Our First New Pick: Xcel Energy

Well, Green Investments readers... my fellow long-suffering, patient friends...

It's finally time.

We are ready to unveil our first NEW pick to kick off the Green Investments recovery portfolio.  

Yes, we believe the bottom is in for the stock market.  We could be wrong. 

We have been wrong before.

And let me be clear: We are not market timers.

But I have been waiting for the right window to restart our portfolio.

And I've been searching high and low for the right company to get us started.

As you probably know, I am pretty big on green infrastructure plays.  These would be companies poised to make a killing on the transformation of our energy and transportation infrastructure... our waste treatment systems... and the like.

Today we have identified a tremendous company that's already beginning to create the coming Smart Grid in states like Colorado.

That company: Xcel Energy (XEL).

Right now, this innovative company is developing something it calls SmartGridCity.  This internet-based infrastructure project is allowing 10,000 citizens of Boulder (a great city, where my Buddhist buddy Karl lives) to control their electrical usage via computer.

In other words, if they want to let their clothes dryer run only when wind power is most abundant, they can make it so using their home computers, by tapping into SmartGridCity.

This Xcel project in Boulder is, in fact, the biggest and most comprehensive Smart Grid project of its kind in America.  Considering the billions Obama has flowing toward Smart Grid already, we're confident that this leg-up on the competition will put Xcel in position to pocket a good deal of the coming profits going forward.

I'll have a more detailed analysis of Xcel in an upcoming Green Investments.  For now, let's take some action:

Action to Take: Add Xcel Energy (XEL) to the portfolio at $18.34.  Use at 35% trailing stop to protect your principal and your profits.

Good investing,

James

Shameless Pitch for Social Picks.com

Guys, every once in awhile I come across a really cool blog that I like to lavish some love upon.

Today, the recipient of my affection is a site I recently discovered called www.socialpicks.com.

The reason I like this one is that it's a little different.  This site is creating a kind of online green investment community where you can get a username... and then play with portfolios, enter into conversations and of course learn how to make money investing in a socially responsible way.

In some way it's a portal to investing blogs and vids, which is fun in itself.  But Tom Konrad, the site's owner, goes a few steps further.  It would be nice if the content were focused solely on green and sri, but hey... it's still a powerful tool for researching great opportunities that are out there.

Definitely urge you to check it out.

Jay

Why Our First Pick Will Be Wind Power

I sense we're on the verge of a mini-rally... a bear-market rally... a dead-cat bounce... a sucker's rally... 

Call it what you will, but I think we'll soon see energy prices steadily climbing again.  

In fact, oil's already entering a pronounced uptrend, and now we have two weeks back-to-back where it looks like the markets are doing their best "I'm not dead yet" impression... a la pick your favorite horror movie from the 80s.

So where is the best place for Green Investments to go a-huntin' in the energy sector?  You have "clean coal"... you have ethanol... you have geothermal... you have solar... But for many reason, I think wind is going to be the first sector to really take flight.

Why?  People can understand it, for one thing, and it's relatively cheap compared to solar.  We've had windmills around for centuries, driving everything from, well, grain mills to water pumps.  There's something kinda charming about windmills.  Although they're quickly becoming serious business.

Along those lines, I've been looking at several companies.  And one of my favorites is a company called American Superconductor (AMSC).

This outfit doesn't make windmills.  It makes the electricity-conducting parts that go inside them.  And what's more, this company, with a $750 million market cap, provides the hardware that connects wind farms to the power grid.

But while it might be a good idea to pick up a few shares of this before it really takes off, we're not buying.  Not yet, anyway.

Why?  The fundamentals.  Pure and simple.  While the company posted its first annual gain in earnings last year, that was offset by significant operating losses for 2008.  Of course, I'm confident that this is just part of the takeoff phase for the company, considering that its gross profits are climbing steadily... even if it's still losing money to the tune of $25.4 million last year.

