmented with numerous small operators, often with some engineering or technological expertise, addressing the peculiar water issues in their immediate locale.  Few companies have gains national or international scale, save for those large engineering firms that have broad interests in a variety of civil engineering projects.  Most of the players are private, leaving few options for investors to take a ‘pure play’ position in water quality.  Nonetheless, we found one private player that offers some interesting water quality solutions.  Two more public companies provide good plays on water.

Headquartered in Pennsylvania, Evoqua Water Technologies has built a network of 170 sales offices and production facilities in eight countries. Evoqua sells a mix of water and waste water treatment products such as activated carbon and sludge thickener or disintegration products.   The company also sells a broad selection of systems for biological treatment of water, waste water handling, aeration and anaerobic digestion, among other equipment and components.  Engineering and project integration services to commission, maintain and optimize water and waste water facilities.  Besides catering to the municipal drinking water and waste water market, the company also serves various industry verticals such as aquatics, food and beverage, pharmaceuticals and chemicals processing, among others. 

Recently, Evoqua won contracts to build four wastewater treatment plants that will expand the capacity of three different communities and one private agricultural company.  The company’s Davco-branded field-erected treatment solution will be installed in each site for expansion of existing facilities.

Unfortunately, there is no public data available on the company’s financial performance or market share.  That said we believe it is highly likely that the company is profitable and has been successful enough to generate strong cash flows that have funded the company’s expansion beyond its home market in the U.S.  With its brand presence on several continents, we expect Evoqua to eventually end up on someone’s radar, either for a move to the public capital market or as an acquisition target.

Xylem, Inc. (XYL:  NYSE) does provide a publicly traded stock for investors interested in the water market.  In the most recently reported twelve months ending December 2015, Xylem reported $3.65 billion in revenue from the sales of water infrastructure and equipment, providing $340 million in net income.  That represents a net profit margin of 9.3%.  The conversion of 12.7% of sales to operating cash flow is even more impressive.

The company got its start with an innovative submersible wastewater pump, parlaying that leading edge technology into a broad range of water and waste water systems and components.  Among the menu of products Xylem sells, is a selection of treatment systems and analytical instruments that address water contamination issues.  Xylem provides filtration, biological treatment and desalination solutions.  The company has systems or products in use in over 150 different countries.

Xylem is no small-cap.  It has earned a market capitalization of $7.4 billion or 2.0 times sales.  That may seem pricey, but we note that the stock is trading at 18.8 times projected earnings of $2.00 in earnings per share in 2016.  A forward dividend yield of 1.7% helps sweeten the pot.  Forward price multiples in the water and waste water industry also suggest Xylem is priced a bit dear.  The sector is commanding valuations only 11.8 times 2016 earnings estimates.

A significant competitor for Xylem is Danaher Corporaton (DHR:  NYSE), which is an even bigger company with products and services well beyond the water market.  Danaher describes its business as a science and technology operation.  In a few words its product line falls under test instruments, environmental products and services and life sciences products.  Danaher can measure the quality of the water at your tap so you can brush your teeth with confidence.  They can also provide products to fix your teeth.  That wide array of products earned Danaher $20.6 billion in revenue in the year 2015.

Danaher is on the calendar to report financial results for the March 2016 quarter on April 21st.  Analysts are expecting Danaher to report a buck in net earnings per share.  Given that the company has met or exceeded the consensus estimate in each of the last four quarters, that $1.00 EPS figure seems like a safe bet.  

Likewise Danaher is trading at a healthy 17.9 times the full year 2016 EPS estimate of $4.88 per share.  A forward dividend yield of 0.7% helps make the case for DHR.

Debra Fiakas is the Managing Director of Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

April 12, 2016

Mueller: Solid Profits In Liquid Infrastructure

by Debra Fiakas CFA

The dire condition of drinking water systems in the U.S. has been made glaringly apparent with the recent debacle in Flint, Michigan that has left numerous citizens in the community suffering from chronic health conditions as a result of contaminated water.  We had no further than our own coverage group to find a company that could help solve problems the drinking water system.  Mueller Water Products (MWA:  NYSE) is a supplier of water meters, pipe fittings, valves, pipe repair components, and fire hydrants.  Mueller’s Echologics leak detection solution gives water utilities details on water infrastructure operation would seem to make Mueller a go-to resource for water system owners, since early leak detection could save millions in wasted capital spending.

In the last post we looked at data from the American Society of Civil Engineers (ASCE) and the U.S. Environmental Protection Agency that reveal the high cost of replacing and improving the drinking water infrastructure.  Even at the current sluggish pace of water system repair of about 5,000 miles per year, the repair portion of the U.S. water infrastructure market value is near $5 billion.  The Freedonia Group reports that world demand for water infrastructure equipment for both repair and expansion is expected to increase 6.5% to $101.7 billion in 2016.  The growth is boosted in part by expansion of water supply lines in developing countries.  Demand in developed countries is primarily for repair and upgrade of existing pipes and connections.

Mueller Water Products
No matter how it is measured water infrastructure is a large market with numerous competitors offering, in many product categories, highly commoditized components.  Strong brand recognition and a well entrenched sales network have helped Mueller win and retain market share.  The company goes head to head with the likes of Tyco International (TYC:  NSYE) with its well-developed fire and water division.  While both McWane, Inc. and American Cast Iron Pipe Company are private companies and provide limited financial information to the public, it is clear that both are significant players in the business of pipes and values.  McWane revealed sales of $1.7 billion in 2014, and American is through to be near $500 million in annual sales.

Mueller reported $1.15 billion in total sales in the twelve months ending December 2015, representing a top-line decrease of 1.7%.  The total sales performance figure is somewhat misleading in as much as Mueller sells its pipe components and values into the oil and gas industry as well as to water system owners.  With the price of crude oil and the entire petrochemical chain at record low prices, shipments to oil and gas customers have been down.  However, sales of the couplings, valves and hydrants used in the domestic water systems have been robust.  In the most recent financial report for the quarter ending December 2015, Mueller management reported 9.2% year-over-year growth in the domestic water segment.

In deciding whether MWA is to be your play in the water infrastructure market, sales is only one element.  In a highly competitive market, a profitable operating structure can deliver strong earnings even if sales growth remains sluggish.  Mueller delivered $57.3 million in net income on $1.15 million in total sales in the last reported twelve months ending December 2015.  Reported net income represented a net profit margin of 4.9% compared to 4.7% in the year-end fiscal year ending September 2014.  Thus while Mueller has struggled to keep its top-line up in the wake of lost business with its oil and gas customers, a lean operating structure has helped drive more profits to the bottom line.

The cash flow from operations echoes the Mueller profit story.  In the most recently reported twelve months ending December 2015, 10.2% of sales were converted to operating cash flow.  This compares to an average of 10.1% in the previous three fiscal years.  The strong cash generation has enabled investments, debt reduction, as well as a consistent dividend payment.

Crystal Equity Research has a buy rating on MWA because we like companies that move quickly and decisively to protect profits even when sales growth is challenged.  Mueller management has defended its share in the water infrastructure market and even more zealously guarded its profits.

Investors have only been willing to pay 16.8 times projected earnings for MWA in recent trading, which is slightly above the anticipated five-year earnings growth  rate (12.5%) for the company plus dividend yield (0.84%) that total 13.3.  Mueller has few direct peers for sake of comparison.  For perspective the broader industrial equipment and components market of which the company is a part, trades at 15.5 times forward earnings multiple.  Interestingly, the utilities sector, which includes the public water system owners that bear the risk of dated and deadly water infrastructure, is trading at a higher 17.3 times forward earnings.

Debra Fiakas is the Managing Director of
Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

March 28, 2016

Water Infrastructure: Opportunity Coming Down The Pipe?

by Debra Fiakas CFA

The most recent report by the American Society of Civil Engineers (ASCE) gives a grade D+ for U.S. infrastructure as of the end of 2013.  Not a very good grade, but an improvement over the plain D grade that had been handed out four years earlier.  With the travesty of the water contamination in Flint, Michigan during 2014 to 2015, the ASCE report should carry special interest.  The threat to the health of the Flint community could be found in anywhere in the U.S.

The executive summary of the ASCE 2013 report does allow that the quality of drinking water in the U.S. is relatively good.  However, the drinking water infrastructure is old and in too many cases the installed pipes and valves have reached the end of useful life.  The replacement of every drinking water pipe in the U.S.  -  over one million miles of water mains  -   would cost more than $1 trillion at today’s prices.

For investors total infrastructure replacement value might be misleading.  What is important is actual spending on water infrastructure. 

There are about 155,000 water systems serving as much as 90% of the U.S. population.   These systems are owned by a mix of public and private owners, all of which guard every penny received from their customers.  The U.S. Environmental Protection Agency estimates only about 5,000 miles of water mains are replaced annually, representing a half percent of the total installed base.  The represents about $5 billion in annual upgrade spending if the ASCE is correct in its calculation of water infrastructure value.

There is a possibility that water system spending could increase.  At the current upgrade pace it would take 200 years to replace the current water infrastructure, which means that water mains will need to provide service well beyond the expected useful life of the iron pipes and valves.  That does not even include new installations to address population growth or urban expansion.  Even the poorest of water system owners probably realizes the consequences of failing to repair the system.  The EPA suggests that the rate of water pipe and value replacement could rise to 20,000 miles per year, which implies a 50-year replacement cycle for the current installed based, but somewhat slower if urban growth is considered.  That would bring demand for water infrastructure components to $20 billion per year at current prices.

It might be a difficult road to reach higher water infrastructure investment.  At least 80% to 90% of water system revenue is based on volume used and water rates.  Water rates in the U.S. have been notoriously low.  True enough, in recent years water rates have been increasing at a faster pace than the Consumer Price Index (CPI), suggesting that water system owners are trying bring collections into line with costs.  According to a water industry research group, Circle of Blue, water rates increased an average of 6% in 2015, faster than most other household goods and services.

It may not be as simple as raising water usage rates.  Water system owners also have to deal with reduced demand for water.  Flint may have awakened the population to the threat of water contamination, but California’s severe drought conditions also brought to the collective conscious the importance of conserving water supplies.  A survey completed by Circle Blue found that total water usage declined in several major cities in 2014, including Austin, Las Vegas, Phoenix and Las Angeles.

In the next few posts we will look at companies producing the pipes, values and components that are used to construct our drinking water infrastructure.  We will try to answer the question, does the large installed based and imperative to improve also mean opportunity for sales and profits for the pipe and value folks.

Debra Fiakas is the Managing Director of
Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

October 08, 2014

Investing In Water Desalination

By Jeff Siegel

The million-dollar manicured lawns of Montecito, CA have withered, died, and gone to seed.

The polo fields are little more than dust now, and many have traded the good china for paper plates so as to avoid using the dishwasher.

There’s no doubt about it — Mother Nature doesn’t care if you’re rich or poor, black or white, fat or skinny. When she lays the smack down, we all feel it. And there is no better example of this than the debilitating drought that’s wringing the Golden State dry.

Of course, for those who can afford it, it’s not all doom and gloom.

Turns out the richest one percent in one of the wealthiest California zip codes is battling the drought with fat wads of cash.

While the “regular people” are forced to deal with the first-world problems of dry lawns and unwashed cars, the big money of Montecito is having its liquid gold trucked in from other regions. Exact locations are still a bit of a mystery.

Of course, trucking in all that water isn't cheap. One unit of water (748 gallons), which used to cost less than seven bucks, will run you up to $80 now. Still, when you consider what it takes to collect, maintain, clean, and deliver that water, $80 isn't really all that much.

No More Golf Courses

One of the reasons the Southwest is having so much difficulty with the drought is not necessarily because of climate change, but because of the lack of a real free market for water.

If folks in the American desert had to pay a price that directly correlated with the cost of bringing fresh water to those regions — regions where it doesn't really belong to begin with — they would be paying a lot more and wasting a lot less.

I suspect that at $80 a unit, there would be far fewer grassy lawns in Phoenix and certainly not as many public golf courses in Palm Springs. As well, the agricultural communities in those regions would all be on drip irrigation, every home would be equipped with rain barrels, and waterless urinals would be found in every single mall, restaurant, and government building from Santa Cruz to San Antonio.

The bottom line is that while we all swoon over oil and gold, it's rare to find folks, particularly investors, who understand just how valuable water is.

Truth is, pitching water investment opportunities has never been easy. Most investors find it to be a boring subject, and unless there's a drought, no one's really interested. Hell, even when there is a drought, few seem to care.

But the way I see it, if you're looking for a steady, long-term investment opportunity, there's one sector you should be drooling over: desalination.

Making Out With Salma Hayek

Now, I'll be perfectly honest: I don't think desalination in the United States is a pressing issue. Or rather, it wouldn't have to be a pressing issue if we just used water a little more responsibly.

