Options Few in Energy Stocks
Oct 06 - Cincinnati Post
With oil prices soaring, investors may be wondering what options there are among renewable energy stocks. The answer: not many. Fuel cell companies are floundering, solar startups are far from solid bets and only a handful of companies are turning a profit in wind power.
The problem with most companies focused purely on non-petroleum power is they
tend to be relatively young, have weak balance sheets and frequently focus on
technologies that aren't yet commercially viable. Some of the most attractive
investments are overseas, and not readily available to U.S. investors.
"Unfortunately and tragically there are simply not a lot of alternative
energy sources being developed," said Stephen Leeb, president of Leeb
Capital Management and co-author of "The Oil Factor," which suggests
crude prices will likely strike $100 a barrel by the end of the decade, if not
sooner.
"It's sad, but that's the reason oil is at nearly $50 per barrel,"
Leeb said. "If there were a whole universe of alternative energy companies
making lots of money, you probably wouldn't have an energy crisis today."
With so much money yet to be made in oil, there hasn't been a great deal of
investor interest in renewable sources of power, analysts say.
"It's been an interesting disconnect," said Matthew Patsky,
portfolio manager of the Winslow Green Growth fund. "The renewable energy
stocks in general went down when oil was falling and went down when oil was
rising. You'd think they'd trade with oil ... but it's been a tough market for
renewable energy stocks in general, and particularly for the fuel cell
companies."
There are high hopes that emission-free hydrogen fuel-cells will replace
gas-guzzling cars and start producing power in homes, but this technology is
still in the early development stages. Companies like FuelCell Energy Inc., Plug
Power Inc. and Ballard Power Systems Inc., a Canadian concern partly owned by
auto manufacturers Ford Motor Corp. and DaimlerChrysler AG, remain unprofitable.
Patsky's firm chose to invest in Quantum Fuel Systems Technologies Worldwide,
Inc., focused on designing the hydrogen storage technologies that help power the
fuel cells in cars.
The most readily deployable alternative to fossil fuel is wind. And as oil
prices continue to rise, it's becoming an increasingly attractive option.
Pure wind plays are in Europe, where the largest turbine manufacturer is
Vestas Wind Systems, based in Denmark. Competitors include Gamesa Corporacion
Tecnologica S.A., a Spanish company, and GE Energy, the largest U.S.-based
player in wind.
At a certain point, solar power starts looking more economical, as well.
Among recent startups is Marlboro, Mass.-based Evergreen Solar Inc., developer
of home solar electricity systems for homes.
Among the major energy companies, BP has done the most to develop alternative
fuels, investing in solar and wind power as well as financing research into
applications for hydrogen. For far more extensive news on the energy/power
visit: http://www.energycentral.com
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