Still, we'll keep an eye on American Superconductor.  And I'll keep you posted as my research continues.  Soon, I hope, we'll find the perfect wind power play for the Green Investments portfolio relaunch 2009.

Good day,

James

Global Warming - the $750 Billion Prize

A very worthwhile new article in the International Herald Trib details the current state of green investing in Europe - and to some degree, globally.

http://www.iht.com/articles/2008/03/28/yourmoney/mgreen.php

It's not surprising that wind-power is cited as one of the most resilient subsectors of the green space.

And it reminded me of, well, how profitable it's going to be for businesses that will spearhead the fight to contain global warming.

The article points out that an estimated $750 billion will be made between now and 2016. That's more than $100 billion a year for the next seven years.

And considering that huge chunks of that will go to some very small startup firms, in some cases, the gains for investors could be sizable.

There will be a ton of flame-outs along the way. Just as with any truly revolutionary, game-changing transformation (like the Internet revolution)... there will probably be a lot more losers than winners.

But identifying those winners is exactly what we're about. And to that end, I plan on having our first recommendation posted later this week.

Especially if the markets can maintain some stability.

Good investing,

James

Green Investments... a Big Bubble?

A recent debate has broken out between two colleagues and friends of mine over green investments...

Both of these guys - Dave Fessler and Louis Basenese - are brilliant analysts and both share different opinions about the long-term viability of green investments... and the green changeover in the economy.

They write for Investment U.

Of course, I side with Dave Fessler on this one. He cites many reasons why Green isn't a bubble or a fad but the only realistic long-term solution for the world's energy needs.

But if you want to read two really smart investment minds taking different sides of the green debate and holding their own, check this out:

http://www.investmentu.com/IUEL/2009/March/alternative-energy.html#more-6249

James

Obama Cap-and-Trade Plan Has a Twist

Most greenfolk have some knowledge of cap-and-trade, I would suppose.

That's where government's put a cap on how much carbon-based pollution can be produced by a particular kind of company... and if a company exceeds their limit, they must pay for the right by purchasing carbon credits from companies producing less than their limit.

The problem with this plan - one of the potential pitfalls - is that it could raise prices for consumers over the long haul on certain products. Obama's budget has an ingenious solution: the excess carbon credits and the revenue they would generate would be given back to the American public in the form of tax refunds.

In some cases, people would receive more in refunds than they paid in increased costs, meaning you might pocket a little money on this (ironically, who wants to profit from excess carbon pollution?).

Anyway, great article on this in BusinessWeek:

http://www.businessweek.com/bwdaily/dnflash/content/mar2009/db20090310_825431.htm

Good day,

James

Obama Speech and Green Investments

Last night, Obama made another marvelous speech to Congress. And he used the opportunity to drive home his priorities for renewing the U.S. economy.

At the very top of the list: renewable energy.

This is more than symbolic. Obama is, unlike so many congressmen who pay lip service to sustainable energy, actually driving resources there to the tune of more than $107 billion.

What's more, he's talking about a cap-and-trade scheme here in America that would be somewhat modeled, presumably, on similar programs being conducted under the Kyoto Protocols.

To that end, he's pledging $15 billion a year toward sustainable energy projects. Here's part of what he said last night:

"The budget I submit will invest in the three areas that are absolutely critical to our economic future: energy, health care, and education.

It begins with energy... Thanks to our recovery plan, we will double this nation’s supply of renewable energy in the next three years. We have also made the largest investment in basic research funding in American history — an investment that will spur not only new discoveries in energy, but breakthroughs in medicine, science, and technology.

"We will soon lay down thousands of miles of power lines that can carry new energy to cities and towns across this country. And we will put Americans to work making our homes and buildings more efficient so that we can save billions of dollars on our energy bills.

"But to truly transform our economy, protect our security, and save our planet from the ravages of climate change, we need to ultimately make clean, renewable energy the profitable kind of energy. So I ask this Congress to send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America. And to support that innovation, we will invest fifteen billion dollars a year to develop technologies like wind power and solar power; advanced biofuels, clean coal, and more fuel-efficient cars and trucks built right here in America."