But I'm a realist, and I know that asking Americans to responsibly use water is like me asking Salma Hayek to make out. I can make the request, but it's not going to happen.

So instead of lamenting rejections, we should capitalize on them. And when it comes to water scarcity, a great way to do that is by tapping the desalination sector. After all, the most recent data suggests the global desalination market will enjoy an 8.9% CAGR from 2013 to 2018. Not bad.

As a side note, desalination is actually a pretty expensive adventure. A recently approved desalination plant in San Diego will cost $922 million (and I'm sure it'll creep up closer to $1 billion after cost overruns), and that'll provide the city with 7% of its drinking water.

In any event, you still have to strike while the iron's hot. And in a world of scarce water resources, desalination is scorching.

Get Exposed

Most of the bigger plays in desalination are not pure plays. I'm talking about companies like GE (NYSE: GE), Veolia Environment (NYSE: VE), and Acciona (OTC: ACXIF).

If you're looking for more of pure play, there's Consolidated Water Co. (NASDAQ: CWCO), which builds and operates desalination plants and water distribution systems throughout the Caribbean. There's also Tetra Tech (NASDAQ: TTEK), which, while not a pure play, is a solid player in the water space and also builds desalination plants in the United States.  Finally, there's Energy Recovery, Inc. (NASDAQ: ERII), which sells energy recovery devices used in desalination and other high pressure industrial processes.

Of course, you can also get some exposure to water and water infrastructure through water ETFs, such as the Guggenheim S&P Global Water ETF (NYSE: CGW), First Trust ISE Water ETF (NYSE: FIW), and the PowerShares Water Resources ETF (NYSE: PHO).

Now, for the record, I'm not telling you to drop everything and load up the boat with desalination plays and water ETFs. Just gain a little exposure here, because the truth is, severe droughts are likely going to be a regular occurrence for years to come. Might as well take advantage of the situation.

After all, it may not be long before you'll have to shell out $80 for 748 gallons of water, too.

Jeff Siegel is Editor of Energy and Capital, where this article was first published.

August 13, 2014

GMOs and Hain Celestial

50 Shades of Green

Garvin Jabusch

As I've written before, "human economies are still so far from real sustainability that even a highly idealized portfolio of our most sustainable enterprises necessarily falls short. Ultimately, the best any portfolio can do is mirror the reality of the world, and today, still, even the best representatives of sustainability can be found wanting compared to what will be required if we would like to keep society thriving indefinitely."

There's no better example of the various conundrums swirling around sustainable economics than GMOs. As one institutional client, Timothy Yee of Green Retirement Plans, recently emailed to me, an "Issue that I am having is with Hain Celestial (ticker: HAIN) and its stand on GMO not labeling/mislabeling. Given this issue, I am in a bit of a quandary. What are your thoughts on the GMO front?"

This is a complex one, and it points out that there really are "50 shades of green," especially in portfolio management, and that no shade is perfect -- far from it.

And yet, we think that our follow-the-science, empirical, evidence-based methodology keeps us as close to a pure realization of a sustainable-economy model as you can find, given the world as it is today, and particularly given the state and entrenchment of the investment management field today, where most clients and advisors remain stubbornly invested in the primary causes, fossil fuels in particular, of the key systemic risks with the power to cause turmoil in economies and societies.

So, where do we believe the empirical approach to observing the world leads with respect to GMOs? First, we know there are questions about where the science will lead us, but we don't believe that GMOs are universally bad. We do not, as a firm, screen GMOs out, per se, although we do not currently own any GMO inventors or development labs, and our Sierra Club Green Alpha portfolio (SCGA) does screen out GMOs explicitly. We do believe that,  as with any technology (AI comes to mind), misuses can be and are deleterious. For example, we object strongly to GMOs such as "Round-Up Resistant Corn," which has been gene hacked to tolerate a huge quantity of toxins that then in turn of course end up in everything -- our food, water, oceans, and bodies. This type of application is not the path to indefinite sustainability and has to stop. Our portfolio construction theory of avoiding systemic risks and investing in solutions to those threats would never allow us to invest in GMOs of this type.

And yet, there are advantageous gene hacks that do give us a shot at mitigating some large systemic risks. Higher-yielding crops can alleviate hunger, drought-resistant crops can conserve water and keep agriculture going in the many places in the world that are drying out (California seems to be emerging as ground zero recently), and in other cases, plants have been modified to improve nutritional content. On the point of drought-resistant crops, Stanford's Dr. Henry I. Miller has posted a particularly informative piece on GMOs and public policy in which he concludes, "As water scarcity increases, drought-stricken crops wither, and food prices rise, the need for resilient agriculture will become more obvious -- and more urgent. With more rational public policy, we can meet that need now. How much more preventable misery and death must occur before our policymakers see reason?"

Indiscriminate rejection of GMOs, in my opinion, only serves to obscure variation among applications. Therefore, as a position, it lacks depth.

We don't think Hain Celestial (HAIN) is likely to be distributing many of the worst kinds of GMOs, since its focus on organics means it's not getting a lot of raw materials (and resulting SKUs) from pesticide-using farms that  might use pesticide-resistant seeds. That said, we do of course believe folks deserve to know what they consume, so transparent labeling -- whatever you think of GMOs -- should be required, and this is the kind of thing where we'd consider some shareholder activism to nudge HAIN to reconsider on this front. Activism, but (as long as we like the fundamentals!) not divestment. HAIN is the most diversified natural and organic product producer, and offers a ton of sustainable alternatives in food and personal care in numerous channels. Therefore, to us it represents a strong next-economy analogue to a legacy-economy rival such as, say, Unilever (ticker: UN).

Finally, in a larger sense, we can't help but agree with astrophysicist Neil Tyson's take on the issue: that "We have systematically genetically modified all the foods, the vegetables and animals that we have eaten ever since we cultivated them. It's called 'artificial selection.' That's how we genetically modify them." Tyson's no-hysteria approach gives us some context, and further, as Ezra Klein points out in the same article, one key cultural difference in addressing ideas that are at odds with the underlying science in conservative and progressive circles "is that conservatism's mistrust of climate science has taken over the Republican Party -- even politicians like Mitt Romney and John McCain have gone wobbly on climate science -- while liberalism's allergy to messing with nature hasn't had much effect on the Democratic Party. And part of the reason is that the validators liberals look to on scientifically contested issues have refused to tell them what they want to hear." On warming, validators like Ann Coulter will tell her base what they want to hear all day long. On GMOs, Tyson, as befits a scientist, defaults to the evidence and tells it like it is. 

Disambiguation of the many and varying underlying issues is what this -- and many other issues within sustainability -- is really about. As Tyson later explained on Facebook:

"If your objection to GMOs is the morality of selling nonprerennial [sic] seed stocks, then focus on that. If your objection to GMOs is the monopolistic conduct of agribusiness, then focus on that. But to paint the entire concept of GMO with these particular issues is to blind yourself to the underlying truth of what humans have been doing—and will continue to do—to nature so that it best serves our survival. That's what all organisms do when they can, or would do, if they could. Those that didn't, have gone extinct."

Recognizing blind spots that can lead to misinformation and, in the case of our field of investment management, therefore to inefficient markets, is a big part of what I try to do.

Is there today such a thing as an indefinitely sustainable economy? No. But we can see a way there, and that way is paved with innovations and increasing efficiencies, and we don't think we can afford to avoid the most promising representatives. Folks like antivaccinators and blanket GMO opponents ignore scientific consensus to their (and our!) peril. 

Disclosure: Green Alpha Advisors is long HAIN, and holds no positions in UN.

[Note: this is part of Green Alpha's ongoing "50 Shades of Green" series, wherein we endeavor to disambiguate the sustainable and less sustainable aspects of sectors, industries, trends and companies. – GJ]

Garvin Jabusch is cofounder and chief investment officer of Green Alpha ® Advisors, and is co-manager of the Green Alpha ® Next Economy Index, or GANEX and the Sierra Club Green Alpha Portfolio. He also authors the blog "Green Alpha's Next Economy."

June 16, 2014

Tall Neighbor Coming to Arizona Desert Community

by Debra Fiakas CFA

The citizens of a San Luis, Arizona are about to get a new, very tall neighbor.  Solar Wind Energy, Inc. (SWET:  OTCQB; formerly Clean Wind Energy Tower) recently secured 600 acres in the area to build a solar wind tower.  This is a unique design that takes advantage of air heated by the sun’s power utilizes.  Fast cooling of the air creates a powerful downdraft that drives turbines at the chimney base.  Solar Wind expects the generators attached to its turbines to produce up to 1,250 megawatts of electricity that can be sold to residential and business customers in Arizona.

Solar Wind Tower Illustration
Few investors have probably heard of solar wind towers.  They are not commonplace, but the San Luis tower will not be the first.  A small-scale experimental model of a solar draft tower was built near Manzanares, Ciudad Real, near Madrid, Spain.  The demonstration operated successfully for eight years before it was decommissioned.  Another tower went into commercial operation in 2010 in Inner Mongolia, China and now produces 200 kilowatts.

Solar towers or chimneys as some call them are low-tech.  The power conversion rate is much lower than other solar thermal designs, such as the solar collectors now operating in California and other areas.  However, low cost per solar collector area helps offset the low conversion rate.
The solar collectors in California and elsewhere have drawn some criticism.  I wrote about Brightsource Energy and its Ivanpah solar thermal power plant in the Mojave Desert in the February 21, 2014 post “The Spaniards are Coming.”  Besides the water requirement to keep solar collectors clean, critics are concerned about heat rising out of the structure as well as the land requirement.  Solar wind towers deserve the same scrutiny.  However, the conclusions might be different. 

First, in the solar wind tower cooled air is directed downward to the turbines, not upward and into the open air.  Second, the land requirement is nominal.  The San Luis structure is to be located on 600 acres, just a smidge under one square mile.  This is about the same area required by a typical coal-fired power plant.  Keep in mind that the power plant itself is not the only land requirement for conventional coal-fired electricity.  Do not forget the many acres of land churned up by the coal mine, without which there would be not so much as a kilowatt coming out of the coal-fired power plant.

 The real concern for Solar Wind Energy’s design is the water requirement.  Pumps deliver water to an injection system at the top of the tower so that a mist can be blown across the tower opening.  The water evaporates into air heated by solar rays.  The air becomes cooler, denser and heavier than the outside warmer air, and falls through the cylinder at speeds up to and in excess of 50 miles per hour.  The company is silent on the amount of water required to operate its solar wind tower,   so this is where things get murky for Solar Wind Energy’s environmental reputation.

For a community in the Arizona desert, it seems the water needs of this new neighbor would be a concern.  The City Council of San Luis unanimously approved the project in April this year.  What is more they guaranteed a water supply for the first fifty years of operation.

The good citizens of San Luis are not the only ones who have stepped forward with support for Solar Wind Energy’s plans.  National Standard Finance has entered into a joint venture with Solar Wind Energy for the San Luis project, which is expected to require as much as $1.8 billion in capital to complete.

The San Luis project is currently slated to take four years to build.  Besides overseeing the engineering design and construction activities, Solar Wind Energy is actively seeking licensees in other countries.  The company recently entered into a memorandum of understanding with a private concern called Invest Africa, Inc., which will represent the technology in Namibia and Botswana.

If the San Luis project impresses investors, it has yet to show up in the company’s stock price.  SWET trades at just two pennies per share.  The company has over 500 million shares outstanding, giving it a market capitalization of $9.6 million.  With trading volume over two million shares per day, the stock appears to be the target of penny stock traders taking advantage of small up and down movements in stock price.  Thus the stock is more like a lottery ticket than an investment.

Debra Fiakas is the Managing Director of
Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein. Solar Wind Energy (SWET) is included in the Wind Group of Crystal Equity Research’s Electric Earth Index of company exploiting earth’s natural formations to create energy.

July 13, 2011

GE’s Mark Vachon: “Gas is massive”

Marc Gunther

How’s GE’s ecomagination  going?

I put that question today to Mark Vachon, who is vice president for ecomagination at General Electric (GE). He replied by talking about natural gas.

“The large macro trend of gas is massive,” he said. “Our oil and gas business will be a huge beneficiary.”

An abundance of shale gas in the U.S., and methane gas reserves in Australia present a wealth of opportunities for GE, which plays all along the supply chain for natural gas.

“We’re a massive player in gas exploration,” Mark said. “We have a water business that can deal with issues in the fracking process.” And, of course, GE sells lots of gas-burning turbines, including a new combined cycle power plant, currently available in Europe, that enables gas to be burned more efficiently and in concert with renewable energy. (See my June blogpost, GE’s big bet on natural gas)

But can you put “ecomagination and shale gas in the same sentence? Yes,” Mark said. GE will focus on making shale gas cleaner, “with technologies like zero-leak valves” and water filtration products like a mobile evaporator that is basically a truck (see below) “designed to enable on-site frac water recycling, reducing the volume of wastewater and fresh water that needs to be hauled to and from the project site.”

