Posted: July 17, 2008

As manager of the Cleantech Index, probably the broadest global stock index of companies engaged in environmentally-friendly activities, Rafael Coven’s analytical world ranges far and wide, from companies that make solar panels and wind turbines to companies that better control the flow of traffic in major cities. Then there are the eco-friendly agricultural companies, a mix of outfits engaged in activities ranging from nutrition to water conservation.

“We’re starting to see a huge amount of money go into” the eco-friendly agricultural sector, Coven told EnergyTechStocks.com. He highlighted four companies on his radar screen: Martek Biosciences Corp., Landec Corp., Lindsay Corp. and Plant Health Care Inc. Martek and Landec trade on NASDAQ. Lindsay trades on the New York Stock Exchange. Plant Health Care trades in London.

Martek’s business is nutrition. The company has a patented form of DHA (docosahexanoic acid) omega-3 sold as a supplement. Studies reportedly show that DHA omega-3 helps brain and eye development in infants.

Landec is involved in an altogether different “eco-agricultural” business. It makes coatings for better seed germination and to avoid spoilage of perishable food items. According to the company, its patented food packaging technology regulates the flow of oxygen and carbon dioxide, thereby extending the shelf life of produce.

Lindsay is probably the most conventional eco-ag company of the three. It makes water-saving irrigation equipment.

Plant Health Care sounds the most intriguing of the four. It has a line of biologically-based products and services for professionals aiming to substitute biologically-based approaches to plant care for a conventional (read: chemicals) approach.

Keep in mind: Coven is a trend tracker, not a stock picker. Still, just as he did in Part 3 of this series – where he emphasized that energy efficiency companies come in all shapes and sizes – part of Coven’s value to every investor lies in part in his ability to take companies that don’t seem to have any connection and show how they fit together into key sectors of the “cleantech” universe.

Not that his own index isn’t doing well. In the second quarter of 2008, the Cleantech Index posted an 8.2% annualized return, beating several broader stock indexes including the NASDAQ Composite Index, the S&P 500 Index and the Russell 2000 Index. It also beat a competitor, the Wilderhill Clean Energy Index.

Part 1 of 5 – At Least 70 Cleantech Firms Are Acquisition Candidates

Part 2 of 5 – 4 Firms That Appear Likely to Get Bought by the ‘Big Boys’

Part 3 of 5 – What Do Telvent, Kadant and Ormat Have in Common?

Part 5 of 5 – Insituform Has ‘Vast’ Untapped Market Potential

Posted: July 16, 2008

At first glance they seem to have nothing in common.

Spain’s Telvent GIT S.A., which trades on NASDAQ, is an information technology firm that has a system for controlling the flow of traffic. Massachusetts-based Kadant Inc., which trades on the New York Stock Exchange, makes and sells paper recycling equipment. Nevada-based Ormat Technologies Inc., which also trades on the Big Board, makes and sells equipment for generating electricity from waste heat.

But look closer, the way Rafael Coven, manager of the Cleantech Index, does, and what you see are three companies all engaged in the energy efficiency business. Telvent helps cars run more efficiently. Kadant helps the papermaking industry run more efficiently. And Ormat improves the efficiency of electricity generation.

Coven says that because energy efficiency companies come in all shapes and sizes, investors may not realize the key role they will increasingly play as the world is forced to do more with less, to expand the global economy in the face of limited supplies of oil, coal and natural gas. As many experts have recently noted, energy efficiency is the only “quick fix” to America’s and the world’s energy woes.

But unlike, say, companies that make solar panels or wind turbines, energy efficiency companies can hide in plain sight, according to Coven. “There are energy efficiency solutions companies for every business sector,” he emphasized during a lengthy conversation with EnergyTechStocks.com.

Coven described Telvent as a “very, very interesting company with really good stuff.” He said Kadant “is very much under the radar.” He thinks Ormat, which gets attention as a geothermal power developer, is equally interesting for its “recovered” energy power plants.

Among other energy efficiency firms in the index Coven manages are Echelon Corp. and Itron Inc., both of which trade on NASDAQ. They make utility meters that save energy because they are “smart,” meaning they are programmable. Still another is Cree Inc., which also trades on NASDAQ. Cree is a manufacturer of light emitting dioide (LED) lighting products that, because they are super energy efficient, are expected to eventually replace all incandescent and even compact fluorescent lighting products.

