Global Alternative Energy ETF
Big Green Energy Players Get Bigger in Credit Crunch
International renewable energy titans are starting to see the credit crunch as an opportunity...
The European Wind Energy Association says stiff financing may lead to consolidation in green power as weaker companies get shaken out or gobbled up.
"We may see some of the smaller projects which have turbine delivery contracts but are struck by the banking liquidity freeze being taken over by the larger power companies," EWEA CEO Christian Kjaer predicts.
And Kjaer's appraisal cuts across the renewable energy spectrum.
Small-scale solar, wind, or even marine power projects won't necessarily be abandoned if financing falls through—instead they'll add to the portfolio of larger companies with more solid credit that can still tap major loans.
For a peek at which large companies will come out on top, let's mine one of the big global green exchange-traded funds.
Global Alternative Energy ETF: A Peek at the Credit Crunch Survivors
The Market Vectors Global Alternative Energy ETF (NYSE:GEX) is what it sounds like—a fund that is diversified both across clean energy sectors and international boundaries. Check out this breakdown from www.etfconnect.com:
|First Solar, Inc. (USA) |
|Gamesa Corporacion Tecnologica (Spain) |
|Verbund-Oesterreichische Elektrizis (Austria) |
|Q-Cells A.G. (Germany) |
|Kurita Water Industries Ltd. (Japan) |
|Solarworld A.G. (Germany) |
|Renewable Energy Corp A.S. (Norway) |
|Trina Solar Ltd. (ADR) (China) |
|Itron, Inc. (USA) |
|Energy Conversion Devices, Incq (USA)|
Even with access to a world's worth of renewable energy stocks, America's First Solar (NASDAQ:FSLR) is GEX's top holding.
That makes sense in a worldwide consolidation scenario because First Solar cranks out thin-film PV cells for just over a buck a watt.
Being able to produce modules for $1.08 per watt makes First Solar attractive by itself. But better margins also mean more cash for acquisition and less dependence on financing in the long run.
And First Solar is not alone in that strength, as we see across the world with Yingli Green Energy.
Yingli's Vertical Integration Key
First Solar's advantage in the U.S. is based on universal manufacturing logic: the more of the production process you control, the lower your costs are likely to be.
China's Yingli Green Energy (NYSE:YGE) isn't among GEX's top holdings, but the approach it has taken to getting solar cells out the door cheaply has put it in the global green elite.
Yingli has vertically integrated its solar business at all levels: ingots, wafers, cells and full modules, giving it a long-term strategy that is well-suited to help fight off recession pressure.
Why would you wait to tap that kind of potential? Green Chip International subscribers just sold Yingli stock on February 12 for a 55% gain in just under 3 months... we really rode the international wave up on that one.
Solar is hardly the only clean energy sector where it's important to cut costs and control production—Nick Hodge wrote in Wealth Daily Wednesday about the global wind energy market's 363% expected growth over the next five years. The U.S. is making big strides, as Nick notes:
"With little fanfare, the U.S. passed Germany last year to become the world leader in installed wind energy capacity. Perhaps more impressive, China's wind energy capacity doubled for the fourth year in a row."
That neck-and-neck race for green energy leadership will continue. Wherever the opportunities are, Green Chip International subscribers are notified when to get in and when to pull the trigger on profits like we did with Yingli.
We're not only scouring the world for winning trades, we're looking ahead to which have the potential to be long-term winners and survivors of an admittedly tough financing landscape.
The portfolio isn't even limited to direct producers of solar, wind, and other clean energy types... it includes grid technology providers and other essential industries for bringing the new global energy economy online.
Don't miss the next winning recommendation. Check out GCI today.
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