2008 - Global Alternative Energy Investing Strategy

Next Year’s Most Promising Investment Opportunities

article from:
http://top5stocks.blogspot.com/2007/11/next-years-most-profitable-investment.html

On Halloween of this year, I published a shocking prognosis of the current state of the global econo­my. In short, I presented five epic trends that are on a collision course at a single moment in history.

The five trends are:

1. The End of Cheap Oil

2. The End of US Dollar Dominance

3. The Emergence of Economic Superpowers in China and India . . . and maybe Russia

4. The Global Scramble for and Hoarding of Precious Resources, especially Water and the

Remaining Oil

5. Population Bomb - As the World's Population Hits 8.9 Billion by 2050

Each trend by itself has historic implications. But all five are happening right now.

Even though these events could have devastating consequences, each contains the potential for life-altering investment opportunities.

The End of Cheap Oil, for instance, has given birth to a burgeoning new industry, alternative energy. An industry that'll be worth over $1 trillion within ten years.

In other words, on the flip side of the "End of Cheap Oil," we see historic potential in alternative energy.

With the emergence of China and India, we see massive opportunities to invest in international markets and global equities.

And that's the premise of this report: We're going to show you where to put your investment dollars in 2008 by revealing what we consider the global macro-trends.

It's a must-read for investors of every stripe.

Enjoy,

Brian Hicks


Alternative Energy Investing, By Jeff Siegel

Editor, Green Chip Stocks

There's no denying that alternative energy is scorching hot right now.

With the reality of peak oil, energy security issues and global warming legislation - that, whether you like it or not, is happening--the demand for alternative energy integration is massive.

And it's only going to continue to grow. In fact, the combined market for biofuels, wind power, solar and fuel cells is projected to grow from $55.4 billion in 2006 to $226.5 billion by 2016. And that doesn't even include geothermal, high-performance batteries or marine energy companies.

2008 will be one of the most profitable years this market will ever see.

Momentum is strong, politicians are securing votes by embracing alternative energy integration, and oil prices are continuing to rise.

Green Chip Review readers know I know alternative energy. And more importantly, I know how to profit from the hottest sectors this industry has to offer.

So here are my top three alternative energy sectors to invest in for 2008:

GEOTHERMAL

It boasts baseload power (i.e., electricity that's available nearly 24 hours a day, seven days a week), requires no storage and is extremely clean. Plus, the growth potential is absolutely massive.

According to a recent MIT report, a cumulative capacity of more than 100,000 MW from enhanced geothermal systems could be achieved in the U.S. Currently only 3,000 MW, or about 3%, of that potential is installed.

And in May, the Geothermal Energy Association (GEA) issued a report that identified 74 new geothermal power projects in Alaska, Arizona, California, Hawaii, Idaho, New Mexico, Nevada, Oregon, Texas, Utah, Washington and Wyoming. These projects, according to the GEA, will double U.S. geothermal power capacity.

Even Alexander Karsner, Assistant Secretary for Energy Efficiency and Renewable Energy, has said that the potential for geothermal could be up in the double digits of our total national generating capacity.

We also can't forget that more and more states are initiating their own renewable portfolio standards. Currently there are 28 states, plus the District of Columbia, that have them. That's more than half the country!

And since geothermal can provide baseload power with less interruption than anything else, we expect to see more and more utilities seeking geothermal resources in an effort to help meet new renewable portfolio standards.

Even the capacity factor (the ratio of the actual output of a power plant over a period of time) for geothermal is between 89% and 97%. Coal is between 75% and 90% and wind is merely 25% to 35% (though future storage applications will certainly help the wind industry bolster its effectiveness).

It may not be the most exciting thing in the world, but we've certainly been paying close attention to these little details for a while now. We've even recommended three separate geothermal stocks over the past three years. And all boast impressive gains.

But we're not alone.

According to researchers at New Energy Finance, venture capital funneled into geothermal totaled $100 million in 2006. Five years earlier, in 2001, there wasn't a dime!

We're also starting to see some bigger institutional money backing geothermal projects. It wasn't long ago when Goldman Sachs threw $27 million into a new geothermal company in Idaho that just happens to have access to one of the largest geothermal fields in the world.