Part 1 of 5 – At Least 70 Cleantech Firms Are Acquisition Candidates

Part 2 of 5 – 4 Firms That Appear Likely to Get Bought by the ‘Big Boys’

Part 4 of 5 – ‘Huge’ $ Starting to Flow Into Eco-Friendly Agriculture Firms

Part 5 of 5 – Insituform Has ‘Vast’ Untapped Market Potential

Posted: July 15, 2008

“Are the big boys just going to sit there and let them eat their lunch?” asks Rafael Coven, manager of the Cleantech Index, the self-described “first, and only, stock market index intended to reflect the surging global demand for clean technology products and services.”

Coven’s answer to his own question is an emphatic no, which is why he believes that four companies that provide energy efficiency services – Comverge Inc., Echelon Corp., EnerNOC Inc. and Woodward Governor Co. – appear likely to be acquired at some point by major electric utilities or by major energy efficiency developers such as Siemens, Honeywell and General Electric.

Each of the four trades on NASDAQ. Except for EnerNOC, all are components of the index Coven recently expanded by 34 companies because he wanted to add more firms that trade outside the U.S. An Exchange-traded fund (ETF), Powershares Cleantech Portfolio (Symbol: PZD), tracks the index. (For more see Powershares Cleantech Portfolio.)

Comverge and EnerNOC are among a small but growing number of companies whose software enables them to switch off customers’ air conditioners and other power-using equipment when demand for electricity threatens to exceed available supply. Each serves as a middleman, contracting with both utilities and their customers, thus making it logical to think one or more major electric utilities might want to fold these companies into their own operations.

Echelon makes so-called “smart” meters that are integral to using electricity more efficiently. Echelon meters can be programmed to reduce power usage and also cost where time-of-day pricing applies. Eventually, every home and office is expected to have a smart meter as part of a “smart” grid that optimizes power consumption and reduces the potential for a blackout.

Woodward Governor is the self-described “world’s largest independent designer, manufacturer and service provider of energy control and optimization solutions for aircraft, industrial engines and turbines, and electrical power equipment.” Given its broad industrial exposure, Woodward logically offers technological expertise that would be valuable to companies such as GE and Honeywell.

Part 1 of 5 – At Least 70 Cleantech Firms Are Acquisition Candidates

Part 3 of 5 – What Do Telvent, Kadant and Ormat Have in Common?

Part 4 of 5 – ‘Huge’ $ Starting to Flow Into Eco-Friendly Agriculture Firms

Part 5 of 5 – Insituform Has ‘Vast’ Untapped Market Potential

Posted: July 14, 2008

Rafael Coven, one of the world’s leading financial analysts of “clean” technology companies, told EnergyTechStocks.com that at least 70 public corporations, each with a floated market capitalization of at least $150 million, can be considered acquisition candidates.

While that would be a large number for any industry, in the case of “clean” technology, it represents all but approximately five of the 76 companies in the Cleantech Index, a global stock market index managed by Coven. The Cleantech Index was recently expanded by 34 companies in order to capture sectors whose leaders trade outside the U.S., especially water companies and wind and solar equipment manufacturers, Coven said.

Overall, the Cleantech Index is made up of companies whose technologies range from “alternative energy and energy efficiency to advanced materials, from air & water purification, eco-friendly agriculture/nutrition to power transmission, etc.,” according to Cleantech Indices LLC’s web site. An Exchange-traded fund (ETF), Powershares Cleantech Portfolio (Symbol: PZD), tracks the index. (For more see Powershares Cleantech Portfolio)

Coven didn’t name the few firms in the Cleantech Index that he doesn’t consider acquisition candidates, but at least one is fairly obvious, Germany’s Siemens, the index’s largest single holding as of July 3. To qualify for the Cleantech Index, at least 50% of a company’s sales or operating profits must be derived from cleantech businesses, which is why some outfits that likely would do the acquiring, such as General Electric, Honeywell and Emerson, aren’t included.

As he scanned his index during the course of a lengthy interview with EnergyTechStocks.com, Coven left little doubt as to some of his personal favorites. About Badger Meter, a company that makes utility meters that could be in high demand as energy efficiency takes greater hold, Coven remarked, “They just keep on doing it.” In discussing Zoltek Companies Inc., which makes carbon fiber used to make lightweight but strong wind turbine blades, car parts and more, Coven said the company could be “huge.”