GE Mobile EvaporatorLike it or not, natural gas is the big story today in the energy business. This is good for GE. It’s probably good for the U.S., given our domestic supply. Whether it’s good thing for the climate is very much an open question. If cleaner-burning gas plants replaces dirty coal plants, they will bring meaningful but incremental progress towards a climate solution. If cheap, abundant natural gas stalls the development of low-carbon renewable energy, or discourages investment in new clean-energy businesses, that’s a problem. Chances are, it’ll do both.

I met Mark near the U.S. Capitol, where he was headed for meetings on energy security with House leader John Boehner, among others. He has overseen GE’s ecomagination portfolio for Jeff Immelt since last October. Ecomagination products include efficient aircraft engines and locomotives, appliances, and LED and CFL light bulbs as well as GE’s gas, nuclear, renewable energy and smart-grid businesses; they’ll generate $20 billion to $22 billion in revenues this year, Mark estimates. The 52-year-old exec, who has been with GE for 28 years, was previously President & CEO of GE Healthcare’s $9 billion Americas Region. He still lives in Milwaukee, where the healthcare business is based, but because one of his jobs is to make ecomagination more global, he has traveled this year to Abu Dhabi, Dubai, Israel, Europe, Australia and China, and he’s soon headed to Brazil.

So if the gas business is booming, where are the challenges in the ecomagination portfolio?

Nuclear’s an obvious one. The son of a nuclear engineer, Mark believes in the technology but says, post-Fukushima, that “it’s very clear, at least for the moment, that we’re in a hiatus.” But, he added, “the nuclear industry is very good at learning from its mistakes.”

Wind, too, faces short-term issues, he said: “It’s clearly challenged over the next couple of years.” Without clean-energy mandates or tax subsidies, wind struggles to compete with cheap natural gas. And there’s uncertainty about those subsidies, particularly in the U.S. where Congress is looking to manage budget deficits.

This past spring, GE made a major commitment to solar PV, drawing on technology developed at the National Renewable Energy Lab. Mark said the company will site a manufacturing plant in the U.S. to make the panels.

Does GE remain committed to ecomagination despite the gloomy policy environment in the U.S.? After all, Immelt put his reputation on the line by becoming a vocal advocate for climate regulations through the U.S. Climate Action Partnership. That didn’t end well.

“Business has to step up and act,” Mark said, nothing that GE plans to buy 25,000 electric cars for its own fleet.

“We are not going to wait for policy,” he added. Good thing.


Marc Gunther is a contributing editor at FORTUNE magazine, a senior writer at Greenbiz.com and a blogger at www.marcgunther.com.

April 01, 2010

Exclusive Report: How to Profit from Global Warming!

Dr. K.

Global warming worriers like Al Gore are missing the many wonderful things that global warming will bring to the world, not to mention the many opportunities to profit from this so-called "climate catastrophe."  Global warming isn't about hot weather, it's about hot stocks in your portfolio.  A new report tells you the stocks to buy now!

Global Warming is the greatest opportunity for investors in a generation.  Some stocks may fall, but others will be headed upward like a the famous hockey-stick chart from the 2001 IPCC report.  For just $499.95, you can buy my exclusive 20 page report on the best Global Warming plays that are certain to set fire to your portfolio like Australian brush during a heat wave after a decade long drought.

Your portfolio

This report details twenty hot stock picks all with the potential to skyrocket between 562% and 10,873%!  Here's a sample:

Online University Stock Set to Soar!

The people running this little known online university stock are no dummies, and they are ready to cash in on a new opportunity.  The reality of climate change has already created a shortage of respectable scientists willing to question it.  But rising oil prices and the threat of greenhouse gas legislation continues to increase the demand from hydrocarbon companies anxious to continue destroying the planet to protect their investors.  In order to cash in on this trend, this University will be launching a new multi-disciplinary Denial Education (DE) department.

DE students will be able to take valuable correspondence courses such as Philosophy 621: "Missing the Forest for the Trees" and Photography 202: "Taking Pictures of Snow that Isn't Yet Melting."   Such courses come without such onerous nonsense like exams or learning, and, along with the new degrees the university confers to any student willing to pay the fee, will help the would-be denier into the lucrative industry of accepting the fat payments for lazy research supporting pre-determined conclusions.  In the response to the success of computer hackers at the University of East Anglia, they've quickly added offerings in computer security as well.

In a sure sign of the strong demand for DE graduates, a large oil company has endowed a faculty chair, while a leading coal miner is helpfully providing student loans which may be repaid in services rather than cash when the budding deniers graduate. 

But don't wait too long!  Soon thousands of freshly-minted DE graduates will be publishing papers about how it still snows in winter, and how big Al Gore's house is to pay off their student loans!

More Sure-Fire Global Warming Winners:

  • A Real-estate investment trust that's ready for rising sea levels.  They're currently buying up tomorrow's beach-front property at today's fire-sale prices!
  • A biotech firm with treatments for many tropical diseases. Today, the company barely breaks even selling expensive medicine to poor countries, but as Global Warming brings tropical diseases into rich Europe and North America, they'll be in for a gigantic payday!
  • A company rolling up zoos sold off by cash-strapped municipal governments.  With species going extinct at a record pace, soon zoos will be the only place to see wildlife.  Attendance will soar, and this company will soar with it.
...and many, many, more!

As an added bonus, I'll tell you about three stocks to short!  Like the global seller of saunas which is sure to go into terminal decline because of aggressive, low-cost competition from a competitor that does not need to make a profit: Mother Nature.

Don't Miss Out!

Don't let these hot-planet winners get away from you!  Everything you need to know to become a Global Warming billionaire is yours for just $499.95!  Order now!
You don't want to be a global warming loser.  There are plenty of ways to make money, and if everyone else is worse off, it will be all that much easier to lord it over them with your new-found profits. 

You will look back and thank me when you are sipping a Mai-Tai in the cool ocean breeze of your tropical North Dakota beachfront estate.

Disclaimer: This post is not intended as investment advice.  If you're considering basing any investment decision making on anything in this article, you should 1) check yourself into a mental ward, and 2) check the publication date.

December 08, 2009

EnviroStar: A Clean Laundry Stock For Your Portfolio

Saj Karsan

EnviroStar (EVI) is a distributor of laundry equipment that has developed a proprietary dry-wet-cleaning machine that avoids the use of perchloroethylene (Perc), a harmful chemical that the International Agency for Research on Cancer has deemed a carcinogen. Perc is also classified as a hazardous air contaminant by the US Environment Protection Agency, and its use will become illegal in the state of California in the year 2023. EnviroStar's patented Green-Jet process uses an environmentally-friendly, water-based solution that is both non-toxic and requires less energy consumption than traditional dry-cleaning methods.

This is currently a tiny company, with a market cap of just $7 million. But for value investors who simply focus on buying businesses that trade at discounts to their intrinsic values (instead of trying to apply small-cap or illiquidity discounts), some of this company's numbers are appealing.

The company's market cap is not much higher than its net cash position of $6 million. Often, a stock with a high cash to market cap ratio is one that is a perennial money-loser. But not in this case. Operating income over the last 7 years stands above the company's current market cap! Demand for heavy-duty equipment has, of course, waned through this recession, but there are two important attributes of this company that reduce its risk: its customers and its suppliers.

The company is not reliant on any one customer, as it distributes its products to over 1700 customers in various industries (hotel/motel, dry cleaners, hospitals etc). A diversified customer base reduces a company's risk, as its revenues/earnings are not reliant on a potential single point of failure.

Furthermore, the company is not burdened with the fixed costs associated with manufacturing this equipment. Instead, the company outsources the manufacturing to various suppliers. By acting solely as a distributor, the company has a more flexible cost structure, allowing it to react quickly to a lower demand environment. As a result, the company should be able to restore margins to previous levels with ease, relative to fixed-cost manufacturers.

The biggest risk to this company may be the way its controlling (and managing) shareholders appear to view public stockholders: as opponents rather than partners. Last December, the controlling shareholders tried to take advantage of a misbehaving market by making a bid for the remainder of the company. The bid, which valued the entire company at $6 million, likely so undervalued the company's assets that it was withdrawn just six days later. Consummation of the deal required a fairness opinion that the price offered was fair for the public stockholders, an opinion no financial advisor could likely offer with a straight face.

Despite this issue, the managing shareholders have done a great job with the company itself. Returns on equity have been commendable over the last few years, despite the fact that the company keeps a fairly sizable cash buffer around. As a result, Mr. Market appears to offer an excellent entry point at these price levels.

Saj Karsan is a guest contributor on AltEnergyStocks.com. Saj manages Karsan Value Funds, and regularly writes for Barel Karsan.

DISCLOSURE: Author has a long position in shares of EVI

September 14, 2009

Book Review: Investment Opportunities for a Low Carbon World (Geothermal + Efficiency)

Charles Morand

Last Thursday, I reviewed two chapters from the recently published book "Investment Opportunities for a Low Carbon World"*. This post reviews two more.

 Geothermal Energy

Alexander Richter, Glitnir Bank (now Íslandsbanki)

Geothermal is one of the most interesting forms of clean power generation there is. As noted by the author, the most convincing argument for geothermal electricity is the fact that it operates at capacity factors in the upper 90s. This makes it the only renewable technology suitable for baseload power with the exception of dam-based (i.e. large-scale) hydro.

However, as the chapter demonstrates, global potential is unevenly distributed, with Asia, North America and Latin America having around three to four times more potential than Europe, Africa and Oceania. Besides a brief review of the global picture, the book focuses largely on the US, which will most likely remain the most active market for a few more years (the US currently accounts for a third of global installed geothermal electric capacity).

The author does a good job of breaking the geothermal development business model into its main phases (exploration, pre-feasibility, feasibility and design & construction) and explaining the various types of capital flows required at each stage, as companies move from a mining exploration business model (exploration, pre-feasibility, feasibility) to a power generation utility model (design & construction). What's missing, however, is a discussion of the probability of project success at each stage, with risk typically culminating in the feasibility phase with important sums of cash being spent on exploration drilling with no guarantee that the resource will materialize.

The chapter's strength is undeniably its assessment of the current state of the US market. The author uses data from a number of different sources to show the future potential of the market. California is expected to lead the way with Nevada coming in second. Based on a database of where the overall pipeline of US projects was at at the end of 2008, the author estimates that several projects will reach the feasibility and design & construction phases in 2011 and 2012, which should lead to greater demand for capital by the industry.

The chapter also touches on direct use geothermal, although the discussion is far less detailed than that on geothermal electricity. This despite the fact that the author writes: "[t]he biggest potential and prospects for the shorter term are in the direct use of geothermal energy, particularly for heating and other applications that use heat directly."

As with the first two chapters I reviewed, I would have liked a few stock picks, and I believe a sub-section on opportunities in the equipment sector might have been interesting. However, this chapter fulfilled its purpose well; it provided a good introduction to the sector and can serve as reference material for later on. The US data was also very useful.

Energy Efficiency as an Investment Theme

Zoë Knight, Cheviot Asset Management

Energy efficiency is the most straightforward way of cleaning up our electricity supply and, given the right incentives, could also be the cheapest one (up to a point, as efficiency investments eventually run into diminishing marginal returns). We learn that in 16 IEA countries with strong efficiency profiles, efficiency measures resulted in aggregate savings worth US$180 billion in 2005 - not bad!

Incentives is thus exactly what a large part of this chapter focuses on. The author provides a thorough review of European policies and US efficiency targets outlined by the Obama administration to date. In both cases, it appears evident now that a trend toward greater energy efficiency incentives and regulations is well underway.

The author also provides a breakdown of global fuel consumption by category and identifies sectoral investment opportunities that could arise in each category. On the manufacturing side, the greatest opportunities are in machine drives (refrigeration, fans, pumps, compressors and materials processing). For households, hot water and central heating are key areas. 

However, as with other chapters I've reviewed so far, there are no specific stock picks. I did learn, however, that Merrill Lynch created an energy efficiency equity index. However, because all substantive info on the index seems to be accessible only to clients, this won't help retail investors much.

I found the review of US and EU policies very useful, but would have appreciated a greater focus on some of the main technologies that are currently commercially available (with the exception of LED lighting which is well covered), as well as some stock picks.

The author makes the following useful point about large companies with exposure to efficiency (most of the opportunities currently available to investors in this area are large conglomerates): "investors need to identify whether the theme is a large enough driver to warrant stock selection or whether there may be other factors that will drive valuation of the stock [...], outweighing the positive structural drivers from increased investment at a government level into energy efficiency. As with any equity investment, positive long-term structural drivers may differ from short-term trading cyclicality."


