"For those who want to 'go green' there are new opportunities to tap the environmental trend by adding cutting edge, alternative energy ETFs to your portfolio," says Doug Fabian, editor of Successful Investing.
"ETF providers are starting to latch onto the green theme. Two fund families, PowerShares and Market Vectors, have created their own classes of clean energy ETFs. A pair of ETFs has been launched in the narrow but potentially profitable niche of solar energy.
"The Claymore/MAC Global Solar Energy Index ETF (NYSE: TAN) is designed to track 25 companies in the solar power industry. Sectors included in the ETF are equipment producers, companies that concentrate on selling electricity, and suppliers of materials or services, installation, integration or finance. TAN currently invests in companies such as MEMC Electronic Materials, Suntech Power Holdings, and LDK Solar Co. Ltd.
"Van Eck Global launched the Solar Energy ETF (ASE: KWT). That solar energy ETF seeks to replicate the price and yield performance of the Ardour Solar Energy Index, which includes companies that generate at least 66% of their revenues from solar energy. The four top holdings are First Solar, Germany's Q-Cells and Solarworld AG, and Norway's Renewable Energy.
Experience has taught me to respect the price action the day after earnings. So when I see LDK trying to break out of a now 5-month old range, pretty much between $30 and $40 -- yes it was up to $50 in January and $20 in March, but those are outliers -- this is a very bearish sign. It's so bearish that I suspect that unless solar plays really heat up again, this stock will need many more weeks or months to break $40, and even then, it's got a ton of resistance all over the place due to bitter buyers in at much higher prices who will be looking to cut their losses.
Peter Way selects his buys by following the trading activity of block traders -- those making large, million dollar bets. Here's the latest from his Block Trader Oil & Gold Monitor.
"The volume stock market liquidity-providers are hedging their necessary position risks in ways that foretell declining oil stock prices. Their records on such outlooks in the past are pretty good, so pay attention.
"The million-dollar market-makers are not always right, and here they tend to be a bit early, but it's obvious they can save you some grief and provide a chance to pick up some meaningful extra profit.
"From our recent review of energy ETFs, we also note that the pros' perception seems to be that energy stocks have been bid up too far. Ok, so what to do? Sell the oil holdings? Then where to put the proceeds?
As was reported in AP online, "Members of the Rockefeller family are pressuring Exxon Mobil (NYSE: XOM) to focus more on renewable energy. The family members, who say they are the oil giant's longest continuous shareholders, say Exxon is too focused on short-term gains from sky-high oil prices. They also argue splitting the roles of chairman and CEO will help the company be more flexible in the future."
Last time I checked, companies had a responsibility to provide value for shareholders, and no one has done it better than the oil giant. It has been producing record earnings quarter after quarter, and that is exactly what it is supposed to do. Corporations are not supposed to be politically correct organizations that throw money around at the latest fad. Maybe Exxon doesn't believe that there is a global warming problem? Or maybe it wants to see a lot more scientific evidence of the problem before committing billions and billions of dollars to research. If I were a shareholder, I would want management to take the exact approach that it has been taking. The fact that it is the most profitable company in the world means something. It should be commended for providing shareholder value.
In fact, Bloomberg has an article that says that ocean cooling will stop global warming. Moreover, the article indeed mentions that the authors tried to spin the article because of Exxon. "We thought a lot about the way to present this because we don't want it to be turned around in the wrong way," Keenlyside said. "I hope it doesn't become a message of Exxon Mobil and other skeptics."
Sounds to me that they are right to be skeptical.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 5/1/08
"As the price of energy soars, I am convinced wealthy countries will turn to the one remaining fossil fuel that is still in abundance: coal," notes growth stock expert Jim Powell.
The editor of Global Changes & Opportunities Report, "Given the high price of oil, the coal-to-liquid fuel industry is starting to take off. One company that should profit handsomely is Headwaters (NYSE: HW)." Here is his review.
"To make coal available for most applications, it must be converted to gasoline and diesel fuel. Fortunately, that process is cost effective when oil costs over $40 a barrel. Since oil is now over twice that price, the coal-to-liquid fuel industry is starting to take off.
"Coal isn't without its critics. When burned, it gives off greenhouse gasses and other pollutants. However, technologies exist that solve those problems. With oil at current levels, it pays to implement the cleanup processes and put coal to work.
"Headwaters should profit handsomely from the growing demand for coal. The company developed technology that changes the chemical composition of coal into high value products, including petrochemicals that are usually made from oil.
"Suntech Power Holdings (NYSE: STP), one of our long-time favorites, is now back on our buy list after being driven down in price by U.S. market volatility and the fallout from a recent earnings report," notes Jim Trippon.
The editor of The China Stock Digest explains, The company is world leader in the manufacture of photovoltaic solar cells and solar electric systems. And, it is developing a new technology to increase solar efficiency." Here is his review.
"The company's solar cells are used to supply power to the electricity grid within China, and it's the number one company in the Chinese solar energy industry. The company's systems also provide dependable power internationally for mobile phone networks and telecommunications relay stations and even street lamps in case of power outages.