Point is, while wind, solar and biofuels have certainly taken the lead in mainstream coverage over the past few years, geothermal has barely made a peep.

But the bottom line is, the potential for geothermal integration is massive. And those who were smart enough to load up a few years ago, while no one was paying attention, are sitting on huge gains right now.

And there's still a lot of money to be made here, because the industry still has a lot of room to grow.

According to a recent report issued by the Iceland-based investment bank Glitnir, the U.S. geothermal industry will need to invest $16.9 billion over the next eight years. As a result, geothermal could provide about 20% of today's electricity needs in California. In Nevada, 60% of the state's

electricity could come from geothermal, and in Hawaii, geothermal could provide 30% of the electricity.

Glitnir also noted that sales of geothermal powered electricity could increase from $1.8 billion to $11 billion.

We expect to see both private and big money to continue piling into this sector in 2008. But we also believe the numbers will be much bigger.

The potential is too great, demand is too strong and energy supply issues are too serious for this sector to be ignored any longer.

Now, Ormat Technologies (ORA:NYSE) is probably one of the safest geothermal plays.

You may not see a doubling or tripling in share price, but the potential for a steady 20% in 2008 is very real. If you're not comfortable with speculation, but want a piece of the geothermal market, this is probably one of the best plays out there.

Ormat Technologies operates primarily in the geothermal sector. In fact, when it comes to geothermal, Ormat is the top dog.

The company has built or supplied equipment for more than 900 megawatts of geothermal and recovered energy generation (REG) power plants worldwide.

REG involves capturing unused residual heat from industrial processes and converting it into electricity that can be sold to power purchasers or used on site without any additional fuel consumption and with zero emissions.

The stock trades in the $50s right now. But I believe this stock will be trading in the $60 range no later than mid 2008. And assuming the power purchase agreements keep piling up, we should see nothing less than $65 a share this time next year.

There are also a number of smaller, more speculative geothermal plays that will get a lot of attention in 2008. These are primarily companies that are buying geothermal properties, testing wells or

actually constructing new power plants.

These are not companies that have the kind of financial strength you'll see with Ormat, but some have access to prime geothermal land and strong institutional backing.

There are currently two of these smaller geothermal companies in our Alternative Energy Speculator portfolio, and we will most likely be adding another in a few months.

Now, I'm not saying every smaller geothermal company out there will deliver, but from past experience, I can tell you that a small, "under-the-radar" geothermal company that we picked up less than two years ago has delivered big time for our Green Chip Stocks members.

The company is U.S. Geothermal (OTCBB:UGTH). And as you can see from the chart below,

members who picked up this little gem when we first recommended it at $0.90 a share are sitting on gains in excess of 450%.



I suspect there are more gems just like U.S. Geothermal out there. And in 2008, a couple of them are certainly going to shine!

ENERGY INTELLIGENCE

Electricity demand is projected to grow 19% nationwide over the next decade, but transmission capacity is expected to grow by only 6%.

And while increasing transmission capacity is certainly one way to reduce strain on overworked grids, improving their efficiency is proving to be an even more attractive solution.

With more talk about efficiency and the obvious need for grid infrastructure improvements, investment in this category grew from $192 million to $476 million in just two years. That's nearly 150%!

According to a recent Clean Edge report, energy intelligence is the second most heavily venture-invested sustainable industry, behind only biofuels.

The report also noted that "with energy efficiency and demand response high on the list of many utilities as a 'new' source of power, energy-intelligence companies may be the new darlings of energy tech."

Of course there's money to be made on the transmission side of this issue. But we believe the efficiency side will bring even greater returns.

You see, one proposed solution is the development of a "smart grid" that would enable

energy-draining appliances to adjust their power consumption based on the daily fluctuations of electricity prices.

Implementing this scheme would require the introduction of all sorts of new technology.

Things like smart thermostats that work with a building's heating, ventilation, and air conditioning (HVAC) units. These devices display up-to-the-minute energy pricing and usage data, and can adjust your system according to the parameters you set.

There are also smart meters that are constantly in communication with a utility's headquarters and substations, allowing instant grid-wide changes, constant monitoring for problems, and remote meter reading and software updating.