* We are always interested in reviewing books and reports in the areas of alternative energy, cleantech or other environmental industries, especially where they add value to the investment decision-making process. If your organization would like a new book or report reviewed, please
contact us

September 10, 2009

Book Review: Investment Opportunities for a Low Carbon World (Wind + Solar)

Charles Morand

Tom and I recently received complimentary copies of a new book called "Investment Opportunities for a Low Carbon World", edited FTSE Group's Director of Responsible Investment Will Oulton*. 

Sep 10-09 book review.bmp

The book is a compendium of articles by 31 different authors broken down into three main categories: (1) environmental and low-carbon technologies; (2) investment approaches, products and markets; and (3) regulation, incentives, investor and company case studies.

While Tom will provide a comprehensive review of the book once he's finished reading it in its entirety, I will instead review a few selected chapters over the course of the next couple of weeks.

I decided on this approach as that is how I generally use such a resource; I select the chapters and authors that I am interested in and I read only what I selected. That said, the majority of chapters in this book were of interest to me and I ended up selecting 19 out of 27 that I'm going to read (I won't be reviewing them all!) Truth be told, reviewing the contents section made me feel like a kid in a candy store and I suspect that most alt energy investing aficionados would feel the same. If I like what I read, I will most likely finish the book.    

This first post provides reviews of Chapters 1 and 2 on the wind and solar sectors.

Wind Power

By Mark Thompson, Tiptree Investments ltd

I tend to consider myself pretty well-versed in all things wind power, and so I was especially eager to read this chapter. Overall, I was very pleasantly surprised.

The author provides a good review of the wind turbine and wind turbine component industries. I especially enjoyed the technical discussion on turbine size and optimizing turbine output, which will become a critical competitive element for turbine makers.

For instance, we learn that because of the relationship between diameter and surface area for a circle, the power of one machine can be increased to match that of several smaller machines by simply lengthening the blades, thus lowering requirements for a range of other components and materials (for instance, two turbines with rotor diameters of 40 meters will have a power output of about 1000 kW, whereas one turbine with a rotor diameter of 80 meters can power 2500 kW.) Because of the mathematics of this, power output increases acheived through longer blades should further improve the economics of wind, so this is definitely a trend worth keeping an eye on.  

We also learn that while the turbine market has been chronically under supplied for the past few years, conferring the incumbents an appreciable amount of market power - the author estimates that the top six makers hold a combined 84% market share -, barriers to entry remain high and very difficult to surmount for would-be suppliers. Concerns over quality, durability, track-record and the strength of the balance sheet to support warranties are all factors that make it very difficult to secure funding for projects using a newcomer's technology. It is fair to say that Thompson is bearish on new market entrants.

Finally, we learn that the trend toward turbine makers internalizing sub-component design and manufacturing is restricting investment opportunities in pure-play supply chain opportunities.

However, what I enjoyed the most about this chapter was the detailed overview of how wind projects are built and what factors make them successful. When it comes to wind power, investment commentators tend to focus on turbines and turbine components, even though very interesting opportunities exist in the project development and operation space. In the author's words: "the development process offers some of the best returns in the sector [...]."

One key point made by the author in that regard is that headline figures about the size of various developers' portfolios are rarely - if ever - comparable given the various developments stages involved in bringing a project into operation. The risk-return profile for pure-play wind power developers is far more driven by the quality of the projects than by the size of the portfolio. However, disclosure tends to be weak in that regard, making it difficult for small investors to gauge the real value of a portfolio.

Overall, I thoroughly enjoyed this chapter. In my view, the information would be most useful to a fundamentally-driven investor looking to really understand how wind power and the wind power industry really work. While the chapter does not answer every question an investor might have, it nonetheless provides the right balance of technical and business information to set someone on the right path. It is a reference to which I will go back.  

Those looking primarily for stock picks, however, will be disappointed. The lack of stock picks is probably the chapter's weakest point, especially given that the book is purportedly about investment opportunities. Having said that, investment ideas abound on the Internet these days and books focused too heavily on providing stock picks at the expense of more general information risk having very short shelf-lives.

Solar Power          

By Matthias Fawer, Bank Sarasin

Writing a book or a book chapter on solar power, especially solar PV, is always a risky endeavor as the information could be outdated 12 months after publication. I thus salute the effort of those who undertake to do it, but in my view this sector is best left to specialist consultancies and sell-side analysts because they can easily update their analysis when conditions change, something that happens frequently in the world of solar PV.

Matthias Fawer's chapter does, in a lot of ways, read like a sell-side report. It covers three broad sub-sectors of solar: (1) solar photovoltaic; (b) solar thermal; and (c) solar collectors. Other than for solar thermal, the way in which the chapter is written assumes the reader already has a fair bit of solar knowledge. For instance, unlike your typical generalist piece on solar PV, few if any details are provided on what the main solar PV cell technologies are, how they compare in terms of price and performance and which company makes them.

The advantage of this approach is that it allows the author to jump straight into industry-level dynamics and not waste precious space explaining what many people already know. For instance, we learn fairly early on that Bank Sarasin sees silicon cell production appreciably outpacing module production until about 2012, potentially providing module makers with a margin expansion opportunity. We also learn that the plant engineering firms that had done so well when every cell manufacturer and their grandmother was adding production capacity during 2007 and 2008 could underperform in the next few years.

Of course the drawback from not providing a lot of technical background is that it makes the chapter a lot less useful for the novice solar investor, or even for the investor who knows a little bit but does not follow the industry closely. The author does, however, provide a ranking of the "strategic positioning" of 27 solar PV firms based on a proprietary model, with his top pick being Q-Cells (QCLSF.PK) from Germany.

The section on solar thermal, also known as concentrating solar power (CSP), contains more basic information on the technology, and provides an overall very good introduction to the sector. Unfortunately, there is a dearth of CSP investment options, and this sector is thus effectively off-limit to most retail investors.

The section I liked the most in the chapter was the one on solar collectors for building and water heating, an industry I knew about but had never researched. I learned, much to my amazement, that by the end of 2008 there was 142 GW of solar collector capacity installed worldwide, versus 12 GW of solar PV and 1.3 GW of CSP.

China is by far the largest market for solar collectors and, unlike in other industries, it absorbs, according to the author, 90% of its own production. Fawer expects annual growth to be about 25% until 2011 and to settle at 18% between 2011 and 2020. However, the much larger installed base currently means that the absolute level of new installations could be quite massive. Although the section on solar collector does not provide stock picks, it most definitely poked my interest and convinced me to look further into this.

Overall, while I was a bit underwhelmed by the solar PV section, I found the CSP section useful and the section on solar collectors very interesting. A greater technical focus would have strengthened the chapter given how technologically complex solar is, and more stock picks would have been appreciated. However, I will definitely go back to the chapter when I do research on solar collectors and even CSP.


* We are always interested in reviewing books and reports in the areas of alternative energy, cleantech or other environmental industries, especially where they add value to the investment decision-making process. If your organization would like a new book or report reviewed, please contact us    

August 27, 2009

Vacation, Updated Graphs, and 2 Conferences

Vacation and Meet Me at the Colorado Renewable Energy Conference or the International Peak Oil Conference.

I'm on vacation this week, so I'm going to leave you with a preview from a presentation I will be giving at the Colorado Renewable Energy Conference on Aug 29 in Golden Colorado. I'm updating my Investing in Renewable Energy presentations, and I've been able to incorporate a lot of the work Charles and I did on clean energy mutual funds and ETFs since January this year.

ETF Holdings Revealed

Charles did some in-depth work looking at the holdings of the ETFs this spring, and I turned it into this graph (click for the high-res version):

Looking at the holdings data, I've changed my favorite clean Energy ETF to QCLN, since it has a moderate expense ratio, and has more exposure to some of my favorite Clean Energy subsectors: Energy Efficiency, Clean Transport, Batteries/Electricity Storage, and Geothermal than my previous favorite, ICLN, which I picked mainly because of the expense ratio.  However, I think QCLN underweights clean transport and wind more than I would like, so another good option for larger portfolios would be a portfolio of 80% QCLN and 10% each of FAN and PTRP.  I prefer FAN to PWND because FAN is more focused on the wind supply chain, while PWND has more of a focus on wind park operators (Power Production.)

Evidence of a Clean Energy Fund Bubble

I also updated my chart of the number of clean energy mutual funds from March to reflect the closure of the Airshares EU Carbon Allowances Fund (ASO):


If that does not look like a bubble (in clean energy funds) I don't know what does.  It just goes to show that solid fundamentals do not prevent bubbles... solid fundamentals are often the foundation on which bubbles build their castles in the sky, to mix a metaphor.  However, if you do have solid fundamentals (as I believe clean energy does) the popping of the bubble just sets the stage for years of healthy growth. 

Presentations on Stock Picking

That's not the core of the presentation, but I like to cover mutual funds and ETFs when talking to a general audience of Alt Energy enthusiasts.  The real meat of the presentation, for me, is picking clean energy stocks.  For that, you'll need to wait for future articles, or come to my presentation at CREC, or the Saturday, October 10 workshop "Survive and Thrive After Peak Oil: Creating Personal Plans for the Coming Decades" at the ASPO 2009 International Peak Oil Conference, October 10-13 in Denver, CO.

At the ASPO conference, I'll skip the mutual fund stuff altogether, and spend more time on the how-to's of stock-picking.  


DISCLAIMER: The information and trades provided here and in the comments 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.


April 28, 2009

Keep Up With AltEnergyStocks.com On Twitter!

Dear Readers,

You can now keep up with AltEnergyStocks.com on Twitter by visiting our Twitter page.

We will post updates when we blog as well as other useful info about what we're up to and relevant news stories. Be sure to check us out!

All the best,

The AltEnergyStocks.com Team

March 12, 2009

Alt Energy Investment Opportunities In The Ag Sector: Intro

I just got back from Growing the Margins, a conference and trade show focused on the bio-mass/gas/energy/products sectors with a focus on the farm and food industries. These are not sectors I have traditionally paid a great deal of attention to, despite the fact that there are very interesting things happening in both.

The most notable contribution to alt energy from farm industry over the past five years has been corn ethanol, an enterprise I have long believed to be economically and environmentally unsustainable. To be sure, ethanol, but especially second-generation ethanol, got a fair bit of attention, as current US targets are expected to trigger significant demand over the next couple of decades. But there was also a lot of talk about a number of other lesser-known topics that gave me article ideas. Here are the three main ones:

  • Farm-based and other small- and mid-scale biogas projects related to green power incentive programs and the ever widening search for carbon offsets. Although there are no direct ways for investors to play this, there may be some interesting lateral opportunities in firms providing equipment ranging from geomembranes for emissions capture to small-scale turbines.
  • The emerging wood pellets for power generation industry, something Tom touched on somewhat a while back.
  • The carbon offsets industry. Although I won't limit my discussion to farm- or biomass-based offset projects, I got the idea from a workshop there.   

I'm happy to entertain other ideas so feel free to send suggestions. The first of this series will be published on Monday, and I will add links to the list as articles are published.         

January 16, 2009

What John Kenneth Galbraith Would Have Said About the Credit Crunch

John Kenneth Galbraith, renowned economist and author of the bestselling The Great Crash, 1929, died in 2006, and so he never saw the crash of 2008.  But he would not have been surprised.  

I just finished reading his A Short History of Financial Euphoria: Financial Genius is Before the Fall, a treatise on bubbles and busts of history, starting with the Dutch Tulip Bubble of 1637 and ending with the crash of 1987. The book was written in 1989, but the message is still timely today.  Galbraith draws out the common factors of all financial bubbles; all will seem eerily familiar to the financial refugees of 2008.

These common factors are:

  • Extreme brevity of financial memory.  Although the bursting of the dot-com bubble happened only seven years earlier, the most similar recent crisis in my mind was the demise of Long Term Capital Management in 1998.  But who remembered that after the dot-com bubble?  (For a refresher, I highly recommend the 2000 Nova documentary Trillion Dollar Bet.)
  • The specious association of money with intelligence.  We have a tendency to think that people who have made a lot of money must be intelligent, and vice-versa.  Surely people who can understand CDOs must be blindingly brilliant and deserve the million dollar pay packages they were earning.  This association is so deep that for most of us, it is an unthinking assumption.  For instance, we might ask about people who invested with Madoff, "How could smart people be so dumb?" when we should be asking: "How could rich people be so dumb?"  This factor is the source of the book's subtitle: Financial Genius is Before the Fall.
  • The thought that there is something new in the world.  By chopping and dicing mortgage risk in different ways, and parceling it off to unknown counterparties (think AIG), financial regulators were persuaded by banks that the overall risk of the system had been reduced.  But it wasn't.  In many cases, it wasn't even redistributed, with banks that had sold bad assets on to investors finding that they still were at risk because they also lent the funds which the investors used to buy the assets in the first place.  As Galbraith says, "The world of finance hails the invention of the wheel over and over again, often in a slightly more unstable version."