Obama is not a tippy-toe kind of guy, that's for sure.

He doesn't seem interested in bartering piecemeal with the opposition for a concession here and there. He's defining the playing field, and his vision does not feature an option whereby the same old policies and talking will suffice.

He seems bent on revolutionizing our infrastructure for real - which is every bit as ambitious as Kennedy's pledge to land on the moon... but a whole lot more practical and necessary.

It will also, in our opinion, prove to be a lot more profitable. And that's exactly where we plan to strike first, when our new recommendation comes your way within the next week or so.

Good day,

James

Obama's Green Investment Push Gains Global Support

In a recent post we talked about the Obama administration's plan to inject $100 billion-plus into the green energy sector here in the U.S.

But we failed to mention that he's not alone in the world.

Governments in Asia and Europe are shifting their infrastructure focus toward greener, more efficient technology too.

In fact, these three regions - the U.S., Europe and Asia - have now committed more than $200 billion to funding green energy initiatives, according to a new report by Deutsche-Bank.

As Reuters reported, DB's head of climate change investment research Mark Fulton sees this trend as bullish for green energy companies in general:

"The activity shows that governments are very serious about continuing to tackle issues around renewable energy and climate change," he said during a teleconference just as DB released its latest analysis yesterday.

"We believe this trend ... will provide crucial support to climate change industries during the current global economic downturn, helping to offset the impact of weaker debt markets over time."

European Union nations have already committed some $60 billion to green energy and infrustructure companies. And these are exactly the areas where we'll be looking to build some of our core portfolio in the coming days.

In fact, we may start with a California company that's already tied into that state's smart-grid project pipeline.

The shares have taken a beating over the past year, as you can imagine. But it's in the sweet spot right now, and possible poised for a rally on the back of Cali's green infrastructure buildout.

That company is called SunPower Corporation. Here's the info from Yahoo! Finanace:

http://finance.yahoo.com/q?s=SPWRA

We're not officially recommending the company yet, but it's on our watch list.

I'm thinking this time around, we're going to start putting together some kind of strategic portfolio, complete with some asset allocation, to ride out this economic storm.

More to come,

James

Warren Buffett's Green China Play

According to a report featured in the excellent blog Ecostocks.com (http://www.emailwire.com/release/19947-Warren-Buffett-Invests-into-Electric-Car-Manufacturer.html), Warren Buffett just pumped about $230 million into a Chinese car-battery company listed on the Hong Kong Stock Exchange.

The company, BYD Company Limited, also trades over the counter (OTC: BYDDF) so you may be able to buy it through your broker. Volume here is pretty light, at about 15,000 shares a day, although with a $1 billion-plus market capitalization, this is no nanocap.

Buffett's Mid-American Energy Holdings Company plans to buy 225 million shares (no word as to the price, although the stock is trading around $1.90 on the bulletin board).

MarketWatch has a good story on this, too:

http://www.marketwatch.com/news/story/berkshire-powers-electric-cars-buy/story.aspx?guid=%7BA0737406%2D0BEC%2D4527%2D84CB%2D8EEA08BD1792%7D

The company makes high-tech lithium-ion batteries and other technologies with the main application being electric cars. Being in the Chinese market (the fastest-expanding auto market in the world) could be what gives this company the edge over its U.S.-based competitors.

We'll put BYDDF on our watch list. But I would not recommend jumping into the OTC shares. Yes, they might triple in value over the next six months. But they might go to zero, too. If anything, we'd recommend the Honk Kong shares, which you should be able to buy through your broker as well.

Good day,

James

Obama's Green Economy - The $100 Billion Prize

There's something about a crisis that forces people to reexamine things, drop old prejudices and finally seek new solutions.

Because, frankly, the old solutions just don't work the way they used to.