Opportunities in this field are only limited by the imagination.

But at the end of the day, it all boils down to how much money can be saved, and how much pollution can be averted.

One company that we really like here is Comverge, Inc. (NASDAQ:COMV).

Comverge provides energy solutions that enable utilities to increase available electric capacity during periods of peak demand, while enhancing grid reliability.

The company's demand management solutions produce no harmful emissions and are as much as 40% less expensive than building and operating a new natural gas-fired power plant, without requiring any additional investment in transmission and distribution assets.

Comverge's total future contracted revenues are now over $300 million, and its total managed capacity exceeds 1,600 megawatts.

Just to put that in perspective, the world's total capacity for installed solar systems is about 3,700 megawatts.

So, essentially, Comverge can produce about 43% of the amount of power generated by all the photovoltaic systems on earth. All without building a single power plant.

And Comverge isn't the only player in this sector.

EnerNoc, Inc. (NASDAQ:ENOC) is another young but extremely attractive demand response
company that could also see a significant rise in share price in 2008.

There are also a few smaller companies just getting started, operating primarily in niche markets. We'll be covering these in 2008 in Alternative Energy Speculator.

SOLAR

Despite the meteoric rise of solar in 2007, this sector still has a lot more room to grow.

In 2006, world production of photovoltaics (PV) grew 41% to 2,520 megawatts (MW). That correlated to the installation of 1,744 MW worldwide, an increase of 19%.

Production in 2006 was dominated by Japan, which accounted for 37% of all manufactured cells. But Germany still dominated installations, with 960 MW or 55% of the world total.

But Japan and Germany, respectively the manufacturing and installation leaders, are no longer guaranteed their spots at the top. They must now fight to maintain their positions.

Japan's output of solar modules actually shrank in the last year by 7% of its market share, while U.S. production rose 30% and that of Europe 42%. And installations in Spain were up over 200%.

Plus, it's predicted that Italy will move into the top three for installed capacity in the next three years, with Turkey and Greece also coming on strong. And the potential in the developing world is not to be ignored, either.

With demand simply outpacing supply, the solar market is shaping up to be a bull's dream, especially as cells continue to increase their efficiency and governmental incentives like the U.S.'s Investment Tax Credit (ITC) and Europe's feed-in tariffs begin to carry more weight. There's just one catch.

For the past few years there has been a relatively severe and ongoing silicon crunch. And while some experts fear this is a hindrance to the profitability of solar stocks, I tend to lean the other way.

Sure, high silicon prices can affect the profit margins of traditional cell manufacturers. That is, companies that purchase wafers (layers of solar panels) and merely cut them into individual cells to make the final module.

In 2004, the price of silicon stood at $25 per kilogram. But increased demand from computer chip manufacturers coupled with skyrocketing production of solar cells has at times sent the price soaring to over $200 per kilogram.

But with these high prices, companies that conserve silicon by manufacturing thin-film modules and companies that use technologies not dependent on silicon (or use only a very small amount) stand to create continued disruption in the marketplace.

Take, for example, First Solar (NASDAQ: FSLR), which makes thin-film panels that aren't dependant on silicon. Instead, they use a technology called Cadmium Telluride (CdTe). Its price has shown the benefits of a solar company minimizing its reliance on silicon. And early investors have cleaned up.

Within the first ten months of 2007, the stock delivered gains in excess of 400%!

But while First Solar was clearly the first big winner in thin-film, it won't be the only one.

In fact, we suspect that a good portion of the new solar companies to go public in 2008 will use

thin-film technology.

We'll also be focusing on companies manufacturing Building-Integrated Photovoltaics (BIPV).

It may sound a bit far-fetched, but we've talked to a number of engineers about this stuff.

There are already a few companies integrating BIPV commercially. One of these is actually in our Green Chip Stocks portfolio.

It's a small California company that's inked deals with major builders to provide solar-powered roofing tiles. They're also working on architectural solar glass.

We're also monitoring a few companies operating in the organic photovoltaics (OPV) arena.

This is where we see the most disruptive technology, though I don't expect we'll see significant

movement here for another couple of years.

Nonetheless, this is the next evolution of solar technology. The stuff that changes everything!