We All Did It

Galbraith also has something to say about who is to blame for the 2008 credit crunch:

We are to blame.  Everyone who indulged in the rush to buy into an accelerating housing market by taking out a loan which they could never pay back.  People who used their homes as ATMs, using seemingly endless home equity to finance vacations to the Caribbean.  Foundations, Charities, and Funds-of-funds blithely intrusting their money to the likes of Bernie Madoff.   Even investors who bought speculative stocks at inflated prices at the start of 2008 despite the stratospheric valuations.

Unless you took your money out of the market in 2007 or 2006, and used it to pay down your debt, you were part of the euphoria which led to the crash.  With luck, we will all learn this expensive lesson, and be able to remember it long enough not to be part of the next euphoric episode. 

History shows that most of us will forget all too soon (if we learn in the first place.)  Nevertheless, we have the power, and the ability, not to be "most people."

Tom Konrad, Ph.D.

December 24, 2008

Seasons Greetings!

The team at AltEnergyStocks.com wishes all of our readers a happy and safe holiday season 2008.

In 2007, we brought you the Cleantech News service. In 2008, we were delighted to bring you individual and category stock pages.

We intend to continue looking for ways to create value for our readers in 2009. As always, we invite you to submit comments and suggestions on how you think we can improve AltEnergyStocks.com. We also always love to hear from you through your comments on the site - keep them coming!

You all helped make 2008 a great year for AltEnergyStocks.com, and we look forward to a great 2009 with you!

Charles, Tom and Brian

October 09, 2008

AltEnergyStocks.com Endorses Barack Obama in the U.S. Presidential Race

With about a month to go to the 2008 presidential election campaign, and after two presidential and one vice-presidential debates, we have heard enough from both tickets on the issue of energy to make up our mind on an official endorsement, an issue we do not take lightly.

John McCain's and Barack Obama's stances on energy can seem very similar to the casual observer. Both candidates support a cap on carbon emissions, and both tend to argue for "All of the Above" when asked about specific forms of energy.

But there are key differences:

1. In the second presidential debate [transcript], Tom Brokaw asked each candidate to prioritize the important issues of Healthcare, Energy, and Entitlement reform. McCain avoided the question, saying that he would work on all simultaneously, while Obama put energy first and foremost. At AltEnergyStocks.com, we also believe that energy should be the new president's top priority.

2. Energy Efficiency. Despite supporting an "all of the above" approach to energy, John McCain very seldom speaks of energy efficiency, and using the energy we have more wisely. Barack Obama nearly always speaks about energy efficiency when he speaks about energy. The incident where Barack Obama truthfully said that properly inflating tires would save more oil than offshore drilling is likely to produce [video], after which McCain ridiculed him for it, is just one memorable example. Although AltEnergyStocks.com supports all forms of renewable energy, we know that energy efficiency is the cheapest and cleanest form of energy available, and so energy efficiency has to come first.

For more differences, this Wall Street Journal article explores the candidates' energy policies and voting records in more depth, and shows that Barack Obama has consistently supported renewable energy, while John McCain has sometimes been an obstacle.

For all these reasons, AltEnergyStocks.com joins other alternative energy and cleantech businesses in endorsing Barack Obama as the best candidate for the Alternative Energy Industry, and for our personal investments in the sector. But beyond immediate economic and financial considerations, we believe that a fundamental shift in the way we produce and utilize energy is a necessary condition for peace and prosperity for the generations that will follow us, and we believe that Barack Obama is the most willing and best able to ensure that this shift occurs.

Charles Morand, Partner & Editor

Tom Konrad, Ph.D., Partner & Analyst

Brian Gomes, Partner & CTO

June 12, 2008

Six Tips for CFA Candidates

I just finished the third (of three) Chartered Financial Analyst (CFA) exams.  I believe I passed, (results will not be available until September.)  I've taken more than my share of tests in my life, and these three exams have been the three hardest.  I decided to publish my advice for others becoming CFA Candidates because 1) my partner at Alternative Energy Stocks, Charles Morand has just become a CFA Candidate (he'll take the first exam in December), and 2) there is little advice available online.

VI. Buy two of your chosen model of calculator  The reason for this is because, if your battery happens to die in the middle of the test, you don't want to waste precious minutes trying to change it.  I never had a battery die on either of my used calculators, but why take the chance (especially when you may never use the $5 extra battery.)   The two models allowed are the HP 12C and the TI Business Analyst Plus.  The links are to eBay, where I was able to buy my calculators for less than $20 each.  

V. The CFA Institute recommends a minimum of 250 hours to study for each exam.  They are not joking.  I studied around 300 hours for each exam.  If you can only put in 200 hours, you will not pass unless you are considerably smarter than I am.  The candidate sitting next to me on level III told me he had taken off 10 days to go skiing this spring.  He didn't finish two questions on the morning portion of the exam, and I got the impression that he had trouble with the parts he did finish.  He seemed angry about how hard the exam was.

IV. Make sure your job and your family are supportive.  Ideally, you should work someplace that gives you time to study, as well as support.  If you have a wife and kids, don't plan to see them on weekends for several months each year for at least three years.  Make sure they understand that, and are supportive.  I had a study partner for level I who had kids, and frequently would miss study dates because of family obligations.  This was his third attempt to study for level one, and he was so unprepared in June that he did not even bother to take the test.

III. Do all the problems in the coursework.  If you just read the material without doing the problems, you will have no idea what they'll be asking for on many of the questions on the exam.  

II. Practice exams are also a must.  I've found that the online exams available from the CFA Institute are harder than the actual test, so I do not bother with anything but the one they give away for free.  On level III, however, the last three years of essay questions are available.  I found these extremely useful.  Exam prep providers Schweser and Stalla also offer practice exams.  For level II and III, I used the Schweser practice exam book from the previous year, which I bought on eBay, and found it very helpful.  I spoke to another candidate between sessions on level III who had used both.  He had switched providers because he was taking level III for the third time, and needed to try something different.  He thought Schweser exams are at about the same level as the real thing, while the Stalla exams are too easy.

I. Exam Prep courses and videos.  I never took an exam prep course from one of the providers, since they are quite expensive and I was paying my own way.  However, I did use year-old videos (at level one two-year old) from Schweser, and found them an excellent way to review the material over the last month of prep.  I also bought these on eBay.  Exam prep providers also offer condensed versions of the curriculum.  I never used these, so I can't recommend one over the other.  The same candidate referenced in II above said that Stalla was better at explaining the concepts than Schweser.

In short, eBay is your friend.  Practice questions are your friends. Your current friends (and possibly family) may have to be reminded of your name, you will have seen so little of them while you were studying.  

The CFA program is an incredible amount of work, but you can get a lot more out of it than just better pay or job prospects.  It has made me a better analyst.  And having missed the last three, I'll appreciate Spring more for years to come.

Tom Konrad

UPDATE 5/19/2011: There are six more useful tips here.

June 07, 2008

Good Luck Tom (and everyone else)!

A quick note to wish AltEnergyStocks.com Analyst Tom Konrad the best of luck with his CFA Level III exam today. We also want to wish good luck to all of our readers who are also taking one of the CFA exams today, break a leg!

We will be taking a break from The Week In Cleantech this week and will be back on Monday with a special feature.

June 03, 2008

Book Review: Profiting From Clean Energy

I received, about a month ago, a complimentary copy of Profiting From Clean Energy, a recent book on investing in alternative energy by investment analyst Richard W Asplund. I will do a short review of the book here, as it may be of interest to some of our readers.

Just so that there are no doubts lingering in your minds as you read through my review, neither AltEnergyStocks.com nor I is receiving any compensation for doing this other than a free book. Should you want your book reviewed here, feel free to contact us and make a request.

General Impressions

Profiting From Clean Energy covers 13 sub-sectors of the clean energy space: solar (PV and thermal); wind; fuel cells; geothermal; cleaner utilities; power efficiency; smart meters; power storage and backup; clean transportation; ethanol and biofuels; trading in biofuel feedstocks; coal; and carbon trading. The book also discusses macro-drivers for alternative energy (e.g. concerns about climate change, energy security, government incentive programs, etc.) and provides growth forecasts. Profiting From Clean Energy opens with a review of the various forms of investments one can make in alternative energy (e.g. individual stocks, mutual funds, etc).

The author takes a largely top-down approach to his analysis. He begins at the economy or even the global level, and works his way down to industry dynamics, how the technology works and who the key players are. For each sub-sector, the book provides a comprehensive list of stocks with some basic analysis. Technology discussions are at a level where individuals without engineering training can easily follow, while still providing enough depth to be well-informed when doing further research on a stock or sector.

The core audience for this book is, in my view, investors with limited knowledge of alt energy but who want to get started and need an effective way to learn a lot rapidly. That's not to say more knowledgeable folks won't get any value out of this book. For my part, I learned a fair bit in the geothermal, energy efficiency and net metering sections, as they were sectors I had not, until recently, examined very closely. But I believe this book can provide the most value if you have limited knowledge of clean energy as an industry but have a strong interest in investing in it, and are not sure where to start.

At a broad level, Profiting From Clean Energy is therefore a good resource to get you thinking about what to look for when seeking out investment opportunities in clean energy. The book does not, however, provide tools for fundamental stock analysis. Whereas certain investment books outline detailed models for analysis based on fundamentals and financials, Profiting From Clean Energy is very much about the macro-picture and does not delve deeply into technical financial concepts.

The Good

- A very good general overview of the key dynamics driving each sector and clean energy in general. Can therefore provide a good base for stock-specific analysis when assessing a company's competitive positioning.

- A comprehensive list of stocks broken down by sector, along with a wealth of external resources to help push one's research beyond the book. The accompanying website, http://www.profitingfromcleanenergy.com/ (currently under development), will soon provide a list of 50 stocks with profiles, and already has features such as a news service and a free newsletter.

- Easy to read and not overly detailed or technical, yet provides a good level of depth.

The Less Good

- Reading a book about investing in internet technology written in 1997 today would likely not be immensely useful. Similarly, because alt energy is going through a phase of rapid evolution and profound changes, this book is not timeless. Read it now and it can provide a lot of value; wait two years and things will have changed too drastically in certain sectors like solar and clean transportation (unless of course multiple editions are planned).

- In the clean transportation section, I would have liked to see a discussion of rail transportation and opportunities associated with it.

- An close follower of the alt energy space will likely not come across a great deal of new information in the book, although the website is a useful resource. I don't, however, believe that this is unique to Profiting From Clean Energy, but is rather a consequence of the choice an author makes about going for breadth (covering multiple sectors) instead depth (covering only one).

April 13, 2008

Lunch With Warren Buffett

Tom couldn't attend to his usual Monday column this week so he asked me to step in. My own investing has been partially on hold over the past couple of months as I have been watching developments in the markets, so I figured I would open the week with something a little lighter albeit not entirely unrelated to alt energy and cleantech investing.

Deflating Valuations = Happy Value Investors

One of the good things about the current state of equity markets for alt energy investors is that several great company's stocks that had been trading at rich multiples for most of 2007 are now priced more reasonably. In fact, for value investors, markets such as these present wonderful opportunities to get in at acceptable levels on good stocks.

At its core, the value investing approach purports that, when buying a company's equity, you should only ever pay for one of two things: (a) the replacement value of the firm's assets (including intangibles like technology and client relationships) or (b) what is affectionately referred to as "the moat", meaning some form of strategic edge that competitors cannot replicate.

With regards to replacement value of the firm's assets, this effectively means that if a stock is trading much above its book value per share plus certain adjustments (say higher than 1.4x), value investors won't find it too interesting. This metric represents what it would cost a competitor to exactly replicate the business, and so adjustments to the balance sheet include intangible items like patents and customer relations. On the second point, the moat can be thought of as a market position that is nearly untouchable for one reason or another. For example, First Solar's (NASDAQ:FSLR) trailing PE of 132x can be partially explained by the company's unchallenged manufacturing and cost leadership in the thin film PV space - investors perceive a moat and implicit in this high multiple is a belief that earnings won't come under attack from competition any time soon.

Needless to say, certain alt energy sectors such as solar PV have seen PE ratios deflate appreciably since the fall of 2007. PE ratios of 15x and under are the ideal range for value investors and, while many alt e stocks still have PEs far above that, certain good opportunities have certainly emerged in the past few months.

Now I don't want to delve too far into this just yet as I intend on doing a full value analysis of a stock I'm considering buying in a few week's time. But for those who don't know a lot about the value investing philosophy, I would recommend familiarizing yourself with it. It can be a powerful, and, if you truly follow it, disciplined approach to investing that has had a very respectable track record over the past four decades, thanks in large part to...

Warren Buffett

Mr. Buffett, the world's richest man and the most famous disciple of value investing's inventor Benjamin Graham, generally needs no introduction.