Coven said a lot of other things investors will find valuable about the prospects for companies in his newly-expanded index, as we’ll see in the rest of this week-long series.

Part 2 of 5 – 4 Firms That Appear Likely to Get Bought by the ‘Big Boys’

Part 3 of 5 – What Do Telvent, Kadant and Ormat Have in Common?

Part 4 of 5 – ‘Huge’ $ Starting to Flow Into Eco-Friendly Agriculture Firms

Part 5 of 5 – Insituform Has ‘Vast’ Untapped Market Potential

Posted: July 3, 2008

Despite all the media attention being given to U.S. presidential candidate John McCain’s plan to build 100 nuclear power plants, investors should stay focused on the international market. That’s where they will find two South Korean companies they should keep their eyes on, according to commercial nuclear power financial analyst Bruce Lacy.

The two firms are Doosan Heavy Industry & Construction Co. and Korea Electric Power. Both trade in Korea. Korea Electric also trades ADRS on the New York Stock Exchange.

According to Lacy, head of his own Iowa-based consulting group, Korea has 20 operating nuclear plants providing 40% of the country’s electricity. Korean companies are “actively looking at export markets and foreign opportunities,” he says.

In the case of both Doosan and Korea Electric, nuclear power is but one of several operating units. Doosan generally is engaged in supplying heavy industrial facilities. Its power unit provides key systems for a nuclear facility, including reactor vessels and steam generators. Korea Electric is engaged in power transmission and distribution at home and in power generation in foreign markets. The company reportedly operates 19 nuclear units with a combined output of 16,715 megawatts (MW).

“Not only is the U.S. market not the only market, it may not even be the most important market,” Lacy emphasized in an interview. “Remember, this is a global business and not all the players have stepped up yet. Along with the French, Japanese and U.S. firms, keep your eyes on the Koreans and Russians,” he said, adding that foreign investment in Russian nuclear power, which is controlled by Rosatom, a state corporation, is “very limited.”

Lacy recently issued “report card” grades for leading French, Japanese and U.S. nuclear firms. To find out what grades companies like Areva and Mitsubishi received, see:
Report Card Grades for 6 Big Nuclear Reactor Makers (Part 1 of 2) – GE/Hitachi, Areva & Toshiba/Westinghouse

Report Card Grades for 6 Big Nuclear Reactor Makers (Part 2 of 2) – Mitsubishi, Pebble Bed & Atomic Energy Canada

Editor’s Note: In keeping with its policy to be solely a news source, this EnergyTechStocks.com article is presented for information purposes only.

Posted: June 13, 2008

When the man behind perhaps the foremost “clean” energy stock index in the world – Robert Wilder, manager of the Wilderhill Clean Energy Index – recommends putting only a “tiny bit” of one’s portfolio into clean energy companies, investors need to pay attention. (For more see Robert Wilder of Wilderhill Clean Energy Index: Clean Energy Should be ‘Tiny Bit’ Of Your Portfolio - Part 1 of 2.) Thus even though now looks like the exact right time to start positioning one’s portfolio for the electric vehicle revolution rapidly coming into view, it’s probably wise not to get too “juiced” up.

Having said that, there a number of companies that EnergyTechStocks.com has reported on which, even if they become only a tiny bit of your portfolio, look like they might make a valuable contribution. Again, there are no sure things. But with motorists begging for relief from high fuel costs, the lure of buck-a-gallon fuel, which is very roughly what it could cost in the U.S. to fill up a plug-in or all electric vehicle with electricity from an ordinary outlet, could make high flyers out of a number of companies big and small.

The place to start is with the lithium-ion battery development companies that earned “A’s” on their “report cards” from guest professor Michael Millikin of the authoritative web site Green Car Congress. Lithium-ion batteries are expected to be the workhorse of electrified transportation, enabling vehicles eventually to go hundreds of miles on a single charge (maybe with the help of ultra capacitors, battery-like devices that provide fast acceleration).