Scientists from academia and researchers from private industry unveiled some amazing

developments in early 2007 at the OPV conference at Johns Hopkins.

I can't stress enough how astonishing this stuff is.

You see, the part of solar cells that collects light and turns it into usable power is now being made on a nano-scale - 100,000 times smaller than the width of a hair on your head.

These nano-particles can be injected into flexible plastics or infused in ink and printed on any solid surface.

We're talking about being able to print solar panels as fast as your Sunday paper.

Of course, in order to even start to compete with traditional cells, these new OPVs need to obtain at least 18% efficiency.

Currently, a number of labs are achieving 6%, with expectations of 8% by the end of 2007 and 10% in 2008.

This may be a little far off for those looking for instant gratification, but ignoring the possibilities could be a huge mistake.

Let's face it: It was only a couple of years ago when thin-film technology was being brushed aside because of its lower efficiency. And look what happened to First Solar.

Eventually, we'll be able to print lightweight flexible solar cells right on the tops of cars and roofs, or inside the bricks and siding of houses.

This stuff is going to happen. We're witnessing a Wright Brothers flight for the solar industry. And you'd better believe there's a boatload of money to be made here.

We'll continue to cover the progress of OPV throughout 2008 and beyond. So stay tuned.

Jeff Siegel

Green Chip Stocks



International Investing with Global Returns

By Sam Hopkins

Editor, Orbus Investor

The world's population has nearly quadrupled in the past hundred years, and by 2050 some 90% of all humans will live in "developing" countries. Resource demands on these nations and their frail economies are enormous, and as global wealth flows downstream, billions of new consumers are

being created.

Consider the energy industry - the power behind every society's present progress and future goals. China's economy, with 11% GDP growth in recent years, is outpaced only by its appetite for fuel.

That's because for every inch China climbs towards the global economic elite, it hustles even further into the ranks of the world's energy gluttons. China will build 500 coal-fired power plants over the next decade. It's forging strong relationships with oil-bearing countries in Africa and other parts of the developing world, creating new economic opportunities there in the process.

State-owned oil company PetroChina is even set to beat Exxon Mobil to become the world's largest company by market cap, with a value of over $500 billion!

But China is also making a strong push towards renewable energy. In a Peak Oil world, one way won't do. The waking dragon is roaring onto the world stage and hedging its energy bets as it goes, creating strong stimulus for regional and international green energy investments.

In the consumer arena, the explosion of billions into the global consumer base means enormous opportunities for companies across all industries.

In the third quarter of 2007, General Motors grew its European sales numbers by 14.6% over the

previous year. In the Asia-Pacific region (including China, India and several other "tiger" economies), the company saw business jump by 15.6%. In Latin America, Africa and the Middle East, GM brought in a full 21.8% more than in Q3 2006 . . .

Contrast those whopping stats with GM's North American sales, which dropped by a full 6%!

Dry bulk shipping rates have skyrocketed since freighters are full of raw material and retail wares that burgeoning national economies crave. The benchmark Baltic Dry Bulk Index is at all-time highs,

pulling Excel Maritime (NYSE:EXM) up 400% in the past year.

Nevertheless, these kinds of stocks are ignored by some. They may say it's too risky to invest abroad, not knowing that American Depositary Receipts (also known as ADRs) of companies like PetroChina can be traded just as easily as domestic blue chips. Or, they may say that countries like India and Mexico will choke on their own smog before prosperity truly blossoms.

Hey, we've seen this soot before. England and the United States, along with Germany and France and a handful of other countries, all experienced the industrial revolution a century ago. They have learned the lessons of their "boom" phases, settling into "knowledge-based" economies that grow at a slower pace than countries currently experiencing periods of rapid growth.

What's different this time around is that the developed world recognizes the countries that used to be merely resource suppliers are now resource consumers themselves. The old guard and new wave of global capitalism suddenly find their lots cast together, and the growth opportunities even for tired American enterprises like GM are staggering.

These are western companies whose international business is growing at a rate double, even triple



that of their domestic sales.

The fresh consumers of the developing world are the most lucrative market on the planet, and

everyone's beating down the door to get access to them.

