Vestas Wind Systems is by far the largest manufacturer of wind turbines, but General Electric and Siemens both have large wind energy operations (with 8400 and 6600 respective installations worldwide). GE and Siemens have been hurt during the recent financial crisis, especially General Electric. GE is one of the most diverse companies in the world, but the stock price was battered by the difficulties at GE Capital. Siemens announced a plan during the summer to lay off over 17,000 employees worldwide to cut rising costs. Although the wind power divisions in both companies are appealing, they make up only a small portion of overall operations. You must invest in each company as a whole and performance hasn’t been good as of late.
General Electric’s turbine size ranges from 1.5 to 3.6 megawatts. Siemens has units ranging from 1 to 3.6 megawatts. Neither company is particularly detailed on the specifications of their turbines, most likely due to proprietary technology. Both companies install units for on and offshore use, and offer similar services to customers.
At the current time, both General Electric and Siemens are trading just up from their 52-week lows. Year to date the companies are each down over 50%. Even though this article is about wind energy, as an investor you cannot ignore the other business areas of these two companies. Both are large conglomerates and wind power is only a small part of each. GE and Siemens have attractive dividend yields and good historical performance. Look for these companies to rebound when industrials and the market have an upswing.
Sunday, December 14, 2008
Green Collar Jobs
The terms blue collar and white collar worker have been around for quite some time, but a recently emerging adage is the “green collar” worker. If blue collar refers to manufacturing and industrial laborers and white collar refers to 9 to 5 office workers, what does green collar mean? It must have to do with forestry or conservation, right? It can, but there are many emerging careers paths in green collar employment.
The demand for green collar workers has been increasing over the last few years. The jobs in the sector as a whole can vary greatly, ranging from manufacturing to office support functions, with many different jobs in between. Manufacturing jobs include factory work at alternative energy companies, such as solar panel technician. Office jobs in the industry include budgeting for green projects and carbon accounting.
It is likely that there will be a shift in employment distribution, bringing white and blue collar workers to green industries over the next few years. Similar job function and employment training will make transition easier. Some universities are even offering green or sustainable MBAs, where studies include environmental economics, green marketing, and sustainable management. Not many schools offer sustainable MBA programs at this time, but the programs are growing and are destined to before more mainstream. The industry growth will help America’s job market and provide new careers for individuals from many different backgrounds.
The demand for green collar workers has been increasing over the last few years. The jobs in the sector as a whole can vary greatly, ranging from manufacturing to office support functions, with many different jobs in between. Manufacturing jobs include factory work at alternative energy companies, such as solar panel technician. Office jobs in the industry include budgeting for green projects and carbon accounting.
It is likely that there will be a shift in employment distribution, bringing white and blue collar workers to green industries over the next few years. Similar job function and employment training will make transition easier. Some universities are even offering green or sustainable MBAs, where studies include environmental economics, green marketing, and sustainable management. Not many schools offer sustainable MBA programs at this time, but the programs are growing and are destined to before more mainstream. The industry growth will help America’s job market and provide new careers for individuals from many different backgrounds.
PowerShares Alternative Energy ETFs
An earlier article discusses the Ardour Indexes, which model various areas of the alternative energy industry and are weighted based on market capitalization. The Van Eck GEX ETF models the Ardour Global Index as accurately as possible, but the company PowerShares has a few products which also model areas of alternative energy. WilderShares, LLC. is a company that tracks various areas of alternative energy. Unlike the Ardour Indices, WilderShares Indices are not based on the overall market capitalization of the companies that comprise it. According to the WilderShares website, no single stock will make up more than 4% of an index at the start of a quarterly rebalance.
PowerShares WilderHill Clean Energy Portfolio- PBW
The PowerShares WilderHill Clean Energy Portfolio (PBW) aims to replicate the WilderHill Clean Energy Index (of course before any fees). The index is currently made up of 53 different stocks, which get rebalanced and reevaluated every quarter. The index has companies in the power generation, clean fuels, energy storage, and other alternative energy related industries. To be included in the index, the stock must trade over $1, have a three month average market capitalization over 50 million, and have significant exposure to the alternative energy industry. PowerShares replicates this index with PBW, which is down significantly year to date obviously due to the poor market conditions and sector performance.
http://www.invescopowershares.com/products/overview.aspx?ticker=PBW
PowerShares Global Green Energy Portfolio- PBD
The Global Green Energy Portfolio (PBD) is based on the WilderHill New Energy Global Innovation Index. The index tracks worldwide clean energy companies, but has a global focus. It is similar to PBW above but a larger portion of the index is made up of international companies. The Global Green Energy ETF has less than 30% of its allocation in U.S. companies.
http://www.invescopowershares.com/products/overview.aspx?ticker=pbd
PowerShares has many different investment products to model various sectors and industries. The two mentioned in this article are both in the red for the year, but they are excellent representations of the alternative industries as a whole. Before considering investing, look at the links to see holdings in each ETF.
