Friday, September 03, 2010

Energy Sector Rocks On

With this post we begin a new series looking at energy alternatives - from oil produced by squiggly algae to complex nuclear reactors to solar panels. Each fuel source or power technology will be considered in terms of capital requirements, raw materials costs and most importantly power requirements for the production process itself. We also look at distribution alternatives and the costs of building delivery infrastructure for some of the newest renewable fuels. Environmental sustainability is another important element in the discussion.

Most investors will recognized our due diligence laundry list as including those factors that really matter in determining commercial success - and value. Amid the jumble we will look for investment opportunities and may a few good trades along the way.

It has become fairly clear that our energy needs cannot be met by one source alone. A menu of sources will be needed to generate electric power and fuel our cars and trucks. That menu will likely be different from region to region depending upon which resources are in abundant supply, bringing Americans into closer sync with nature than anyone ever since the Industrial Revolution washed across the country in the 1800s.

Investors should be salivating over how the alternative energy industry is shaping up. The need to a variety of energy sources is leading to the rise of numerous players bringing some exciting technologies and processes to the market. The public, policy makers and business decision makers appear to have accepted the premise for a reduction in the use of imported oil and the adoption of earth-friendly sources from organic or other sources. Consequently, more capital has come available for start-up as well as more mature companies with products already on the market.

We begin our series next week with PetroAlgae, Inc. (PALG: OTC/BB) which is testing the capital market with an S-1 filing now pending before the SEC. PALG is a stock on our Beach Boys Index - a wide ranging group of alternative energy developers using various technologies to harness the energy produced by the sun through photosynthesis - that is photosynthesis in current time. In this group we will revisit the ethanol producers and check in on the cellulosic ethanol developers to find out when we can stock sacrificing our corn muffins for gas to drive to the mall.

Although the Beach Boys group is a long list of promising companies, our discussion is not limited to biofuel. We will also look at various mechanical energy sources we have grouped in an index called Earth, Wind and Fire. This group includes wind mill producers, the geothermal energy developers, wave energy and solar convection generated energy.

There is energy at the atomic level as well. We have grouped companies producing power from nuclear or solar photovoltaic technologies or hydrogen from electrolysis in an index called The Atomics.

A discussion of the energy topic would not be complete without a discussion of the various innovations that reduce energy consumption. We include a group of transmission, distribution and efficiency operations in the Mothers of Invention Index.

Look for our company lists in the coming weeks at the Crystal Equity Research web site. Although not indices in the conventional sense, the lists should provide investors with a sense of both the breadth and depth of investment opportunity in the alternative energy sector. We named our indices to honor those iconic rockers of the “oil and gas century,” because, like rock and roll, we will live on even if our journey is a bit uneven.


Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

1 comment:

grant said...

I love your blog so far and find it very insightful but there are a million spelling/grammatical errors which make it nearly unreadable.