2013 Alternative Energy Stock Predictions
Will Natural Gas Crush Alternative Energy in 2013?
In 2004 a hotshot Wall Street type cornered me after I spoke at a private luncheon in New York.
He told me I had a lot of balls wasting his time talking about alternative energy — declaring he was an “important man” who didn't find it amusing that some tree hugger in a suit (yes, that's what he called me) would lecture him about a coming boom in solar...
I never forgot that guy. In fact, over the years I had hoped to run into him again, just so I could remind him that not only was I 100% right about and made a fortune as a result of the solar bull market from 2005 to 2008, but that he was also kind of an asshole.
Of course, it's not healthy to hold grudges. And quite frankly, after all these years my success in playing the modern energy space more than makes up for my inability to engage him in a spirited debate back then, when I was still fairly new to the public speaking circuit and hadn't quite built up the confidence to take on guys like him.
Since then, I've come to realize that a lot of these Wall Street guys — with their overpriced suits and overpriced educations — aren't any smarter or any more “in-the-know” than you are.
In fact, when push comes to shove, most of these guys are completely clueless...
Especially when it comes to the world of modern and alternative energy.
This is why a lot of the same guys who trivialized my analyses back in 2004-2005 now regularly read these pages and invite me to speak at their conferences...
Next week I'll be at a private meeting in New York where I'll be discussing some of my predictions for 2013. Here's a preview...
Electric Cars Ride Steady
Electric cars will remain the target of naysayers and partisan slaves in 2013.
Sales will be light, but not nearly as dismal as many continue to suggest — particularly given the higher pricing that typically comes with any new, game-changing technology.
Early adopters will continue to move these things out of showrooms and onto highways at a pace that is actually faster than what we saw with the conventional hybrids back in the late 90s.
Every major carmaker will have electric and plug-in hybrid electric vehicles in production or on the road, but battery technology will not progress much next year outside of the lab. I don't expect to see much improvement on miles-per-charge as it relates to battery technology; most increases here will likely be the result of lighter-weight materials, body design, and software developments.
Either way, while these increases will be valuable, they won't tack on the additional 80 to 100 miles — nor will they provide the cost reductions necessary to facilitate the next wave in consumer interest, taking us away from early adopters and onto the early majority. I don't expect to see that unfold for at least another five to six years.
In the meantime, fleets will also steadily add electric vehicles to the mix, particularly in regions where gas and diesel prices are exceptionally high. Sales won't be so strong that it'll move the needle much, but it'll definitely help automakers move inventory and gain visibility in the marketplace...
On the political front, it won't matter who wins the next election. Although Romney will talk a good game when it comes to ending those very generous tax credits for electric vehicles, he won't have enough support in Congress or from the auto industry to make it happen.
Solar Stocks Struggle to Survive
Solar investors looking to hit it big this year will be disappointed.
Most solar companies (primarily panel and cell manufacturers) will continue to suffer another year of unpleasant margins.
China will continue to pump more money into its solar industry which will result in two things:
First, solar prices will continue to fall, albeit probably not as fast as we saw in 2012. This will benefit solar installers that are making a killing right now in the United States. Installation growth will remain strong, particularly with all these new solar leasing companies that are breaking records on both commercial and residential installations.
Worth noting is SolarCity, one of the largest and most successful solar leasing companies in the nation. It's set to go public this year, and will trade under the symbol SCTY.
Second, with so much cash being pumped into China's solar industry (just to keep it afloat), we're definitely seeing the stage being set for a massive implosion. China's solar industry ATM machine is working overtime, and it's doing so while the world is clearly starting to see visible cracks in China's economy.
China solar companies will continue to pump out cheap solar in 2013, but they'll be among the first casualties when the house of cards comes crashing down.
For investors, solar will remain tricky. The most lucrative opportunities in 2013 will continue to be in those small niche tech sectors and in installation. The latter could prove to really launch the SolarCity IPO, so definitely watch that one carefully.
Wind Energy Blues
In the absence of the wind energy production tax credit, the U.S. wind industry will absolutely stall in 2013.
In fact, you can pretty much kiss the domestic turbine industry goodbye next year... Layoffs will continue, and aside from GE (NYSE: GE) and Siemens (NYSE: SI), most shops will be mothballed until a new mechanism is introduced to jumpstart the industry again — or subsidies for oil, gas, and nuclear are phased out. And that's just not going to happen.
Of course, there's not much left for investors in this space now, any way. And publicly-traded wind development companies that are already operational, like Western Wind Energy (TSX-V: WND), will be fine, as they won't be affected by the loss of the production tax credit.
In fact, Western Wind is currently finishing up construction on a new project while its older projects are actively generating revenue via long-term power purchase agreements with the utilities. The company's also now selling off its assets, which we believe will get the stock up to at least $3.00 a share. The timing on this one is actually pretty spectacular.
It's Good to Be King
Natural gas will remain king in 2013. And while it will continue to be dirt cheap, prices will start inching back up next year.
Also worth noting is that going forward, we're definitely going to see more trucks and buses running on natural gas.
We're also going to see approval on exports. The economics on exports are just too juicy to ignore.
Those who are properly positioned now in natural gas are going to see some nice, steady growth in 2013.
Domestic oil production will also remain strong, offering dozens of opportunities for investors. I'm particularly fond of some of the latest enhanced oil recovery technologies, like this one that's now being utilized by BP, Chevron, and Halliburton.
North Dakota will continue to pump out oil fortunes as well, and Arctic drilling will aggressively resume next year when the season starts up again.
Although I suspect to see more delays and more proof that the economics of many of these Arctic drilling operations simply don't make sense right now... And I don't even want to think about an oil spill up there, where it will be impossible to properly clean it up or control a gushing wellhead.
But you know how that goes... The bureaucrats and oil companies will worry about that when it happens. Brilliant!
Regardless, the Arctic drilling experiment will continue in 2013. But I'm putting my money on enhanced oil recovery and domestic operations in North Dakota for the big payday.
These are just a few of our predictions that we'll use to dictate our strategy in 2013.
Of course, nothing is set in stone...
Major geopolitical events, social unrest, economic recovery revisions, acts of God — all of these things can make us change course at any given time. We must be nimble.
Rest assured, either way — no matter what unfolds in 2013 — we will continue to grow and protect our wealth.
To a new way of life and a new generation of wealth...