PowerShares WilderHill Clean Energy Portfolio- PBW
The PowerShares WilderHill Clean Energy Portfolio (PBW) aims to replicate the WilderHill Clean Energy Index (of course before any fees). The index is currently made up of 53 different stocks, which get rebalanced and reevaluated every quarter. The index has companies in the power generation, clean fuels, energy storage, and other alternative energy related industries. To be included in the index, the stock must trade over $1, have a three month average market capitalization over 50 million, and have significant exposure to the alternative energy industry. PowerShares replicates this index with PBW, which is down significantly year to date obviously due to the poor market conditions and sector performance.
http://www.invescopowershares.com/products/overview.aspx?ticker=PBW
PowerShares Global Green Energy Portfolio- PBD
The Global Green Energy Portfolio (PBD) is based on the WilderHill New Energy Global Innovation Index. The index tracks worldwide clean energy companies, but has a global focus. It is similar to PBW above but a larger portion of the index is made up of international companies. The Global Green Energy ETF has less than 30% of its allocation in U.S. companies.
http://www.invescopowershares.com/products/overview.aspx?ticker=pbd
PowerShares has many different investment products to model various sectors and industries. The two mentioned in this article are both in the red for the year, but they are excellent representations of the alternative industries as a whole. Before considering investing, look at the links to see holdings in each ETF.
Chinese Solar Manufacturers
Past entries discussing solar energy have featured domestic companies, but there is a very large market for solar energy in Asia, particularly China. Numerous manufacturers base their operations in China, such as Yingli Solar, Solarfun, and Suntech Power. There are a few successful Chinese solar companies, but there are many small somewhat unknown firms as well.
Suntech Power had a very successful IPO in 2005, the stock was trading near $100 at the start of the year but is currently below $10. Solarfun is also down over 50% since its IPO in December 2006. Many Chinese solar companies look for a big debut through an IPO, much like during the internet stock boom of the late 1990s. Currently, solar companies abroad and domestic have been struggling due to the economic problems and decrease in oil prices.
As attractive as some of these companies may seem at the current discount, the Chinese solar industry is a speculative investment at this time. Many of the companies are largely unknown to US investors, and it’s difficult to assess the financial strength of the firms. The companies do have financial statements and data on sites like Google Finance and Yahoo! Finance, but the coverage on domestic companies by financial analysts is much more detailed. There are currently a few solar companies in China that will more than likely be successful, but the current financial turmoil makes it too early to tell.
Suntech Power had a very successful IPO in 2005, the stock was trading near $100 at the start of the year but is currently below $10. Solarfun is also down over 50% since its IPO in December 2006. Many Chinese solar companies look for a big debut through an IPO, much like during the internet stock boom of the late 1990s. Currently, solar companies abroad and domestic have been struggling due to the economic problems and decrease in oil prices.
As attractive as some of these companies may seem at the current discount, the Chinese solar industry is a speculative investment at this time. Many of the companies are largely unknown to US investors, and it’s difficult to assess the financial strength of the firms. The companies do have financial statements and data on sites like Google Finance and Yahoo! Finance, but the coverage on domestic companies by financial analysts is much more detailed. There are currently a few solar companies in China that will more than likely be successful, but the current financial turmoil makes it too early to tell.
Chesapeake Energy Issues New Shares, stock diluted.
Chesapeake Energy announced Friday November 28th that they filed forms with the SEC seeking to issue up to 50 million new shares of stock. This could raise up to $1 billion in capital for the company. The share price dropped over 15% during Friday’s trading session with the news of the possible new issuance. The company has been struggling over the past few months due to falling oil and natural gas prices. The new shares will most likely be issued in 2009.
Although the company has issued new shares of its stock many times in the past, the news hit the stock hard because Chesapeake also stated that they were having cash flow problems and may have trouble paying off future debts. Deutsche Bank, one of the underwriters of the new shares, claims that the new issuance is not being done because of cash problems. Deutsche Bank also stated that if the shares were issued today, it would give Chesapeake Energy a 17% expansion in share count. Although the new shares would dilute the current equity, it would provide the firm with around $1billion in cash (given the current market price). Chesapeake also recently sold domestic shale assets to Norwegian company StatoilHydro ASA for $3.38 billion.
When a company issues new stock, it will unavoidably dilute the current shares in the market. Chesapeake Energy is still rated a buy by numerous analysts who have looked at the company’s long term growth potential. The company will look to rebound as the demand for natural gas increases and fuel prices stabilize.
Although the company has issued new shares of its stock many times in the past, the news hit the stock hard because Chesapeake also stated that they were having cash flow problems and may have trouble paying off future debts. Deutsche Bank, one of the underwriters of the new shares, claims that the new issuance is not being done because of cash problems. Deutsche Bank also stated that if the shares were issued today, it would give Chesapeake Energy a 17% expansion in share count. Although the new shares would dilute the current equity, it would provide the firm with around $1billion in cash (given the current market price). Chesapeake also recently sold domestic shale assets to Norwegian company StatoilHydro ASA for $3.38 billion.