That's certainly the case with the current economic crisis and the promise of green investing to help lead the world into a new era of sustainable economic growth.

Green is going mainstream, and there's a heightened sense of urgency. Obama's new $800 billion (give or take) stimulus program has alotted at least $100 billion toward green energy grids... solar and wind power... clean coal and other technologies. That's 1/8th of the package - an absolute knock-out percentage by any stretch.

Clearly, Obama's putting his money where his mouth was on the campaign trail, and that's a good thing.

I would love nothing more than to see mainstream investment minds, writers, bloggers and journalists actively embracing green as a result... rather than playing with it like a cat plays with a mouse, waiting for it to die some inevitable death. As if green were a fad. As if it were the Chia pet of investing.

In fact, since the money is going to flow there, it seems the mainstream is adjusting to the new reality, and starting to - gasp - embrace it!

Bloomberg's John Wasik wrote in anticipation of the stimulous going through:

If Congress is serious about battling climate change, it will mean putting more than 10 million cleaner and carbon-neutral vehicles on the road and retrofitting buildings, factories, offices and homes.

Green buildings not only save energy and reduce carbon emissions, but can create employment. In Germany, just insulating 200,000 apartments led to 25,000 new jobs.

As infrastructure and transportation are rebuilt and "greened," it will demand more new steel, concrete, plastics, electronics, clean power and earthmoving vehicles.

Corporate Earnings

Another benefit may turn up in your personal portfolio. A green economy lifts almost every industry as bottom lines improve because less energy and resources are consumed. Communities from Silicon Valley to the Mahoning Valley can all prosper from this boom. Companies such as General Electric Co., Duke Energy Corp., Caterpillar Inc., Siemens AG and Hitachi Ltd. will benefit from big infrastructure and energy spending.

Yes, Big John. Welcome to the green side.

http://www.bloomberg.com/apps/news?pid=20601039&sid=a2kXgRVOCh6c&refer=home

Of course, our argument here all along is that green = efficiency. How in the world could any self-respecting capitalist not love the idea of increasing efficiency to promote long-term economic growth... while creating millions of new jobs now?

More to come.

James

We're diving back into the markets... but why?

Well, it's been over a year since we concluded our 12-month experiment.

And the results were conclusive: You can indeed beat the S&P 500 with only green investments. I'll be providing detailed data from that experiment in an upcoming post.

Meanwhile, with the world apparently falling apart at the seems, it's time to dive back into the markets... but with a few caveats.

You can call them my rules of green investing in the New Obama Era:

1) BE PREPARED TO LOSE SOME: Only use money you can afford to lose when investing in new stock speculations.

2) DISCOVER THE GOVERNMENT ANGLE: Follow the money. And the money is coming from Congress right now. Invest only after answering this question: How might the government's spending policies affect (or not affect) any potential investment in the green space. Pay very close attention to the New Economy (or the new "O-conomy" as my friend Larry calls it). It's being constructed largely without influence from Wall Street, and with heavy government direction. And it could be very beneficial to green technologies and the green culture in general.

3) PROTECT YOUR DOWNSIDE SYSTEMATICALLY: As we construct our new core portfolio, we'll be looking to an investment horizon of at least one year, although we'll use our regular trailing stops to protect our gains and minimize our losses along the way.

The last year has been amazingly damaging to portfolios around the world. I've watched it up close and personal from inside the financial industry, and it has been uglier than anything I've seen in this lifetime.

In fact, I haven't met a single old-timer who has been able to say: ah, this is nothing. Back in so-and-so we had to... etc. Nope. Even they old guys are stunned and humbled.

Humility, however, is the beginning of all investment success, as my friend and colleague Alexander Green of the Oxford Club has written.

So with a dose of humility, we're about to start putting together a new green portfolio right in the midst of the most horrible markets we've ever seen. Because guess what - when the recovery comes, and the New Economic landscape becomes more clear, I am confident that green technologies will be more prominent - and profitable - than ever.

More to come,

James