A few of my classmates and I had the extreme pleasure and honor of traveling to Omaha, Nebraska, to spend the morning and lunchtime with Mr. Buffett a couple of weeks ago. It was a truly once-in-a-lifetime experience. While I admire the work and talent of many people, I don't often come across individuals that I find inspirational on a personal level. Warren Buffett's thinking on many issues related to investing and business has definitely influenced my own, and it turns out that his approach to life in general makes a lot of sense to me. His most memorable advice to us: "The number one thing you should look for in a spouse is not humor or smarts, but low expectations." I've tried to convince my wife of this since to no avail.

So, as a prelude to a post dedicated to the value investing approach to security analysis in a few weeks' time, I figured I would share a few thoughts and pictures with our readers on the man who has had the most impact on the field of value investing, and, truthfully, on investing in general.

Some Pics

This sign in medium-sized letters next to an innocuous-looking door is about the only thing in the building telling you where you actually are

Lunchtime at Piccolo's Steakhouse. Mr. Buffett loves a good steak for lunch and a rootbeer float for desert

Mr. Buffett and myself after lunch

April 26, 2007

Links & Blogrolls

Altenergystocks.com frequently receives requests to provide links to other websites and/or to join services where several blogs are featured together in one platform (see an example here). As our regular readers have probably noted, our blog rolls (Tom's and mine) are not especially extensive. We thought at this point that it might make sense to let our readers know how we go about selecting sites for inclusion in our blog rolls and what our policy is with regards to giving out links to other sites.

Blog Roll

Our approach to adding links to our blog rolls is very simple. Blogs/sites must:

(a) Be of enough interest to us that we follow them regularly

(b) Post often

(c) Provide real value-added for our readership

Of course there are plenty of blogs/websites out there that meet these criteria, but we also believe that blog rolls should not be so long as to make them overwhelming for site users. Our blog rolls are also not static - for instance, I recently made certain changes to mine to reflect what I've been paying attention to lately.

Yes, this may all sound very subjective, but devising a truly "objective" way of populating our blog rolls would negate the true intent of a blog roll, which is to indirectly give you our opinion on what is worth reading.

You may have also noticed that our blog roll is broken down into 3 sections: (a) Charles' favorites, (b) Tom's favorites and (c) Two thumbs up. The last category contains sites/blogs that we both think are worth your while.

Blog Aggregation Services

Blog aggregation and other types of social sites often ask us if we are interested in being featured as part of their services. We do not mind, as long as it requires no commitment and no extra work on our part.

Altenergystocks.com is not interested, at this point in time, in becoming affiliated with other services. In short, if you wish to add us to your service, you may do so after having notified us and received approval. We are not, however, interested in relationships that: (a) require exclusivity agreements, (b) require us to link over to you, (c) require us to alter our content in any way, (d) entail an appreciable amount of extra work on our part.

Charles' shared items: A New Feature!

Some of you may have noticed a new feature called "Charles' shared items" on the right side navigation bar, above the Archives.

The items shown in this window are blog posts and media stories that I flag as worthy of your attention as I go through my RSS reader (Goolge Reader) daily. Unlike the Week in Cleantech, this feature is dynamic and I add new links to it a few times each day. We therefore encourage you to use this if you want up-to-date info on what is going on in the world of cleantech.

Happy alt energy investing everyone!

April 02, 2007

Away Last Week

I was away on holidays last week with self-imposed lack of access to email - thanks to Tom for holding the Alt Energy fort alone!

Several of you sent me emails to which I haven't gotten around to responding yet. I apologize for that. I will get on that tonight and you can expect a response in the next few days at the latest.



January 15, 2007

A Climate of Injustice

For this post, a tad bit of shameless promotion for a friend.

My former grad school roommate and good friend Brad Parks, who works at the Millennium Challenge Corporation in DC, co-authored a book on the asymmetry that exists between emerging countries' share of global greenhouse gas emissions and the price those countries will have to pay, not only monetarily but also in terms of health and quality of life, as the effects of climate change materialize.

Brad put a tremendous amount of work into this and the few chapters that I had a chance to read were excellent. If you have an interest in international development and the environment, this is a timely and critical piece of work.

The Book

A Climate of Injustice: Global Inequality, North-South Politics, and Climate Policy
J. Timmons Roberts and Bradley C. Parks
MIT Press, December 2006
$26.00/£16.95 (PAPER)

The global debate over who should take action to address climate change is extremely precarious, as diametrically opposed perceptions of climate justice threaten the prospects for any long-term agreement.

Poor nations fear limits on their efforts to grow economically and meet the needs of their own people, while powerful industrial nations, including the United States, refuse to curtail their own excesses unless developing countries make similar sacrifices. Meanwhile, although industrialized countries are responsible for 60% of the greenhouse gas emissions that contribute to climate change, developing countries suffer the "worst and first" effects of climate-related disasters, including droughts, floods, and storms, because of their geographical locations. In A Climate of Injustice, J. Timmons Roberts and Bradley Parks analyze the role that inequality between rich and poor nations plays in the negotiation of global climate agreements.

Roberts and Parks argue that global inequality dampens cooperative efforts by reinforcing the "structuralist" worldviews and causal beliefs of many poor nations, eroding conditions of generalized trust, and promoting particularistic notions of "fair" solutions. They develop new measures of climate-related inequality, analyzing fatality and homelessness rates from hydrometeorological disasters, patterns of "emissions inequality," and participation in international environmental regimes. Until we recognize that reaching a North-South global climate pact requires addressing larger issues of inequality and striking a global bargain on environment and development, Roberts and Parks argue, the current policy gridlock will remain unresolved.


"This is a remarkable book. In applying a wide variety of disciplinary approaches – empirical and theoretical, qualitative and quantitative – the authors provide a thorough and truly global understanding of the structural inequalities and injustice that come with contemporary climate politics and disasters. A rich, sophisticated, and balanced study that moves beyond structural explanations and opens horizons for change."

--Arthur P. J. Mol, Wageningen University, The Netherlands

"Roberts and Parks have written an outstanding book that highlights the deep structures of inequality and mistrust that pervade every aspect of the climate regime. It will be essential reading for anyone who wants to understand why the South is increasingly reluctant to join up with the post-Kyoto process."

--Clark A. Miller, Consortium for Science, Policy & Outcomes, Arizona State University, and editor of Changing the Atmosphere: Expert Knowledge and Environmental Governance

“This book is a significant contribution, both in addressing questions of justice in the climate change debate and in providing new perspectives on the prospects for successful negotiation.��?

--Dale Jamieson, Professor of Environmental Studies and Philosophy, New York University

The Authors

Timmons Roberts is James Martin 21st Century Professor at the Environmental Change Institute, Oxford University, UK, and Professor of Sociology at the College of William and Mary, US.

Bradley C. Parks is a Development Policy Officer in the Department of Policy and International Relations at the Millennium Challenge Corporation in Washington, DC, and Senior Researcher at The Center for International Policy Research at the College of William and Mary.

October 16, 2006

Ammonia-Fueled Combustion Engines are Coming

A while back, Jeff, one of our readers pointed me to an announcement on ammonia fuelled irrigation pumps. Late last week, Jeff sent me another link to Market Watch's coverage of the Ammonia Conference in Algona, Iowa.

In the article, Ted Hollinger, President of Hydrogen Energy Center (HYEG.OB), outlines the company's efforts to produce ammonia fueled engines. From the article:

HEC projects their ammonia-fueled engines will produce 2.33 times more horsepower than a gasoline-fueled engine and plan to have finalized systems ready for sale in 2008.

"Ted Hollinger's presentation was one of the highlights of the conference. If the Hydrogen Engine Center ammonia fueled commercial internal combustion engines are as high in efficiency (50%) as Ted Hollinger indicates, it will be difficult for fuel cells to compete," commented Norm Olsen, P.E., Manager of Iowa State University's BECON (Biomass Energy Conversion) Facility in Nevada, IA.

That certainly is very interesting and presents a great opportunity for the company if his projections are correct.

I had a look at 1-year performance of the stock and it has just been hammered since June of this year with a precipitous drop since late August. Does anyone have an explanation to that recent performance?

September 06, 2006

CleanTech Investing Still Needs To Make Money

A recent post by Tyler Hamilton at Clean Break brought a few things into focus for me.

On cleantech investing, Tyler says:

the fact remains if you want to get businesses to embrace a more sustainable way of operating and convince consumers to adopt a more sustainable lifestyle you've got to go back to basics: Will this lower costs/monthly bills? Will this improve operational efficiency? Will this lower risk? Will this give me an edge over rivals?

I could not agree more. In my opinion, there is also an important analogy between the adoption of clean technologies and investments in those clean technologies. The analogy between adoption and investment shows that these two things will ultimately have similiar paths.

For clean technologies to be adopted, they must be supported by economic benefits to the end users of those technologies. They must strengthen the business case for the customer. If the economic benefits are not there, the usage of these technologies cannot be sustainable. Goodwill runs out when the money runs out.

The lack of adoption of a clean technology will of course impact an investment in the company. When we invest in a company, we own a piece of that company. Over the long term, if the company is not profitable because its products are not being adopted, our investment in that company will reflect the performance of its products. If you are investing in alternative energy companies because it is the right thing to do, but you are continually losing money, there is just so long that can last despite all your good intentions. The profits of a company or lack thereof will bring that reality home to you as an investor.

The adoption of clean technologies and the investment in clean technologies both must be justified by economic benefits - it cannot just be the right thing to do. If economic benefits are not there, the adoption and investment in these technologies cannot be sustainable.

Here's to saving the world by investing in profitable clean tech companies!

At some point later in time, I would like to add a forum to this site to facilitate interaction amongst the readers and to create a community. Right now, I just have the comments section of this blog.

For today, I am asking that you use the comment section below if you would like to tell us about an alternative energy (or clean technology/environmentally friendly) company that you are excited about. Tell us what the company does, why you like them and the potential of the company and their products.

Of course, your comments on the post itself are always welcome.

March 30, 2006

Ceres Petitions Mutual Fund Companies to Consider Climate Change

TreeHugger.com points out that Ceres.org has sent out petitions and letters to Fidelity, Vanguard, and American Funds asking them to begin addressing the economic risks of climate change by supporting global warming shareholder resolutions filed with U.S. companies.

"In 2005, none of the three mutual fund companies supported such resolutions, which typically request that firms disclose the financial risks and opportunities of global warming and describe their strategies for managing those challenges" [ more ]

March 28, 2006

American Superconductor's D-VAR voltage regulation system to provide voltage and power factor control for UK based 35 megawatt wind farm

American Superconductor Corp. (AMSC) received an order for a D-VAR® voltage regulation system from Econnect Construction, a U.K. company specializing in grid connection for renewable energy sources. The D-VAR system will be installed in Scotland where it will provide voltage support and power factor regulation in a mixed hybrid solution designed by Econnect Construction for a 35 megawatt (MW) wind farm. AMSC expects to commission the D-VAR system in October 2006. [ more ]

March 21, 2006

Guinness Atkinson Set To Launch Alternative Energy Mutual Fund

Guinness Atkinson Asset Management, Inc., announced the upcoming launch of the no-load Guinness Atkinson Alternative Energy Fund, which will invest in companies involved in the production, distribution or storage of alternative energy, including energy conservation. The fund is designed as a vehicle for investors seeking to profit from and participate in the shift from conventional fuels to alternative energy sources.

The fund will invest primarily in companies that produce 50 percent or more of revenues from alternative energy and will be managed with an emphasis on value. Lead manager of the fund will be Tim Guinness, Chief Investment Officer of Guinness Atkinson, who also manages the Guinness Atkinson Global Energy Fund.

Guinness Atkinson has produced an in-depth, eight page research report called the Alternative Energy Revolution. This report provides an analysis of various alternative energy technologies and includes a discussion of the shift underway from conventional to alternative energy.

The anticipated launch date for the Fund is March 31. Investors wishing to learn more can request a prospectus and a copy of the Alternative Energy Revolution by calling 800 915-6565 or by visiting the GA Funds website. [ more ]

March 15, 2006

ChangeWave Research Alternative Energy Trends Report

As promised earlier this week, I have been given permission to post the abstract of the ChangeWave Research Alternative Energy Trends report. I work for the publishing company that produces the ChangeWave services and have been involved with ChangeWave from the beginning. I am also an Alliance member. The ChangeWave Alliance is a group of about 5,000 industry insiders and professionals that are regularly surveyed to track economic and investment trends in various sectors of the market. You can learn more about ChangeWave at their newly redesigned website.

If you are currently an alternative energy professional and want to learn more about joining the ChangeWave Alliance, please feel free to send me an e-mail or leave a comment below.

And the Winner Is? Hybrid/Electric Leads for 2006 while Solar Shows Momentum - But 5 Years Out it's Fuel Cells

Overview: During the week of February 7-10, 2006 we conducted a survey of Alliance members who work for companies involved in the Alternative Energy industry or who are knowledgeable in the field. A total of 121 Alternative Energy Industry members participated, along with 804 members knowledgeable about the industry.

