I think the biggies are companies like Vestas, SunTech, SunPower, First Solar, but I'm wary of investing in individual names, because unless you have tons of time to invest in figuring out who the winners will be, it's easier to invest in ETFs to insulate yourself from individual stock risk.
But I think alternative energy investments are a no-brainer for the next 5 years and have invested in PBW for the following reasons:
1) I'm thinking that with the Dems in the majority in both houses of Congress and likely the White House, they will probably sign Kyoto, do a carbon cap and trade program in the US, and invest heavily in alternative energy. So was thinking that getting in this year would be a good idea, before the new administration takes over.
2) In addition, I was thinking that since the Dems will pull the troops out of Iraq and start heavily taxing the oil companies to pay for their spending programs, as well as reinstituting the PAYGO rules that the Republicans let lapse, we may see a shrinking budget deficit, which means the dollar will go higher, which means that US stocks will go higher.
3) Then lastly, I think that with India and China becoming rich, they will continue to put more cars on the road and continue to consuming increasing amounts of oil, which means oil prices will not be coming down in the next 5 years at least. When oil prices are high, that gooses alternative energy returns, because alt energy is seen as a competitor.
4) Al Gore just kicked off a $300 million US lobbying/awareness campaign to drive up a frenzy among lawmakers and citizens to get comprehensive climate change legislation passed in the 2-3 years. That's a big warchest and is likely to feed the fire among the Dems who will actually have power to make those changes starting next year.
5) Congress is right now reintroducing the solar and wind tax incentives legislation, the renewal of which Bush vetoed a couple months back, but this time, they have 61 senators backing it, which is enough to override Bush's veto. That will be good for the solar and wind alternative energy industries.
6) Alternative energy is forecasted to grow at an annual rate of 50% per year for the next 5 years, according to the latest forecasts, with higher growth coming from the US and China, because the both are far behind Europe and Japan in this area.
So put all those things together and I think this sector could outperform almost every other sector in the next 5 years. I think at the most optimistic, it's possible to see a doubling or trebling of your money. At the least optimistic, it's possible to get at least a 10% per year return on average. So that is why I pulled money out of Cisco and other places to make my first and most substantial bet in any single sector since the Internet boom started in 1995. |
