Beating Obama's Green Gamble

It's Time to Buy

By

“We're driving right off a cliff, and it gets worse each day.”

My colleague's observation yesterday morning wasn't in regards to the looming fiscal cliff currently dominating media headlines...

It was a reaction to the post-election performance — or lack thereof — of the market.

Since the election results were announced last Tuesday night, the Dow has dropped more than 5%, falling six of the past seven days. And things don't look much better today.

Those aren't the kind of odds you want in your corner as an investor.

Surely, there must be a silver lining in our president's successful bid for reelection... maybe a sector that had a huge stake in his victory?

Actually, there is. If nothing else, certainly renewable energy should see a boost.

But do you really want to put your money behind Obama's wager on green energy?

I'll leave that one up to you...

The Green Gamble Fizzles and Flutters

Contrary to popular belief, the post-election market blues extended to the renewables industry...

Turns out green investors had just as much trouble finding support:

green stock losses

And the Energy Information Administration's Short-Term Energy Outlook, released on Election Day, didn't help matters.

The EIA reported an overall decline for renewable consumption by as much as 2.6%.

The loss is mostly due to a decrease in hydroelectric power, which, according to EIA, “... more than offsets the projected growth in the consumption of other renewable energy forms.”

As for Obama's great green hopes next year, it's not looking good...

renewables supply growth

Now, we may not see a real renewable renaissance for decades to come, but one thing is clear...

Things will get worse before they get better.

Take a look at wind, which has been growing rapidly over the last decade. Last year wind power grew by 27%. This year it's expected to fall to 16%.

Even despite that slight decline, there's another, bigger issue for your wind stocks to deal with...

When the ball drops in Times Square this year, it'll mark the end of a tax credit for any turbines that begin operating in 2013. The tax credit offers companies 2.2 cents for every 1000 watts, and has been in place since the first Bush took office...

Wind's growth rate will continue falling without an extension.

Are you willing to put faith in Congress' ability to come together?

It also means companies may have to cut nearly 40,000 jobs. Vestas Wind Systems, which has already cut loose thousands of employees this year, is ready to add another 3,000 people to that list.

In the wake of Obama's market bomb, is there any good news for us to take to the bank?

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Don't Bet Against This Winner

For the last six months, there has been a promising opportunity quietly developing — one that's destined to move higher, no matter who controls the White House.

In fact, "quietly" may be a bit of an understatement (click charts to enlarge):

6 month natural gas price

Notice the up-tick in early November?

Now take a look at the past week:

natural gas 1 week

While everything else seems to be in free fall since November 6, natural gas prices have jumped over 7%.

I told you recently that natural gas is the only sure bet in energy, and we're still early in its recovery.

It holds a long-term value that you can't find anywhere else right now. And we're not the only ones to recognize this...

Almost half the deals made by MLPs in the oil and gas sector have been based on natural gas reserves. Some of the bigger players, like Cabot Oil and Gas, are trading at all-time highs:

COG 11-16

Want more bang for your investment buck?

Don't just look for the companies that produce natural gas...

Pay attention to those that will develop the infrastructure that will allow us to utilize this cheap, abundant resource. These plays aren't yoked to natural gas prices; they don't need prices to double for you to potentially triple your investment.

One of my colleagues, Christian DeHaemer, outlines the entire operation for you in his detailed investment report.

Mark my words: 2013 is going to be a banner year for natural gas profits.

Until next time,

Keith Kohl Signature

Keith Kohl

follow basic@KeithKohl1 on Twitter

A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.


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