A Blue Chip Alternative Energy Portfolio

This week, my column for AltEnergyStocks.com is about a safer way to invest in alternative energy: through the established, blue chip companies which are moving into the field. The column begins:

    For many of my older or more cautious clients, investment in small, profitless (or nearly so) startup alternative energy companies is inappropriate. Even a diversified ETF such as the Powershares Wilderhill Clean Energy portfolio (AMEX: PBW) is too volatile due to its heavy exposure to profitless renewable energy companies such as Evergreen Solar (NasdaqGM: ESLR). Because of this, in the last year PBW has been over $24, but as low as $16.24. While such volatility can lead to supercharged profits when you are riding it in the right direction, many investors cannot sleep at night if one of their holdings lose a third of their value in just a couple months (as PBW did last year.)

    Nevertheless, growing awareness of Global Warming, Peak Oil, Gas, and Uranium, and energy security worries are leading to broad interest in alternative energy among people who do not fit the typical aggressive speculator profile of people who can shrug off a 50% loss in a single holding over a short period of time.

    The Blue-Chip Solution

    Fortunately, not all companies involved in alternative energy are risky startups. For an investor who is willing to own stocks which are not pure-play companies, getting an exposure to quality businesses in alternative energy can actually be easier than finding quality companies among the firms whose business is purely devoted to a singe renewable energy technology. In fact, many of the industry leaders are actually divisions of larger conglomerates.

Click here to read the rest of this column.

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4 Comments

  1. Laura Carbonneau said

    I was just thinking that I want to put some investment in alternative energy but we aren’t necessarily in a position to put money into something really risky – and then I remembered to look at your blog! Very interesting stuff.

  2. I wonder if common “investors” interested in jumping on the alt energy bandwagon are aware of the financial outlook of the portfolios they invest in. Cellulosic ethanol for example will not become financially viable on a commercial scale for another 5 years.
    Cheers,
    Francesco DeParis

  3. Tom said

    You’ve hit the nail on the head, Francesco. But to be fair, few people have the time or the skills to judge the future profitibility of companies… a knowledge of what you know and what you don’t know is essential to sucessful investing… you don’t have to know everything, but you do have to aviod investing on what you think you know that just ain’t so.

  4. Paul Ferreri said

    I dont think 5 years out. Please take a look what Abengoa is doing in Spain..

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