Bottom Line: Alternative Energy Industry respondents still believe Hybrid/Electric Vehicles will experience the most rapid economic growth over the next two years, but the current results show the Solar Sector ranks second and has picked up the most momentum since our October 2005 survey.

What about 5 years out? Industry respondents believe the Fuel Cell sector will experience the most rapid economic growth over the next five years - with once again the Solar Sector ranking second.

We asked industry respondents to identify the fastest growing mid-tier companies within various alternative energy sectors for the next 12-24 months. Here are the leading companies identified by sector:

Hybrid/Electric Sector: Energy Conversion Devices (ENER);
Fuel Cell Sector: Fuel Cell Energy (FCEL) and Energy Conversion Devices (ENER);
Solar Sector: Evergreen Solar (ESLR);
BioMass Sector: Archer Daniels Midland (ADM).

We also asked industry members how long they believe it will take for key Alternative Energy breakthroughs to reach commercial viability. Here are the consensus estimates:


Other Key Findings:

  • Most Rapid Economic Growth - Past 12 Months. Alternative Energy Industry respondents cited Hybrid/Electric Vehicles (60%) as having experienced the most rapid economic growth over the past 12 months - up 7-pts since our previous survey. Importantly, number two Solar Energy (34%) has more than doubled during this time.
  • Impact of Rising Energy Costs during 2006. Not surprisingly, the vast majority (92%) of industry respondents think rising energy costs will drive significantly more investment to alternative energy in 2006 - with Hybrid/Electric Vehicles (28%), Solar (27%) and Biomass (26%) benefiting most.
  • Higher Fossil Fuel Price Assumptions. Twenty-eight percent (28%) of Industry Respondents report their company's business plan now assumes Significantly Higher fossil fuel prices for the next 5 years - up 8-pts since October 2005. Another 41% say their company assumes Somewhat Higher fossil fuel prices.
  • Biggest Technology Breakthroughs - Next 12-24 Months. Industry Respondents believe Fuel Cells (27%) and Hybrid/Electric Vehicles (27%) will experience the biggest new technology breakthroughs over the next 12-24 months.

Summary of Key Findings

Alternative Energy Sectors - Most Rapid Economic Growth

Past 12 Months
Hybrid/Electric (60%; up 7-pts)
Solar (35%; up 19-pts)

Next 12-24 Months
Hybrid/Electric (49%; up 1-pt)
Solar (39%; up 12-pts)

Next 5 Years
Fuel Cells (25%; down 6-pts)
Solar (22%; up 10-pts)

Breakthroughs Closest to Reaching Commercial Viability
Dramatic Expansion in Ethanol Production - 2011
Development of Highly Advanced Battery - 2012
Solar Cells Become Affordable Enough to Be Commercially Viable - 2014
Development of Mass Produced Hydrogen-Fuel Cars - 2018
Rising Energy Costs Driving Investment into Alternative Energy in 2006

Who Will Benefit Most?
Hybrid/Electric (28%)
Solar (27%)
Biomass (26%)

Fastest Growing Mid-Tier Alternative Energy Companies

Hybrid-Electric Sector: Energy Conversion Devices (ENER)

Fuel Cells Sector: Fuel Cell Energy (FCEL), Energy Conversion Devices (ENER)

Solar Sector: Evergreen Solar (ESLR)

BioMass Sector: Archer Daniels Midland (ADM)

March 10, 2006

Lack of Posting

You may have noticed that I have not been posting to this website very frequently for the last couple of weeks. During this time I have been working very hard at my day job launching a redesigned website. Working 12+ hour days for the last couple of weeks has put a toll on my free time. But I'm glad to say that we launched the new site yesterday and I should be able to pick backup again soon.

For those of you interested, here is a link to the new site that has taken all of my time. [ more ]

I also have some additional good news, the site mentioned above has created some special reports on Alternative Energy Investing and I have been given permission to post the findings here next week. So stay tuned.

March 06, 2006

Wells Fargo Publishes Report on Alternative Energy Investing

Joel Makower points to a special report published by Wells Fargo Private Client Services "Identifying the Opportunities in Alternative Energy" (PDF.)

It is a good primer on alternative energy resources (hydro, wind, solar, hydrogen, biomass, and -- yes -- nuclear), along with an analysis of their respective advantages, disadvantages, and outlooks. [ more ]

February 01, 2006

Bush's State of the Union

"America is addicted to oil, which is often imported from unstable parts of the world"

Thanks to Mr. Bush's state of the union address last night, we should see some nice gains across the board in the Alternative Energy sector.

Some of the big winners may be the Ethanol companies like Archer Daniels Midland (ADM) and Pacific Ethanol, Inc. (PEIX).

The EnergyStockBlog.com has a nice write up on the potential for ADM. [ more ]

GreenCarCongress.com has a nice summary of the important parts of the speech.

In his State of the Union 2006 address, President Bush announced the Advanced Energy Initiative�a 22% increase in clean-energy research at the Department of Energy (DOE).

The Initiative is intended to focus on providing breakthroughs in two areas: power for homes and businesses; and transportation. [ more ]

Update: Well the market is now open and shares of ADM and PEIX are trading down. But shares of Fuel Cells and Solar companies are up.

January 27, 2006

The Top 25 Purchasers of Renewable Energy and Their Suppliers

The Energy Stock Blog points to the U.S. Environmental Protection Agency list of the current top 25 purchasers of renewable energy, and their suppliers. From the release:

Top 25 Partners are Partners whose annual green power purchase is the largest, and whose green power purchase has been completed. Their actions are helping drive the development of new renewable energy sources for electricity generation. Combined, their purchases amount to 3.3 million megawatt-hours (MWh) annually, which is approximately 75 percent of the green power commitments made by all Partners. These Top 25 Partners provide an example to their peers, customers, and community.

Here are the top 5

  1. U.S. Air Force
  2. Whole Foods Market
  3. U.S. Environmental Protection Agency
  4. Johnson & Johnson
  5. U.S. Department of Energy

You can view the complete list at the Energy Stock Blog website. [ more ]

December 01, 2005

An X-Prize for Alternative Energy?

I read several financial sites and feeds throughout the day and I have an entire section devoted to various stock blogs in my Bloglines feed reader account. A post on Andrew Tobias's website today really caught my attention where he was talking about his $100,000 “idea� contest.

In response to the $100,000 “idea� contest, Alan Q writes: “Here’s mine and it’s a damn fine idea. Building on the success of the X Prize in reusable spacecraft: Expand government funded X Prizes in areas where innovation is vital to the nation's economic future and national security. For example:
  • $40 billion in cash and 20-year federal tax forgiveness (both can be adjusted) to the first automobile company that puts a million hydrogen-based cars in the hands of consumers. The company must demonstrate that it is covering the cost of production in the price it charges.
  • $10 billion in cash and 20-year federal tax forgiveness to the first developer that builds and fills (at least) a 500-home development that is completely powered through renewable energy (solar, wind, etc). Again, it must be shown that the price of the homes truly reflects costs.

“These are just a couple of ideas where these kinds of prizes would spur innovation, yet the cost to the government would be, relatively speaking, pocket change. I can imagine a blue-ribbon panel that identifies which of these contests would be the most useful. (Remember, these are just examples.)� [ more ]
Well I thought that was sure genius and wanted to bring it to your attention. Think of the impact of taking this type of concept to the next level. An X-Prize for Alternative Energy! Ok Carmack, are you up to the task?

November 30, 2005

PowerShares to Launch Water Resources ETF

water_map.gifPowerShares (the maintainers of the Alternative Energy ETF) are coming out with a new exchange traded fund that focuses on a Water Resources Portfolio.

The PowerShares Water Resources Portfolio is based on the Palisades Water Indexâ„¢. The objective of the Palisades Water Indexâ„¢ is to capture the substantial economic value of water that will inevitably be unlocked as the global population adjusts to the linkage between human health, economic development and resource sustainability. [ more ]

This new ETF is set to launch sometime in December and is expected to trade with the ticker symbol PHO. While this EFT is not related to Alternative Energy, I wanted to point it out that it many be an excellent vehicle to own for the future. Also water stocks typically fit into most Socially Responsible Investment portfolios.

I will most likely be adding this ETF to one of my other personal portfolios when the fund starts to trade. I have been very happy with the entire PowerShares ETF product line and have shares in the Dividend Achievers ETF, China ETF, Zacks Microcap ETF, Nanotech ETF, and Alternative Energy ETF in my personal portfolios.

November 28, 2005

Recycled Holiday Cards

A couple of weeks back the Treehugger.com website had a link to a company called Green Field paper that makes recycled holiday cards. [ more ]

Well I needed to purchase some cards to send out to clients. So I decided to give them a try.

I went to the website and was amazed at all the different choices in recycled card stock. But the cards that suprised me the most are the Grow-a-Note cards. These cards are made from handmade paper and are embedded with a variety of wildflower seeds. So the receipient of the card can just plant it in the soil and wild flowers will bloom the following spring. I thought that was a very novel idea.

When I ordered, I had a slight problem with my order and I had the opportunity to talk with the owner Rick Smith via e-mail. He was very attentive and the company and service has been great. The cards arrived in the mail today and the quality of the printing is outstanding and compares to something you would see in your local Hallmark. This is an unpaid endorsement and I just wanted to spread the word about the company. Please consider Greenfield Paper for your holiday card needs (or anytime of the year for your paper needs.)

P.S. If your one of my clients, you will be receiving this card in the mail soon :-)


November 18, 2005

Did You Recieve a Junk Fax that you thought was coming from Alt Energy Stocks?

Some companies have send out stock promotion faxes that people think are coming from Alt Energy Stocks.

We don't send out any faxes. If another company is using our name, they are they are doing so without our knowledge or permission.

If you did receive a fax, please use the following information so that you can report the company.

How the FCC Can Help

The FCC has taken numerous enforcement actions, including the issuance of citations and fines, against companies for violations and suspected violations of the TCPA’s prohibition against unsolicited faxes. If you have received unsolicited faxes you are encouraged to contact the FCC regarding the incident(s). You may need to provide documentation in support of your complaint, such as copies of the fax(es) you received.

If you have received an unsolicited fax or received a fax from someone who does not have a business relationship with you or who has not received your prior express permission, you may file a complaint by completing the FCC’s on-line Consumer Complaint Form at: www.fcc.gov/cgb/complaints.html, or by calling the FCC’s Consumer Center at 888-CALL-FCC (888-225-5322) voice or 888-TELL-FCC (888-835- 5322) TTY.

You can also send a letter summarizing the complaint to:

Federal Communications Commission
Consumer & Governmental Affairs Bureau
Consumer Inquiries and Complaints Division
445 12th Street, SW
Washington, DC 20554.

Your Complaint Should Include:
your name, address, and a telephone number where you can be reached during the business day;
the telephone number through which you received the fax advertisement;
the property, goods, or services that are advertised on the fax; the name of the business offering such property, goods, or services, if included in the fax; and any telephone numbers or addresses included in the fax;
a copy of the fax advertisement, if possible, or confirmation that you have retained a copy of the fax;
as much specific information as possible, including whether you ever gave the advertiser permission to send faxes or ever did business or have had any other contacts with the advertiser.

November 07, 2005

REN21 Report

Joel Makower has posted a link to the Renewable Energy Policy Network for the 21st Century report on his website.

Joel sums the report up nicely:

All told, it's an upbeat and encouraging assessment that renewable energy around the world is being embraced by an audience far more important than environmentalists, technologists, or even high-ranking government leaders: the big-bucks investors capable of growing the kinds of large-scale, sustainable markets we'll need to create a renewable-energy future. [ more ]

Investment into this sector is growing at a very fast pace and I feel that investors that join in early will reap some nice rewards in the years to come.

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 15, 2005

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

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.

August 30, 2005

Ch Ch Ch Changes...

As you can see the site is starting to show some of the changes I have planned.

First off, there is a slight redesign of the website to take advantage of some new features available from the newest release of MovableType. If you currently run a blog with MT I highly recommend the upgrade. If you want to get into the world of blogging, feel free to drop me a line and I can give you some links/advice.

I have updated the stocks list and refreshed some of the listings. You may also notice that there is now also a portfolio link. Details about the future of this link will be coming soon. One section that has gone away is the resources section. I never really had the time to add to or keep up with this content. The old content is still available via the archives for those that are interested.

More changes are on the way and I will soon be able to start adding some real content rather than this misc stuff about the website.

August 26, 2005

Alternative Energy Mutual Fund?

I recently received an e-mail question from Don that asked,

Have you come across any mutual funds that invest in alt. energy stocks?