"Certainly China is in desperate need of clean renewable sources of energy. Residents of major cities like Beijing and Shanghai are constantly enveloped in a choking cloud of smog. Beijing has said it wants a tenth of its energy to come from environmentally friendly sources by 2010.
"The problem with solar energy has always been the high cost of manufacturing solar cells relative to the amount of power output per cell. Suntech is attacking that problem with rigorous cost control and the competitive advantages that low cost Chinese manufacturers enjoy in the international arena.
Two leading global experts have both turned bullish on France's Veolia Environnement (NYSE: VE). Vivian Lewis, in her Global Investing, notes, "Veolia is the way to play the 'water works square' on the monopoly board."
Nicholas Vardy, editor of Global Stock Investor suggests, "The smart money is betting that water may be the 'oil of the 21st century.' And Veolia is my number one way to profit from this global megatrend."
Vivan Lewis says, "We recommend buying French water and sewage conglomerate Veolia at current prices; the stock has been brought down by niggling Euro-concern about its levels of debt. The company is also being penalized for acquisitions.
"Veolia is the former Générale des Eaux, a municipal service firm. This history creates an image problem for VE which is seen as a utility.
"Our main reason for the buy, apart from price, is that this is a fast growing company with good earnings in a hot sector. In 2007, VE had revneues of euros 32.6 bn, up 14% on which its recurring net profit fost 22.5% to euros 933.2 mn. Earnings per share were euros 2.16, up 13.7%.
"Another reason for liking VE is that it is moving into China big-time, with waterworks in Tianshin and Shibai and environmental service in Juijiang. All in all, France still represents 44% of sales and the rest of Europe 36%. VE does about 10% of its business in the U.S. and the Chinese are part of the remainder.
Jim Stack is well known for his "safety-first" approach to money management, focusing on a balance between risk and reward. In his InvesTech market Analyst, he notes, "We now see a window of opportunity in Waters (NYSE: WAT).
Here, Bruce Morison, consultant for Stack Financial Management, explains, "In a market overreaction to a weaker-than-expected fourth quarter, an opportunity has been created to invest in this high-quality company at an attractive valuation level.
"The stock dropped 20% when the company reported earnings that were $0.08 shy of the $1.06 estimate that Wall Street was forecasting. The shortfall was primarily a result of a higher-than-expected tax rate for 2007 and weaker sales in Japan.
"The Japan results reflected a change in government regulations for water testing. Our concern over this event is limited given that Japan accounts for less than 10% of the Waters' sales and is not a key growth market for the firm.
"A quick recap of the company ... Waters Corporation is a medium sized company based in Milford, Massachusetts which designs, manufactures, and services high performance liquid chromatography (HPLC) and mass spectrometry (MS) instrument systems.
"With oil over $100, and voters increasingly attuned in this political season to the need for clean and renewable fuels, the alternative energy industry is ripe for investment," says David Sandell.
"American Superconductor designs and sells products geared to utilities, industrial companies, and wind energy developers. Its offers are designed to help these customers to generate and deliver electrical power more efficiently, cleanly, and reliably.
"The company has two chief divisions. Its profitable Power Systems segment sells power converters to utilities and industrial customers, both in the U.S. and internationally. The point of these converters is to regulate voltage, thereby improving the performance of the electric grid – making it more efficient (and energy-conserving) as well as reliable.
"The company is teaming up with the Department of Homeland Security as well as with Con Edison on a grid upgrade for New York City that would increase capacity and suppress power surges.
"In 2007, beefing up this division, American Superconductor made two significant acquisitions. It bought Windtec, a company that specializes in wind energy – licensing proprietary wind turbine designs, training workers to maintain turbines, and supplying converter and control systems to wind farms.
"We've been tracking the water industry for a while and it's been crystal clear that water is an area we want to dive into," says Toby Smith in his ChangeWave Investing. Here, he looks at a water-focused ETF.
"Water is often taken for granted, but that is changing. A combination of global economic growth and years of neglect are leading to a tidal wave of demand for water infrastructure and various technologies.
"It's forecasted that by 2025, almost two-thirds of the global population will live in countries where water will be a scarce commodity. Climate change could exacerbate the problem. Clearly, water issues cross all boundaries.
The water industry combines the best attributes of a good defensive strategy coupled with numerous 'offensive' plays. From a growth perspective, spending on water projects at all levels is on the upswing due to years of infrastructure neglect and under-investment.
"One great way for all investors to participate is by investing in an ETF with a water focus, such as PowerShares Water Resources (NYSE: PHO).
"The beauty of this water ETF is that it gives us exposure to each of the companies that were highest rated in our survey (comprising approximately one-third of the PHO holdings). PHO also has a well-balanced portfolio, with no single stock representing more that 4% of the total. IN our view, it's clear that the water industry will see above-average growth well into the future."
Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.
"I love buying great companies near the bottom of the barrel," says resources expert Eric Roseman, who has added Canadian-based Cameco Corp. (NYSE: CCJ) to his buy list.
The edtior of The Commodity Trend Alert explains, "Cameco, the world's largest uranium concern, is a gem, right in the middle of a long-term earnings boom amid high energy prices and a massive backlog of orders for its raw material used to feed nuclear reactors." Here is his review.
