Sunday, February 26, 2006

I see a lot of "green"backs

In his state of the union speech on Jan 31st 2006, President George W. Bush said"Keeping America competitive requires affordable energy. And here we have a serious problem: America is addicted to oil, which is often imported from unstable parts of the world. The best way to break this addiction is through technology. Since 2001, we have spent nearly $10 billion to develop cleaner, cheaper, and more reliable alternative energy sources -- and we are on the threshold of incredible advances."

On Jan 12th 2006 at a colorful debate hosted by the Churchill Club —a gathering spot for Silicon Valley'’s movers and shakers. John Doerr of Kleiner, Perkins, Caulfield & Byers saidGreen is the new red, white, and blue"” Doerr, whose firm is investing in clean/alternate energy startups, was echoing comments made by New York Times writer Tom Friedman in a recent column (subscription required).

With crude hitting $60 a barrel and oil politics roiling the middle east, looks like alternate energy may be a good bet for the long term. While we have briefly talked about this in a previous post, there are several ways to play the alternate energy market.

- One diversified way to invest is the PowerShares Clean Energy ETF (NYSE:PBW) ($20.5), this is a new and innovative ETF by PowerShares (expect a post on this company and its innovations)

- Peter Thiel the founder of PayPal whom we have talked about in an earlier post Peter, is betting big on the Canadian oil sands and expects oil to hit $80-$100 by 2010. There are several Canadian plays in this area, Suncor Energy (NYSE : SU) ($76.8), Encana (NYSE : ECA) ($42), Nexen (NYSE : NXY) ($53) and Canadian Natural Resources Ltd (NYSE : CNQ) ($56.12) . Suncor is an integrated oil company with $9B in revenues and Encana is North America's largest natural gas producer with $16B in revenues. Both these companies have trillion plus reserves in the Alberta oil sands. Nexen is a much more risky bet , a pure play on Canadian oil sands.

- In the clean energy arena
  • Hydrogen fuel cells - the king of the game here is Canada based Ballard Power Systems (NYSE : BLDP) ($6.35), this stock is extremely volatile and a safer bet may be the diversified conglomerate United Technologies (NYSE :UTX) ($58.89)
  • Nuclear power - Cameo (NYSE:CCJ), ($37) the world's largest uranium producer, again based in Canada.
  • Wind power - Iberdrola (Madrid CATS:IBE.MC), the world's largest owner of wind farms.
  • Solar power - SunPower Corporation (Nasdaq:SPWR) ($39.7), a recent spinof from Cypress Semi or Suntech Power Co (NYSE : STP) ($36.6) a Chinese company specializing in solar panels and photovoltaic cells.
P.S. - Another good play in this sector particularly in fuel cells, hybrid technologies and batteries is Johnson Controls (NYSE : JCI) ($69), its a well diversified industrial company recently highlighted during a visit by President Bush.


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