As EnergyTechStocks.com reported two months ago, there were eight publicly companies that earned A’s from Millikin – South Korea’s LG Chem (thanks to its Compact Power subsidiary); the U.S.’s Johnson Controls, Maxwell Technologies, Ener1 and Valence Technology; and Japan’s Hitachi and Panasonic EV (a joint venture between Toyota and Matsushita).

For more on all of the companies Millikin’s “class,” see Battery Developers A123, Altair, Compact, EEStor Get New Report Card Grades (Part 1 of 3)

Battery Developers Ener1, Hitachi, Johnson Controls, Lithium Tech Get New Report Card Grades (Part 2 of 3)

Battery Developers Maxwell, Automotive Energy, Panasonic, Valence Get New Report Card Grades (Part 3 of 3).

When plug-ins and all-electric vehicles hit dealers’ showrooms – a handful in 2009, followed by an avalanche of new models in 2010, adding up to possibly three million sold per year by 2012 – a number of car companies may also become high flyers. Three of the most intriguing – Detroit Electric, Fisker Automotive and Phoenix Motorcars – are all still privately-held, but still well worth investors’ attention. (For more see How Execs at 30 Top Cleantech Firms Expect to Make Lots of $$ (Part 1 of 7) Electric Cars = the Next Mass Market Technology.) Two giants, Nissan and Honda, also should do well, experts say, adding that two car companies that may grab the media spotlight attention, Toyota and General Motors, could have problems with technology and/or production schedules.

Last but by no means least, investors should consider companies that will enable electrified transportation. General Electric, for example, is working on technology that will allow a driver to fill up downtown or at the mall, anywhere there’s a parking space with a curbside connection to an electric outlet. (For more see GE Alternative Energy Expert Assimakopoulos Looks at the Future (Part 2 of 3) – When Parking Spaces are Gas Stations.) And electric utilities may see their revenues grow as a result of becoming the transportation world’s new fuel suppliers. Utilities such as Constellation, NRG and Exelon could prosper nicely, experts say. (For more see Constellation, Exelon, NRG, PSEG Should Prosper in Coming Era of Plug-in Hybrid Vehicles — Analyst.)

Posted: April 28, 2008

Raymond James & Associates believes the companies “best-positioned to ride the solar wave of the future” are Evergreen Solar, JA Solar Holdings, SunPower Corp., Suntech Power Holdings and Trina Solar.

In a report last week, these five companies were singled out by the brokerage firm based on their effective cost management, robust R&D, strong downstream presence, or other factors. Each also is likely to emerge as a market leader and may serve as a consolidator as the industry develops, Raymond James believes.

According to the brokerage firm, “the emergence of solar power as a significant component of the global power market is a sustainable trend that is likely to accelerate over the next decade, driven by improving solar economics and ultimately far greater solar adoption rates than today.” The result will be “tremendous opportunities for investors,” Raymond James concluded in its energy “Stat of the Week” last week.

Overall, Raymond James said it wouldn’t be surprised if by 2020 installed PV capacity within OECD was up 10-fold from current levels, totaling 87 gigawatts (GW). Noting that if even Germany can make solar power work despite its below-average sunlight, then once PV is cost-competitive with grid-supplied power (which the firm thinks will happen within a few years) then all of Europe should be wide open to PV development.

Even better opportunities should exist outside Europe, the brokerage firm said, noting that “solar economics are inherently more attractive in the U.S., Italy, Australia and so on. This also underscores that there is tremendous long-term potential for PV adoption in high-sunlight emerging markets of the Southern Hemisphere, such as South Africa and Argentina.”

Posted: April 17, 2008

Last month EnergyTechStocks.com reported on the then-emerging crisis in metallurgical coal, emphasizing that investors appeared to be paying too little attention to this money-making opportunity. (See Too Little Attention is Being Paid to Coal’s Sudden Supply ‘Apocalypse’ – Nightmare for Asia, Windfall for Investors.) With the markets now picking up on this opportunity, Raymond James & Associates has issued a new report naming the four U.S. companies it thinks are best positioned to benefit. Metallurigcal coal is used in steelmaking.

“There are only a handful of U.S. coal producers with any meaningful leverage to the metallurgical coal story,” Raymond James noted before naming four companies whose total production in 2008 or 2009 is expected to include 10% or higher metallurgical grade coal.

The biggest potential beneficiary would appear to be Florida-based Walter Industries, whose production Raymond James forecast will be roughly 90% metallurgical coal. So far in 2008, Walter shares have performed exceptionally well, although they have slumped some in recent sessions.