If you're just looking to plain-vanilla American stocks with a global presence as your means of getting on the international trend train, let me show you what you're missing.

Here's a chart of the NYSE:ADRE, the BLDRS Emerging Markets 50 ADR ETF (exchange-traded fund). With a blend of fifty hot stocks from all over the world, this handy fund returned 566% more than the S&P 500 index ETF (AMEX:SPY) in one year.

It's not enough simply to try to get the world to come to you. In fact, the Organization of Economic

Cooperation and Development (also called the "rich countries' club") calls what's happening right now a "rebalancing" of global wealth. With a weak dollar and unhealthily high debt levels, the United States and its resident companies are in trouble.

International governments and entrepreneurs are ready to pounce, asserting themselves not just as the world's factory forces but the primary catalysts of all-around growth.

My experience tells me that the capitalist dream is no longer exclusively American. On December 11, 2001, China joined the World Trade Organization. Vietnam followed in early 2007. Though the Cold War was fought to keep communism from spreading, even these nominally socialist societies echo the words of Chinese premier Deng Xiaoping, who said, "To get rich is glorious."

Through my travels and face-to-face meetings with citizens of the world's most momentous

economies, I find out what's next and what's most important to the vast majority of the world - those



whose yearning for comfort and financial strength is driving them forward.

I've delivered 119% one-year gains in infrastructure (a key requirement for developed and developing countries alike), telecommunications (helping to integrate rural and low-income citizens with the mesh of global financial centers), and of course energy, where one recent recommendation logged an

eight-month gain of over 270% in this long-term secular bull market that will roar well into the 21st century.

The advantage I show my readers is truly worldwide. I point out the highlights of every continent and exactly what kick each place can contribute to your own financial growth and safety.

It's international portfolio insurance, and it's a must for today's best investors.

Kind regards,

Sam Hopkins

Editor, Orbus Investor



Time to Catch the Techs

By Steve Christ

Editor, Quantum Confidential

With the housing sector falling off the cliff and the financials struggling to keep their exposure to failing mortgages buried, the technology sector remains the market's biggest bright spot.

Because, let's face it, all of the big investment stories of the last seven years are now unwinding

before our eyes, and it's not a pretty sight.

Banking, real estate, mortgages, builders--you name it--all of them are down for the count and

headed nowhere but lower, no matter what the Fed does.

That leaves the tech sector as one of the best options in these volatile markets.

In fact, just last month one of its biggest names, Google (NASDAQ:GOOG), sailed through the $700 mark, jumping nearly 34% since mid September. In that time, the Internet giant has added over $55 billion in market cap, passing one of the net's old guard, Cisco Systems (NASDAQ: CSCO), in the process.

A 46% increase in third-quarter profits and the promise of even greater returns in the future have pushed the stock to all time highs, up 731% since its IPO in 2004.

That Google story, however, is just a part of the greater picture that continues to emerge in the tech sector. That's because, to put it simply, the sector remains in serious uptrend, despite all of the bad news that continues to dog other parts of the market.

The rise in the popular PowerShares QQQ ETF (NASDAQ:QQQQ) is a perfect example of what's

going on in technology stocks. Take a look at the chart:



Since the sub-prime inspired pullback in March, the QQQ's are up 28%, outpacing both the Dow and the S&P 500 by a long shot.

So what is it about the tech sector that makes it so attractive these days?

Well, it's two things.

The first is that with housing and the financials fighting nothing but headwinds, the move towards techs is completely logical. With their strong balance sheets and inroads into the global economy, techs--at this point--just make sense.

But beyond that obvious reason there is also this: Technology stocks have always been somewhat disconnected from what's going on in the broader markets. It's just their nature.

Part of that stems from Moore's law itself.

Because to a large extent real progress on the technological side is dependent upon the progress of the chips themselves. That tends to give technology stocks a rhythm of their own, since according to Moore's law, hardware improves by a factor of one hundred every ten years, while software improves by a factor of ten.

That has helped to put the techs on something of a ten year cycle when it comes to making

market-changing advances--the kind that push share prices higher.

The last of these game-changers was the introduction of the Internet to the masses in 1996, as the technology to deliver it finally caught up with the marketplace. The bubble that followed in its wake, of course, was one for the ages.

