Wednesday, July 9, 2008

Oil Mogul Sounds Alarm on Renewable Energy



Oil billionaire T. Boone Pickens launched an energy plan and social-networking campaign yesterday that calls for replacing Middle Eastern oil with Midwestern wind.

The so-called Pickens Plan would exploit the country's "wind corridor" from the Canadian border to West Texas to produce 20 percent of the country's electricity. In the video accompanying the PickensPlan.com Web site, Pickens said that getting 20 percent of the U.S.' electricity from wind and diverting natural gas to transportation could be done in 10 years "if there is the right leadership."

Some critics are saying that Pickens is launching a self-serving campaign but his response is blunt: "I am 80 years old and worth $4 billion; I am not doing this for the money." You can watch the television commercial hitting airwaves by clicking on the video above.

Renewable energy is a theme that I will come back to often in my blog. I believe that investors need to familiarize themselves with this sector because the future of our planet is at stake. Pickens is right: the time for action is now. America and the rest of the world's dependence on oil will only lead to more wars and an environmental calamity.

I got interested in solar stocks when a buddy of mine introduced me to a Canadian company called Timminco, a supplier of solar grade silicon, or upgraded metallurgical silicon ("UMG Si"). Timminco was one of the top performing stocks in the S&P/TSX in 2007 and if their technology pans out, some hedge fund managers believe that this company will carry a lot of weight in the Canadian benchmark index.

But I track other solar stocks as well. Many of the established solar companies are based in the U.S. (First Solar, MEMC, Sun Power, Evergreen Solar), Germany (Q-Cells) and China (Canadian Solar, Renesola, Solarfun, Yingli, JA Solar, Trina Solar, LDK Solar, etc). The sector is very volatile because big hedge funds love to short it and scoop up shares at lower prices before they announce earnings. And boy have those earnings been stellar, leading some to question whether they are too good to be true.

I believe that the latest correction in solar stocks represents an opportunity for investors to nibble at a sector that may be in the early stages of a long-term secular bull market. Some pension funds have already taken notice (CPPIB and CalPERS to name a few).

As far as second quarter earnings, keep the following scheduled earnings releases on your calendar:

ESLR-July 17
SPWR-July 21
FSLR-July 28
STP-Aug 4
JASO- Aug 4
YGE-Aug8
CSIQ-Aug 11
SOLF-Aug 15
TSL-Aug 18

Before you invest in any solar stocks, watch this video on Tech Ticker (click to watch). Please remember that renewable energy may be the future but these stocks are extremely volatile so if you can't stomach volatility, avoid investing in the sector altogether.

But if you would like to nibble on solar stocks, in my opinion, the current levels offer an excellent entry point. My favorites in the sector right now are still CSIQ, SOLF, ESLR and TSL.

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