By Nick Hodge | Thursday, October 28th, 2010
After a rocky start, the cleantech space is quickly becoming Wall Street’s darling.
TheStreet.com — backed by Cramer himself — recently found 63% of investors now consider solar stocks a core holding.
And CNBC just reported, “The green category has burst beyond alternative energy sources, such as solar and wind manufacturers, to include companies in the business of energy efficiency, clean and efficient water use, building, transportation, energy storage, and healthy living.”
It went on to say the cleantech “universe of companies grew from virtually nothing in the early 90s to more than 1,000, many of which have the potential to grow in the double-digits.”
And if you’ll allow me one more quote before I get to how to profit from all this, Bank of America recently declared: “In the context of the stock market, we believe cleantech offers more potential upside than most sectors.”
More potential upside than most sectors.
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But it’s not all rosy…
Cleantech is an adolescent market. It’s growing, changing, and getting comfortable with itself.
Winners and losers are being established, and you’ve got to be careful not to bet on a loser.
Not everything changes
In 2005, Europe was cleantech king. Danish Vestas (COP: VWS) and Spanish Gamesa (MCE: GAM) were crushing the wind market. German Q-Cells (XETRA: QCE) and Norwegian Renewable Energy Corp. (OSLO: REC) were ruling the solar roost.
No one had heard of the smart grid. Green building was a fledgling idea. China was still the environmental bad boy.
But billion-dollar profits can change a lot of things…
China made cleantech development a priority, and the competition proved too much for European firms.
The U.S. simply dropped the policy ball, allowing its nascent wind and solar markets to all but die on the vine.
A developing market waits for no company or country. So while the cleantech market has been consistently growing for years, there are plenty of boom and bust cycles buried in the details.
Take Spain, for example — the fastest growing solar market in the world a few years ago. After a reduction in its subsidy program, it quickly fell several rungs from the top spot.
In 2008, the U.S. was the largest wind energy market. In 2009, China stole the title away.
You see, it’s not the growth that’s changing…
Just take a look at a 20-year chart of past and estimated global wind and solar growth:
Wind installations will grow 287% by 2020; solar PV will grow 665% in the same time.
The growth will be there for decades. In fact CNBC says cleantech “growth rates are accelerating, because demand is going up and the cost (of solutions) is going down.”
It’s the end markets and companies providing the technology that are changing.
Capturing coming investment
Here are some indisputable facts…
Renewables already comprise one quarter of installed global power capacity.
And for two years in a row (2008 and 2009), more money has been invested in new cleantech capacity than in new fossil fuel capacity.
With that kind of growth, you can bet the investment dollars are pouring in…
Not counting hydro, public-sector and development banks invested $130 billion in renewable energy in 2008, and followed that up with $150 billion in 2009.
That money is cleantech’s engine of growth. It’s driving technological advancements, bringing down costs, and raising efficiencies.
To profit from this growth, you need to find the best technologies.
One way to do that is to let a fund manager do it for you. The Winslow Green Growth Fund (WGGFX), for example, is ranked the best in the category by Morningstar.
It focuses on best-in-breed technologies from multiple green sectors, and counts among its holdings First Solar (NASDAQ: FSLR), Bioexx Specialty Proteins, and American Superconductor (NASDAQ: AMSC) — all stocks with great potential in the solar, biofuel, and smart grid sectors, respectively.
But to maximize your gains from this explosive sector, individual stocks are the way to go.
That’s how you earn more than 600% on battery maker BYD (HK: 1211), just as a Warren Buffett investment sends it moonward…
Or how you net several hundred percent from a tiny American nuclear company that’s still too hot to name.
Gains like that are becoming commonplace now that cleantech is squarely on Wall Street’s radar.
But this next one almost slipped through the cracks.
It’s a solar company trading for around a buck. But it’s unlike any solar company you’ve ever seen or heard about.
Its team of scientists has found way to apply a nano-spray to almost any surface, turning it into a solar panel instantly. Solar windows, solar curtains, solar roofs — heck, solar laptop covers — this company is about to turn the industry upside down.
But as I said, I almost didn’t hear about it. Luckily, my friend Jeff Siegel was diligent enough to make his way into a closed-door demonstration of the product…
Words aren’t enough to describe what he saw there, so he put together is findings in this exclusive video.
I don’t know what you’ll find more amazing… The spray-on solar panels — or the thousands of percent it could add to your portfolio.
Call it like you see it,
Nick