But now, ten years later, the tech clock has begun to tick again, because Moore's law has once again delivered.

Today's faster chips and improved software have led directly to the improved performance that will usher in a new era in devices and on the net--one that might actually live up to all the hype that ruled the day in the late 90s.

This improved performance has enabled manufactures to create and improve upon various devices, from PCs and laptops to cell phones, iPods and video games. Additionally, improvements in

broadband and data compression have begun to foster a world where practically every bit of

entertainment and information will be digital.

So while the first wave of the internet ended up creating one of the biggest bubbles of all time, its

second act just eleven years later is delivering where the first one failed.

In short, the sector is putting up not just great earnings but the real prospect of future growth - and that's what the markets are really reacting to.



In fact, since the liquidity-inspired correction in mid August, the NASDAQ has completely outpaced the both the Dow and the S&P in the latest move to the upside. Since then the Naz has gained 14%, beating the Dow by 9% and the S&P by 8% over that period. And while those margins may seem small by comparison, the truth is there is more here than meets the eye.

That's because, throughout the entire length of the most recent bull market run, the NASDAQ has

absolutely lagged the other two. While the Dow and the S&P set one record after another, the

NASDAQ seemed to be merely along for the ride.

But over the course of the last few months those roles have completely reversed, as the tech-heavy index has quickly gone from third to first.

Take a look:

Of course, the NASDAQ won't likely hit its all time highs like the Dow and the S&P did earlier this year, but it does look like it's headed to 3,100 by year's end--about another 10% to the upside.

One of the ways that my subscribers have cashed in on this move has been through an investment the growth of IPTV (Internet Protocol Television). Because its growth is off the charts.

I wrote about it in January in a story titled The Triple Play is on its Way.

Its part of a much larger trend in which practically every piece of content produced will be made digital and moved online.

In fact, according to a recently released report, the number of subscribers to IPTV services worldwide grew by 179% in the last twelve months. That made for eight million subscribers, according to the data by analyst firm Point Topic. The data also showed that IPTV is no local phenomenon, either.



Europe led the way, adding three million IPTV subscribers in that period, making it the strongest

market in terms of growth, with a 231% increase, and in total subscriber numbers, with nearly five

million subscriptions as of June.

And, of course, there is always China.

That massive country has finally awarded its licenses for IPTV, which means that its market will likely grow quickly. In fact, analyst now believe subscriptions there could be over seven million within the next two years.

It's that type of fast global and organic growth in this and numerous other areas of the sector that has made tech stocks the investments of choice lately.

Hardware, software and services - you name it - this rally is taking them higher.

After all, these companies are beating the Street for a reason.

It's called growth, and it's pushing the shares of these companies to new heights. That makes the tech sector one of the best plays in the market headed into next year.

What We Expect from Gold in 2008

By Luke Burgess

Editor, Gold World

&

Greg McCoach

Editor, Mining Speculator

Gold's run-up from $250/ounce in spring 2001 to its recent (almost recording-setting) peak of $848/ounce on November 7 has been nothing short of sensational.

Gold's long-term fundamentals leave little room for interpretation. Production problems have emerged, speculative demand is surging, crude oil prices show no signs of cooling off, and the US dollar is being bombarded. These fundamentals will continue to drive gold prices during 2008.

In the short-term gold appears to be slightly overbought and we may continue to see a bit of

consolidation. But short investors, who are now exposed to losses in the billions, will likely take the opportunity to close their positions on any major dip in prices considering the overwhelmingly bullish fundamentals. This will be very supportive of gold and will help buoy a profit-taking correction.



We expect gold prices to average $775/ounce in December. The yellow metal is unlikely to spend too much time, if any, below the $750 level. From there we expect continuing price increases during 2008. After a few weeks of solidifying a price base above $800, gold will likely rise to break its 1980 record of $850/ounce. Simply based on what we see in the charts, it's likely that gold prices could even soar to over $900/ounce in mid to late 2008.

Gold prices show no signs of looking back. The long-term underlying trend remains incredibly bullish. The still developing and deepening housing and credit crises, the ailing US dollar and rising oil prices will continue to be the main drivers of a surging gold price in 2008.

Luke Burgess