Here was my response,


I haven't found any specific mutual funds that are entirely in this sector. I know that the Pax funds have a few holdings of Alt E stocks. This sector has been hot recently, so I know many of the stocks that I follow are in many mutual fund portfolios. Most mutual fund managers are momentum players and when they see stocks moving quickly in any specific quarter, they try to close the quarterly books with some of these names in the portfolio.

You should really look at the PowerShares Exchange Traded Fund (ETF). An ETF works just like a mutual fund, but trades like a stock. The Power Shares Clean Energy ETF (Ticker Symbol PBW) is one of the only fund like investment tools I have found that follows this sector. More information can be found here: http://www.powershares.com/. This ETF can be purchased from any brokerage account.

I'm including this Q&A here for all to share. If you have any additional information, please feel free to leave a comment below.

August 24, 2005

Thanks for the support

I wanted to extend my thanks to all of the people that want me to keep this website alive. I have been reviewing many of the comments and plan to incorporate many of these changes very soon.

My plan is to have a re-launch of the website with all of the changes by September 1st. My goal is to become more focused on investment ideas, rather than just a press release news source. I think many of you will be very happy with the final results.

Thanks for your patience.


p.s. The call for help is still out there for those that are interested in providing editorial assistance. Feel free to drop me an e-mail if you are interested.

July 20, 2005

The Purpose of this Site

I have been recently thinking to myself, "What is the purpose of this site."

Originally I had grand plans about introducing people to this particular sector of stock investing. I think that alternative energy investing should be a part of your portfolio for several reasons. I feel we should support these companies so they can continue to grow and provide alternative ways to provide energy. I also feel that these companies are ideally poised for tremendous growth in the future as the technology matures. This growth usually means growth in the stock (and profits in your portfolio.) To that end I started this site to gave you ideas on where you can put your money in this sector.

Well for 90% of the people looking to add alternative energy stocks in their portfolio, you should just put the money into the PowerShares Clean Energy ETF (PBW). PBW will give you some good exposure into this sector. In my personal portfolio I have allocated 25% of my money into this sector (my holdings in PBW are 20% of that total.)

For the last couple of months this site has basically degraded into a news aggregation service for Alternative Energy Stocks. That was not my original intention, and keeping it updated with all the news stories has become a burden for me since I currently manage 20 investment sites for my current company, and about 5 other websites for my side hosting business. I also maintain 2 other personal blogs. All of this means I have little time to maintain this website.

I know that there are readers to this website because of the amount of traffic it generates. I also receive frequent press releases and personal requests from some of these public companies to make sure they are mentioned.

So here are my questions to the readers of this website.

  1. Do these news stories provide any value to your investing?
  2. Have you learned anything new by coming to this site?
  3. Is there an audience out there that is interested in investing in these companies rather than the PBW ETF?
  4. Are you looking for specific buy/sell/hold advice for these companies?
  5. How can this site be changed/updated to better suit your needs?
  6. Finally, is there anyone interested in becoming a contributing editor? This is your chance to be part of the blogging revolution. Without some help soon, this site will probably linger in obscurity for sometime.

Please feel free to submit a comment using the form below, or send me an e-mail.

p.s. I just realized I have maintained this site for 1 year. Happy Anniversary to altenergystocks.com.

April 11, 2005

G7 Rumors and Speculation

There are several newsletter editors that are floating the idea that the next G7 conference will have some significant announcements concern the requirement for its members to use alternative energy. The next scheduled meeting is on Friday with a meeting of the G7 finance ministers and central bankers. I doubt anything will be announced at this time.

But any announcement by the G7 concerning alternative energy will help to propel the AltE stocks.

March 09, 2005

American Stock Exchange to Trade Options on Seven PowerShares

The American Stock Exchange® (Amex®) will launch trading in options on Thursday, March 3, 2005 on the underlying shares of

The PowerShares WilderHill Clean Energy Portfolio (PBW) will open with strike prices of 10-20 with one-point increments and position limits of 1,350,000 shares. The options will trade on the March expiration cycle with initial expirations in March, April, June and September. The specialist will be LaBranche Structured Products, LLC. PowerShares Wilderhill Clean Energy Portfolio is a closed-end fund incorporated in the USA. The Fund's investment objective seeks to correspond to the price and yield of the Wilderhill Clean Energy Portfolio. [ more ]

I purchased shares in PBW on the first trading day of this new ETF for one of my long term buy and hold accounts. I also trade options and was pleased to learn I can now either hedge my holdings, or try to accelerate my gains with this new tool.

This morning on CNBC Jerry Castellini was talking about the real possiblity of $80 a barrel oil. If this ever happens, the future of AltE stocks is looking very good.

A Brief Hiatus

I have been on a brief hiatus from posting to the website. My other projects and real job have been taking a large portion of my time. I was also recently down two employees at my company, so I was doing triple the amount of my normal work. I’m making an offer to one person today so I'm able to see the light at the end of the tunnel. I will be trying to catch up on many of the missed press releases today. I will also be switching the intra day graphic to the new Alternative Energy ETF (PBW) sometime this week as well.

Another reason I have been busy is that my hosting business has just recently completed the launch of two new stock blog websites. Both of these have been keeping me up late at night so that I can get them completed.

If you have time, check these sites out as well.

BillCara.com: Capital Markets and Social Equity.

JohnMugarian.com: Investor Alert.

March 01, 2005

WilderHill Clean Energy Index ETF to Begin Trading on Amex March 3, 2005

This Thursday, PowerShares Capital Management LLC, will introduce a new exchange traded fund (ETF) based on the WilderHill Clean Energy Index, the first index comprised of companies focused on developing renewable sources of energy, clean energy technologies and environmentally-friendly technologies within the energy sector. The "PowerShares WilderHill Clean Energy Portfolio" (PBW) will begin trading on the American Stock Exchange March 3, 2005 and will replicate the WilderHill Clean Energy Index. [ more ]

February 14, 2005


A quick diversion from the normal content.

If your planning on buying some items on Amazon.com, please lend me a hand by clicking on one of the links below.

I also always have a link to Amazon.com at the top of this page. Your orders through these links help to fund this website.

February 02, 2005

New Server

If you are seeing this post, that means this website has been successfully moved over to the new server.

As you may (or may not know) I run a hosting business on the side. This website is more of a hobby for me. This is in addition to my REAL fulltime job.

One positive about maintaining this website is it has brought me more clients for my hosting business.

I recently added a new client that is now getting some decent traffic. So I purchased some servers and I'm in the process of relocating all my websites to this new server hardware.

Hopefully this move should provide better service to my AltEnergy investing audience. Over the next couple of weeks, I will be making some additional updates to the website as well. I'm also thinking about breaking up the stock listings into sectors.

Please feel free to comment on this (or any) article and let me know how I'm doing. Just click on the comment link below (signup for TypeKey if you haven't already.) I know from my traffic reports, that there are at least 1,000 of you out there that visit on a regular basis.

All I ask is for some feedback.

January 31, 2005

AltEnergy ETF Shares to start trading on Feb 4.

The new Alternative Energy ETF, which will be managed by PowerShares Capital Management, will track the WilderHill Clean Energy Index, a benchmark calculated by the Amex that was launched in August. The Amex collaborated with index provider WilderShares, LLC in developing the index. It will start trading on the AMEX on February 4th.

The index contains 37 companies that use greener and renewable energy alternatives such as wind, solar, and hydrogen fuel cells. I'm searching for a ticker and will post it once I can find it. Post a comment if you find it before I do.

January 04, 2005

My Stock Picks for 2005

At my real job, a group of us have a yearly stock picking contest. Some years I have performed well, others have been terrible (last year my total performance for my picks was a miserable -13%.) The winner of 2004 was up over 50%. Her method, spread out the newspaper, take 3 M&M candies and throw them up in the air. She picked the 3 stocks the candies landed on.

The rules of our little contest are simple. Pick three stocks that trade for over $5. We buy at the close on the first trading day of the year (yesterday) and sell at the close on the last trading day of the year. We then average the performance of the 3 stock picks and don't count dividends.

This year I decided to pick only AltE stocks and here are my picks for 2005.

Mechanical Technology Inc (MKTY) is primarily engaged in the development and commercialization of direct methanol micro fuel cells (DMFCs) through its subsidiary, MTI MicroFuel Cells Inc. (MTI Micro) and in the design, manufacture and sale of high-performance test and measurement instruments and systems through its subsidiary, MTI Instruments, Inc. MTI also co-founded and retains an interest in Plug Power Inc., a designer and developer of onsite energy systems based on proton exchange membrane fuel cells.

Syntroleum Corp (SYNM) is engaged in the research and development of the syntroleum process, a process designed to convert natural gas or synthesis gas into synthetic liquid hydrocarbons, and activities related to commercialization of the syntroleum process.

Fuelcell Energy Inc (FCEL) is engaged in the development and commercialization of carbonate fuel cell technology for stationary power generation.

As in years past I purchased shares in each of these stocks (I already own FCEL and bought more.)

January 03, 2005

How to Build Your Sustainable Portfolio

Rona Fried at SustainableBusiness.com has written a good article on how to get started on building a Green portfolio. [ more ]

December 22, 2004

Happy Holidays

AltEnergyStocks.com is taking a holiday vacation and will resume posting the first week of January.

I wish you a safe and happy holiday.

December 16, 2004

MIT, Columbia Begin New Energy Experiment: Half-ton Levitating Ring Is Key To Work

MIT and Columbia University students and researchers have begun operation of a novel experiment that confines high-temperature ionized gas, called plasma, using the strong magnetic fields from a half-ton superconducting ring inside a huge vessel reminiscent of a spaceship. The experiment, the first of its kind, will test whether nature's way of confining high-temperature gas might lead to a new source of energy for the world. [ more ]

November 09, 2004

Alternative Energy Gadget Site

powerhouse2.jpgI stumbled onto an Alternative Energy Gadget site today. I personally love gadgets and frequent some of the well known sites like Engadget, Gizmodo, and Cool Tools.

I just added Treehugger.com to my list of daily gadget reads.

The article that sparked my attention is the review of the Power House from Mindware. [ more ]

This project looks like an great way to introduce my daughter into the world of Alternative Energy.

September 29, 2004

SatCon Receives $1.8 Million Order for Rotary Uninterruptible Power Supply

satcon_logo.gifSatCon Technology Corporation (SATC) announced that it received a $1.8 million purchase order for an initial installation of a 2.2 megawatt Rotary Uninterruptible Power Supply (RUPS). Included in the purchase order is an option for a second UPS for $1.5 million. Baldwin Technologies in College Park, Maryland served as the engineering and manufacturer's representative for this sale and the final customer is the National Institute of Standards and Technology in Boulder, Colorado. Delivery of the first unit is expected in the first calendar quarter of 2005. [ more ]

September 16, 2004

Princeton's Plasma Physics Laboratory to lead U.S. fusion research project

The U.S. Department of Energy chose Princeton's Plasma Physics Laboratory to lead the United States' participation in an international fusion energy project known as the International Thermonuclear Experimental Reactor (ITER).

"We wanted to do it because it gives us an intellectual role in planning this experiment and making sure it succeeds," said Robert Goldston GS '77, director of the plasma physics lab. "This is very important for the future of fusion energy."

In what Goldston described as an "amazing step" towards the development of nuclear fusion, ITER aims to construct the first device capable of producing self-sustaining burning plasma—the substance necessary for nuclear fusion to take place—for significant periods of time. [ more ]

They don't expect to have a working demonstration until 2050. I feel that Fussion is the future for our energy needs, but we are a long way away from that reality. This is why we need to look for options like hydrogen or other renewables that can hold us over until then.

September 01, 2004

Cold Fusion Back From the Dead

IEEE has written an article about the resurgence of Cold Fusion research.

"Later this month, the U.S. Department of Energy will receive a report from a panel of experts on the prospects for cold fusion��?the supposed generation of thermonuclear energy using tabletop apparatus. It's an extraordinary reversal of fortune: more than a few heads turned earlier this year when James Decker, the deputy director of the DOE's Office of Science, announced that he was initiating the review of cold fusion science. Back in November 1989, it had been the department's own investigation that determined the evidence behind cold fusion was unconvincing. Clearly, something important has changed to grab the department's attention now." [ more ]

August 31, 2004

Revolutionary Alternative Energy Technology
Part One:Anti-Matter

James over at the Alternative Energy blog has started a new series of reports based on the next generation of alternative energy solutions. His first edition discusses Anti-Matter. [ more ]

August 18, 2004

Power solutions pursued from unlikely sources

It may sound like weird science, but small tech power is being pursued in some unusual places, including your liquor cabinet and toilet. What’s more, if you thought cold fusion was so 80s, it – and a new variant called sonofusion – has bubbled back into the news. [ more ]

July 16, 2004

US to halt nuclear fusion project

The US is halting its own national nuclear fusion energy project and is joining the International Thermonuclear Experimental Reactor (ITER) project team to find a way to use neclear fusion as an inexhaustible and clean energy source. [ more ]

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