Renewable Energy Sector a fast growing stock play

Stock Watch: Alternative Energy Investment Opportunities

By Jonathan Keehner
NYU: http://journalism.nyu.edu/pubzone/theoryb/node/573

The International Herald Tribune published a disappointing article today on alternative energy investing that reported the following:

Top-performing subsectors during the third quarter were solar (39 percent), wind (25 percent) and efficiency (17 percent). The least strong sectors were hydrogen and fuel cells, which gained 5.8 percent, and electricity storage, which dropped 3.5 percent.

The article cautions against concentrating heavily in alternative energy or investing in “small and unprofitable” companies that may suffer “irrespective of commodity prices.” This advice seems fair, if obvious, but it is a shame that the article focuses on these platitudes instead of prospective opportunities, such as balancing an energy portfolio with an alternative component (through one of the many new available funds) or investigating a promising new technology (such as those in high demand from emerging markets). An example of this is the following:

At the other extreme, many fuel cell companies, which produce electricity from an external fuel supply of hydrogen and oxygen, have done little more than tread water.

If fuel cells, with a 5.8 percent quarterly gain, represent the “extreme” poor performance in the sector, it would follow that this may be a space to consider investing. To illustrate the poor performance of fuel cells, the article gives the example of Ballard Power Systems.

However by my calculation the stock is up over 20% during the past 6 months. While Ballard may not have been a homerun, it is hardly the paragon of poor investing - particularly after Chinese President Hu Jintao made a high profile visit to the company last month (which the article failed to mention).

Although it is encouraging to see articles on alternative energy in mainstream publications, articles like this seem to demonstrate that we are just at the beginning of the alternative energy learning curve.