Three Green Stocks Set to Pop
Small Cap Investor Daily readers that caught President Obama’s State of the Union Address last week no doubt agree with him on one major point – 2010 is all about job creation. With unemployment hovering around 10%, there are simply too many Americans who are out of work. Not to mention that there isn’t enough tax revenue being generated to cover the county’s operating costs.
For an economic recovery to take hold, we need people to get back to work. The President’s rhetoric on the import of job creation began with a simple statement: “…jobs must be our number-one focus in 2010…” We knew this would be a major initiative once the New Year got underway, but last week Obama reinforced his plan to create jobs for more Americans in the coming year. And a major part of his plan is to increase investment in the renewable energy industry. I have to say, we called it pretty well on November 19 of 2009.
That week I wrote a three part series entitled ‘Renewable Energy Revitalization. I wrote that “President Obama is focused on real job creation going into 2010…job creation will be one catalyst that will bring renewable energy infrastructure back into the spotlight in 2010…There is another sector that has the backing of the government, but it's not a bailout. The sector is renewable energy infrastructure, and it is critical to the future health of our country.”
During his address, Obama said “We should put more Americans to work building clean energy facilities”. To do this he called for more production, efficiency, and incentives, as well as other investments to spur innovation in wind, solar, nuclear, clean coal, and bio-fuel technologies.
Small-cap investors should take note: this momentum should help to move the shares of several highly profitable, small-cap renewable energy companies. This sector of the market has pulled back recently, and many companies are trading at the same levels as they were in the middle of November. But despite what the stock price fluctuations may indicate, there has been increased investment in the sector.
That news comes from Ethan Zindler, head of North American research for New Energy Finance Ltd. This guy would know. Recent investments, spurred by federal incentives, include over $100 million by Citigroup (NYSE: C) and Morgan Stanley (NYSE: MS) in 2009. Behemoth General Electric (NYSE: GE) is starting to get involved again as well.
Remember that when Obama signed the American Recovery and Reinvestment Act of 2009, over $75 billion was earmarked for renewable energy investments. So despite an uptick in spending by the big boys, there is a lot more to go. But the real opportunity is still in the overlooked, and under-appreciated small-cap companies that have the potential to see their sales explode as federal incentives spur investment, and demand.
This includes A-Power Energy Generation Systems (Nasdaq: APWR), a Chinese wind turbine manufacturer that recently announced plans to build a manufacturing facility here in the U.S. to supply turbines to North American projects. A-Power’s stock has traded off its recent high of $20.55 and is now trading at only $12.21 a share and with a forward PE of less than 10. This is a great value for a company expected to increase EPS by 53% next year on a 77% increase in revenue.
I’ve been following two other stocks that are well positioned to benefit from the renewable energy revitalization. One is a solar cell manufacturer that recently grew year over year quarterly earnings by 130%. This stock is now trading 10% off its recent high and with a forward PE of only 10.
The second company provides specialized environmental services including exploration, production, cleaning, packaging, and disposal services. This company’s government contracts should help it grow revenues by over 33% in 2010.
In 2009 I put these three stocks together in an Alternative Investing Special Report that went out to subscribers of Small Cap Investor PRO. Since I recommended them, shares have traded higher for two of the three companies, with one posting a return of 34% even after the market’s retreat the past three weeks. But this pullback has created attractive entry prices right now. And I expect Obama’s push for renewable energy investment is going to help these stocks rally in February. In fact, just this morning it looks like shares are already heading higher.
If you would like to learn more about these companies, I encourage you to begin a trial subscription to Small Cap Investor PRO. You can likely cover the cost of a yearly subscription within just a few weeks of investing in my favorite stocks. Plus there is absolutely no risk when you sign up for a trial subscription. Just click here to find out more about how you can get started with Small Cap Investor PRO today. When you sign up you’ll immediately have access to my Alternative Energy Special Report.
It’s all about job creation in 2010. We’ve gotten that message loud and clear. And these three high-growth but under the radar small-cap stocks could be excellent ways to play the push.
