Renewable Energy IPOs
Two New Renewable Energy IPOs
A couple of years ago, it seemed like there was a conga line of alternative energy IPOs in the pipeline.
But a lot has changed in just two years!
Today, with the market struggling from an out-of-control housing crisis, failing banks, and eight years of failed economic policies fueled by fiscal irresponsibility - few want to risk going public.
And the ones that have gone public this year aren't making shareholders do cartwheels. (Though in all fairness, it's not unexpected to see a stock dip in share price after it goes public.)
Real Goods Solar (NASDAQ:RSOL), the solar subsidiary of Gaiam, Inc. (NASDAQ:GAIA), went public on May 8. It was priced at $10 a share. Today, the stock trades under $7.00 a share.
GT Solar (NASADAQ:SOLR) went public on July, 25. It was priced at $16.50 a share. Today the stock trades around $13.00 a share.
Still, the appetite for quality alternative energy stocks is quite healthy. Because no matter how bad the market gets - our increasing demand for energy and our dwindling supplies of fossil fuel resources is pretty much guaranteeing that the renewable energy industry has a long and profitable road ahead.
And that's why, despite adverse market conditions, there will continue to be a fairly strong showing in alternative energy IPOs.
Back in May, the U.S. Department of Energy announced that wind power is capable of becoming a major contributor to the United States' electricity supply - offering up 20 percent of our overall energy mix.
And of course you're familiar with T. Boone Pickens' Pickens Plan. This is the scenario that would allow 20 percent of our utility-scale generation from natural gas to be replaced by wind. The natural gas would then be transitioned to be used as a transportation fuel for fleets throughout the U.S.
Not surprisingly, T. Boone's now building one of the largest wind farms in the world. When completed, it'll produce up to 4 Gigawatts, or enough to power about 1 million homes.
Point is, wind is absolutely huge. In fact, when it comes to sustainable, renewable energy generation - wind really is king. And very soon, we're going to see a new wind IPO that's hoping to benefit from wind's reign. The company, which is a wind developer, is called First Wind Holdings, Inc.
First Wind is currently developing or operating wind farms in Hawaii, Oregon, Utah, New York, Vermont, Maine, and New Brunswick. The company now has about 100 megawatts in production.
As far as investing in wind, we're actually just as bullish on the wind developers as we are on the turbine manufacturers. Sure, there's plenty of money to be made in turbines. But it's a tough sector to play domestically, as GE pretty much runs the show. And that's not a pure play.
If you're looking for an established pure play turbine manufacturer, you'll have to look overseas. Fortunately, those stocks are not as difficult to invest in as you might expect. In fact, our international editor, Sam Hopkins has a service dedicated solely to international renewable energy stocks. You can read more about that here.
But if you're looking for a wind developer to play, your choices are limited. In fact, the only one we like right now is Western Wind Energy Corporation (TSX-V:WND). The company is generating power right now for the California energy market. This is the energy market that IS tied to the price of oil.
So needless to say, when oil prices skyrocketed a couple of months ago, this stock was flying high. And when oil prices head back up after this brief respite (and you better believe they will), this is a stock that will benefit nicely.
The company also just had a nice second quarter - announcing record revenues of $2.1 million and net earnings of $2.9 million. And losses were down significantly, from $2.1 million from the previous quarter, to just $24,433.
Another company going public this year will be A123 Systems.
As a high-performance battery manufacturer, A123 is trying to get a piece of the lucrative Plug-In Hybrid Electric Vehicle (PHEV) market. And as far as we're concerned, this will truly be one of the hottest transportation opportunities in the next five to ten years.
You see, today's PHEVs are very efficient. Most are quite sturdy and attractive, and of course deliver real fuel efficiency. In fact, there are few PHEVs today that deliver anything less than 30 miles on just one charge.
Since the average U.S. driver drives 29 miles per day (according to the Bureau of Transportation Statistics), a 30-mile, all-electric range is perfect. It means most folks could get to and from work everyday, without using a single drop of gas.
And now the race is on to develop the strongest, most efficient high-performance battery for this next generation of super efficient PHEVs.
A123 definitely has a shot at being a leader here.
Mostly because this company has aligned itself with some pretty major players, including GE, Black & Decker, North Bridge Venture Partners, Qualcomm, Ford, and GM.
In fact, last year, the company announced that it was co-developing lithium-ion battery cells with GM for the auto-maker's new PHEV, the Chevy Volt.
Of course, there are other companies in the running here. But there are plenty of opportunities as our transportation infrastructure continues to transition to one that is more sustainable, and of course, less reliant on foreign oil.
Either way, we win.
To a new way of life, and a new generation of wealth...