"I'm drawn to quality at a distressed price, for whatever reason, such as earnings-related surprises, management changes, special one-time write-downs, etc. Most of our recommendations are founded on exactly these principles of value-contrarian investing.
"Cameco Corporation was a $60 stock 12 months ago, but because of production bottlenecks caused by a major flood at one of its biggest mines (Cigar Lake) in late 2006, the stock suffered a beating and has bounced all over the map lately. Yet, for years, Cameco was Canada's uranium darling and I always wanted to own this gem. But the problem was, Cameco always fetched a high price, and I hate paying top dollar - even for a great business.
"Despite the recent economic slowdown, Hexcel (NYSE: HXL) is seeing its market for carbon-fiber-based aerospace products and parts boom," says energy sector expert Elliott Gue.
The contributing editor to Personal Finance explains, "And in addition to growing aerospace demand, the firm has growing markets in wind power and nuclear power." Here is his review.
"Hexcel makes lightweight carbon-fiber parts used on modern aircraft designs. New aircraft designs such as the 787 incorporate far higher carbon-fiber content than older planes, so Hexcel is becoming an increasingly important supplier.
"The aerospace demand cycle isn't directly tied to demand for air travel. Airlines and aircraft leasing firms typically plan their purchases of new planes many years in advance; the aerospace cycle is highly visible and longer-term in nature.
"Currently, demand for modern fuel-efficient aircraft such as the 787 Dreamliner from Boeing (NYSE: BA) is booming. Hexcel recently reported fourth quarter results and offered management's outlook for the year ahead. Just over 50% of the company's total sales come from the commercial aerospace market.
"The market is booming: Sales surged more than 21% compared to the fourth quarter of 2006 in constant dollar terms. Hexcel sells to both Airbus and Boeing which have a combined acklog of nearly 7,000 planes that have been ordered but not yet delivered.
"Water is the sleeper investment of the decade," says Jim Powell. "Although the world is focused on energy, clean water is in far shorter supply in many regions. That's even true in many parts of the U.S."
The editor of Growth Stock Alert suggests, "A great deal of money will be made by today's earlybird investors who buy strategic water stocks." Here are his favorites in the sector.
"Unlike oil, there is no substitute for water. Some investors mistakenly think that water is a low value commodity that's not likely to deliver good profits. What the critics fail to consider is the equipment needed to obtain, purify, transport and recycle water is very expensive.
"Calgon Carbon (NYSE: CCC) is my first choice in a water stock. The company is the world's largest supplier of granulated activated carbon, the principal purification agent for water. The company also supplies complete treatment systems for municipalities and private organizations.
"The company has 16 operating centers and 23 sales and service offices around the world. A few years ago
, the company expanded its purification business to include industrial liquids and gasses. Rising concerns about greenhouse emissions and other pollutants are giving Calgon Carbon another boost.
"I also recommend ITT Corporation (NYSE: ITT), the world's leading supplier of systems that move and purify water. The company's treatment equipment is sold throughout the world under the Sanitaire, Aquious and WEDECO brands.
"Alternatives may not be an important source of electricity, but they are the fastest-growing subsector in the energy space," says energy sector expert Elliott Gue in Personal Finance. Here, he looks at wind power.
"The US Energy Information Administration (EIA) projects that wind power will grow by more than 7%, encouraged by generous government subsidies. Compare that to just 1.5% annualized projected growth in total electricity demand.
"The world's largest wind turbine producer, Vestas Wind Systems (OTC: VWSYF), fell on hard times back in 2005. It priced some of its turbines too aggressively and saw a surge in warranty claims because of defective components.
"But the stock appears back on track. Warranty provisions are down to 5% of revenues. Profit margins surged 4 percentage points year-over-year because of more rational turbine pricing. Vestas' current backlog stands at EUR4.1 billion (US $6.03 billion), up more than 30% year-over-year.
Within the next three years, the federal government is expected to enact legislation capping carbon output levels for U.S. businesses. U.S. companies will either have to reduce their greenhouse gas emissions by a certain percentage, to be determined later, or buy carbon offset credits from businesses that have reduced their carbon output in excess of their required minimum. Why is this a problem for investors? Once the federal carbon caps are in place, carbon offset credits will be much more expensive to purchase. Companies with excessive carbon outputs will pay a steep price for carbon credits.
Why don't companies take a more proactive approach and purchase carbon offset credits now when the price is much lower? Unfortunately, the carbon credit market is presently completely unregulated. There is no standardized system for measuring carbon reduction amounts nor is there any way to verify the legitimacy of such carbon credits as do exist. Companies that wish to market themselves as "green" may voluntarily participate in various carbon reduction efforts, such as reforestation projects. But there is no guarantee that the federal carbon cap program will recognize those efforts once mandatory caps are in place.
Many of the same problems exist with Renewable Energy Certificates (REC). There is no national registry of who owns what RECs, no verification as to whether the energy is actually generated from clean energy sources. There is no standardized method to convert RECs into carbon offset credits. In the next 3-4 years, all investors in all types of companies will be forced to consider carbon output numbers as one more factor in the due diligence process.
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