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Jonathan Yates
With Solar Energy a Nightmare, Where to Invest Now to Protect the Environment?

Going down in flames with the flags waving has never been a particularly shrewd way to invest. But for the shareholders of First Solar (NASDAQ: FSLR) and other solar energy stocks, that has been the course of action in recent market developments.  Over the last month of trading, First Solar is down about 20%.  The exchange traded fund for solar energy, Market Vectors Solar Energy (NYSE: KWT), if off more than 5% for the same period.  Another solar power energy exchange traded fund, Guggenheim Solar (NYSE: TAN), has also declined almost 5% for the last four weeks.  For those who believe in watching the actions of smart money to decide how to invest, General Electric (NYSE: GE) recently sold off its solar power assets to First Solar.

Photo: Dan Forbes

Solar power could have “its day in the sun” again as an investment.  For 2013, First Solar, Market Vectors Solar, and Guggenheim Solar are all up, after all.  But that has most likely been a function of a bull market rather than a great business performance coupled with a robust outlook.  The sale of solar power assets by General Electric is proof of that state of affairs.  As a recent article in Wired magazine by Juliet Eilperin, “Why the Clean Tech Boom Went Bust,” noted, the lower price for natural gas has decimated the alternative energy sector.  Unlike alternative energy, what has become even more alluring as an investment even with the falling price of natural gas for those seeking to both profit and protect the environment is energy efficiency.

The most promising of all sectors to reduce fuel use and bring down utility costs, energy efficiency seeks to improve on existing operations along with implementing better systems, among other actions.  It does not seek to wholesale replace current units, as does alternative energy.  As an example, Blue Earth (NASDAQ: BBLU), a leader in energy efficiency, is working on a new project to build six solar projects in New Jersey.

According to an article in the New Jersey Star Ledger by Alexi Friedman, “Blue Earth Inc. Announces $20 million in Solar Installations for N.J.,” that will be enough energy to power thousands of homes.  While Blue Earth is a direct energy efficiency play, there are other companies involved in the business with far broader lines of business.  Home Depot (NYSE: HD) and Lowes (NYSE: LOW) both sell a wide range of energy efficiency products and services.  Roofing products from Dupont (NYSE: DU) are specially designed to be more energy efficient, as another example.

This trend of energy efficiency outperforming alternative energy should easily continue.  Energy efficiency continues to be heavily desired by both public and private sectors.  Governments at all levels are mandating energy efficiency standards for new buildings.  The stocks are responding, as to be expected.  Blue Earth is now trading at a level more than 300% above its 52-week low.  First Solar, Market Vectors Solar, and Guggenheim Solar have all fallen recently. Based on prevailing market patterns, that should go on well into the future.


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