Raymond James’ other three metallurgical coal picks are Virginia-based Alpha Natural Resources, Missouri-based Patriot Coal Corp. and Virginia-based Massey Energy Co. Like Walter Industries, each trades on the New York Stock Exchange. About 25% to 38% of each firm’s production is expected to be metallurgical coal, according to a Raymond James analysis.

Like shares of Walter Industries, shares of each of these three have risen in recent weeks. However, in its new report, the brokerage firm emphasized that it expects metallurgical coal shortages (and thus higher prices) to persist for “at least the next couple of years.”

Posted: April 11, 2008

As much as veteran energy analyst Daniel Scotto thinks geothermal energy companies could have a bright future (as he outlined in Part 1 of this series), he holds the same high opinion about some companies he expects will be involved in the mechanics of carbon dioxide emissions trading.

Scotto, president of Whitehall Financial Advisors LLC in Greenwich, CT, is one of a growing number of financial experts who expect carbon trading to blossom shortly into a global market where hundreds of billions of dollars worth of “credits” are traded annually. In this market successful companies will reduce their carbon “footprints” below a government-prescribed level, thereby generating credits (based on tons of CO2 removed from the air) that they sell on the open market to companies that fail to get under the cap.

Scotto believes that companies that certify carbon credits, plus companies that profitably trade carbon credits the way Wall Street firms now trade stocks and bonds, will be big beneficiaries of this new trading market. Among the specific firms Scotto sees as winners is Goldman Sachs, which Scotto notes has been doing mock carbon trading for the past 10 years. Two lesser-known firms Scotto likes are Climate Exchange Plc and ICF International Inc. Climate Exchange trades on the London exchange, while ICF trades on NASDAQ.

Climate Exchange is the parent of the Chicago Climate Exchange and the European Climate Exchange. The former provides a voluntary but contractually binding trading platform for CO2 and other greenhouse gas emissions, while the latter is an exchange that focuses on compliance certificates for the mandatory European Emissions Trading Scheme.

Virginia-based ICF provides advisory and management consulting services around the world, primarily for energy, environment, infrastructure and other markets. As such, it’s in good position to craft strategies for companies to decide whether and, if so, how to get under their emissions caps.

“This is all going to take off in five years or less,” Scotto told EnergyTechStocks.com, referring to a global carbon trading market and its need for these sorts of companies. “Investors need to be ready,” he added.

Posted: April 10, 2008

After decades on Wall Street, energy analyst Daniel Scotto is never at a loss to explain why something is or is not “hot.” Well, almost never. Scotto can’t understand why more attention isn’t being paid, by investors and government officials alike, to geothermal energy. In an interview with EnergyTechStocks.com, Scotto said, “Geothermal energy is being grossly overlooked.”

Geothermal energy is the earth’s own heat, captured and used to turn water into steam for powering clean-runningelectrical generation facilities.

Scotto, who as president of Whitehall Financial Advisors LLC in Greenwich, CT, has devised his own index of alternative energy companies that trade in the U.S., said he likes two geothermal companies in particular: Ormat Technologies Inc., which trades on the New York Stock Exchange, and US Geothermal Inc., which trades on the Toronto exchange.

Scotto said he believes geothermal energy has the potential to meet 50% of the forecasted increase in electrical generating capacity over the next two to three decades, provided governments “commit to it in a meaningful way.” He said that rather than doing what Washington is doing – which is to commit billions of dollars in the form of loan guarantees and other financial incentives for building new nuclear power plants – the U.S. government should commit to geothermal energy, which Scotto noted is plentiful, widely available and, unlike solar and wind power, ideal for baseload power plants that operate 24-7.

“We need to redeploy that money going for nukes,” Scotto said. Making a meaningful commitment to geothermal energy “will make everyone a lot happier in five to 10 years,” he said.

Scotto said that if his index included companies not traded in the U.S. a third geothermal firm he would recommend is Contact Energy Ltd. of New Zealand. Contact, which recently posted a three-month high on the New Zealand exchange, has 500 megawatts of geothermal generation under development in New Zealand.

Coming tomorrow, April 11, In Part 2 of Scotto’s Top Picks: a bright outlook for some carbon trading concerns