When a company issues new stock, it will unavoidably dilute the current shares in the market. Chesapeake Energy is still rated a buy by numerous analysts who have looked at the company’s long term growth potential. The company will look to rebound as the demand for natural gas increases and fuel prices stabilize.
Wednesday, November 19, 2008
While watching CNBC over the summer, one would have certainly seen commercials about T. Boone Pickens’ energy plan. The oil magnate made his fortune in the 1980s in various takeover and buyout operations and is currently advocating the use of domestic and alternative energy. Pickens is pushing the use of wind farms for electricity generation and natural gas for use as a transportation fuel.
The plan calls for two big changes in domestic energy production. The first is eliminating natural gas as an electricity generation fuel and using it for transportation. Natural gas is highly available domestically and could be widely used for transportation. The second change is the use of wind power for electricity generation. Pickens looks to build wind farms in rural areas throughout the United States, which would free up natural gas supplies for use as a transportation fuel. Although natural gas is fairly cheap and abundant, it is much more valuable if used as a transportation fuel.
Pickens Plan is fairly simple in context, but the implementation will take a great deal of time and effort. Pickens has already invested $2 billion in wind turbines for delivery in 2010, but the project has been temporarily halted due to the decrease in oil prices the past few months. A hurdle to the initiative is inadequate electric grid infrastructure for the widely dispersed wind facilities. Further, natural gas turbines play an important role in managing short term demand variation on the power grid in a way wind, nuclear and coal power cannot.
http://greeninc.blogs.nytimes.com/2008/11/12/pickens-delays-his-plan/
If you are looking to support the Pickens Plan, you can join his New Energy Army below. He is currently looking for 2 million supporters by inauguration day with a goal of having a new energy plan within 100 days of the new president taking office.
http://www.pickensplan.com/act/
(image from pickensplan.com)
Saturday, November 15, 2008
Vestas Wind Energy
Vestas Wind Systems A/S is not a household name in the United States, but the Denmark based company claims to be the largest modern energy producer in the world, with a market share of 23 percent. Vestas refers to wind energy as “modern energy” because it is clean, predictable, and renewable. Vestas, by far the largest alternative energy company in the world, makes up almost 20% of the Ardour Global Index, with First Solar being next comprising around 10% of the index. Vestas has installed over 35,000 turbines in 63 different countries and installs a new unit every four hours on average. .
Vestas manufactures various wind turbine models; the main components are made in Denmark. The largest turbine the company makes is the 3 Mw V90. It’s advanced materials and design makes it lightweight and more efficient than previous models. Vestas units have been hooked up for grid compatibility as well as used for offshore and rural applications. On the website, one can see the breakdown of where Vestas units have be installed throughout the world. So far, there are 9,641 Vestas turbines in the United States today creating over 5000 Mw of power.
Currently, Vestas Wind Systems A/S trades on the stock market in Copenhagen under the symbol VWS. There are two ADRs where one can purchase Vestas stock domestically under the symbol VWDRY and VWSYF, but only around 500 million shares are outstanding with an average daily volume of a little over 100,000 shares. VWDRY is one third of a share of VWS so its quote is one third the price. Many individuals may not recognize Vestas domestically, but the company is leading the pack in the alterative energy market. The ADRs have faired much better than other alternative energy stocks over the past few months and will continue to do well in the future.
Sales are strong, the company is expanding, and products are on backorder. However, Vestas stock has dropped nearly 70% over recent months, along with many other additional alternative energy companies. The company's stock may be a bargain at this time because of the quality of product and future growth opportunities.
Vestas manufactures various wind turbine models; the main components are made in Denmark. The largest turbine the company makes is the 3 Mw V90. It’s advanced materials and design makes it lightweight and more efficient than previous models. Vestas units have been hooked up for grid compatibility as well as used for offshore and rural applications. On the website, one can see the breakdown of where Vestas units have be installed throughout the world. So far, there are 9,641 Vestas turbines in the United States today creating over 5000 Mw of power.
Currently, Vestas Wind Systems A/S trades on the stock market in Copenhagen under the symbol VWS. There are two ADRs where one can purchase Vestas stock domestically under the symbol VWDRY and VWSYF, but only around 500 million shares are outstanding with an average daily volume of a little over 100,000 shares. VWDRY is one third of a share of VWS so its quote is one third the price. Many individuals may not recognize Vestas domestically, but the company is leading the pack in the alterative energy market. The ADRs have faired much better than other alternative energy stocks over the past few months and will continue to do well in the future.
Sales are strong, the company is expanding, and products are on backorder. However, Vestas stock has dropped nearly 70% over recent months, along with many other additional alternative energy companies. The company's stock may be a bargain at this time because of the quality of product and future growth opportunities.
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