More Alternative Energy Stocks for the Future
Kevin is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
As I stated in a previous article, the writing is on the wall for traditional energy sources. To recap quickly, the world is past peak oil, natural gas is requiring the troubling practice of fracking more and more and coal is just as limited and increasingly harder to reach as natural gas and oil. This leaves the human population with a rather simple choice: adapt to alternative energy or adopt that chic 18th century lifestyle (you’ve got a horse and carriage, right? Find an Amish/Mennonite carriage dealer if not…) and say goodbye to air conditioning, refrigerators and the like. I’m guessing we all know which way we’d prefer to go on this one.
Statistics are starting to finally bear out the fact that alternative energy is here to stay and becoming increasingly important. Please keep in mind that electricity created by dams (hydroelectric) has been around for decades without nary a naysayer which is why I question anti-wind and anti-solar types. Wind is creating 50 gigawatts (GW) or the equal of the power generated by 44 coal plants or eleven nuclear plants and solar provides 5 GW. The amount of energy created by wind and solar powers 15 million homes and supplies 300,000 jobs. It’s time to recognize the value of alternative energy and ignore politicians protecting their oil, gas and coal donors. Traditional energy producers receive over $72 billion in subsidies a year, almost 4 times what alternative energy producers get. But that will slowly change.
In a previous alternative energy article I mentioned some fuel producers. FutureFuel Corp. (NYSE: FF) is a five star stock at the Fool with all Fools with an opinion supporting it. FF is seeing revenue growth due to increased biofuel sales. From Q1 of 2011 to Q1 of 2012 revenue tripled and adjusted EBITDA almost doubled. No wonder the Fool believes this five star stock is poised to pop.
KiOR (NASDAQ: KIOR) is my risky pick in this sector at this juncture. KIOR has recently received Part 79 registration for its Renewable Gasoline Blendstock 5 by the U.S. Environmental Protection Agency. This is the last hurdle prior to sales of the product. Yes, KIOR is a one star here at the Fool and Fools are split right down the middle on whether this stock will out or underperform. Count me as a supporter because: the stock has had double-digit valuation increases this year despite supposedly gloomy outlooks, the current low valuation is most likely due to whim of sentiment and the stock can quadruple and still just reach its 52-week high.
Solazyme (NASDAQ: SZYM) is another biofuel producer that is a good buy because of valuation decreases most likely spurred on by sentiment and analyst opinions. A negative P/E ratio is combined with a valuation that is curiously close to the 52-week high. This valuation increase is most likely tied to the jump in corn prices induced by the drought. It’s a four star stock with much Fool support. Another positive factor for SZYM is a large government contract.
When considering biofuel stocks in general it is a good idea to keep in mind that the revised U.S. Federal Renewable Fuel Standard increases the requirement for bio fuel production in the U.S. to one billion gallons for 2012. Current production is in the range of 700 to 800 million gallons meaning that some producers will combine for an increase of one quarter to one third of sales. That will most assuredly have a positive impact on stocks, something smart Fools will take advantage of. Invest wisely, invest boldly and make money, capitalism wants you to.
thedeswolf has no positions in the stocks mentioned above. The Motley Fool owns shares of Solazyme. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.