Investing in Cleantech

Written By Nick Hodge

Posted December 31, 2007

In the anticipatory week since Christmas, it seems every news, financial and other media outlet has gone to great lengths to issue their annual lists of superlatives, both best and worst.

And in an effort not to break the mold, I figured I’d do the same. But, of course, I want to talk about water and renewable and alternative energy superlatives–of which there are many.

Let’s start with just a basic market overview. The Wilderhill Clean Energy Index (^ECO) out performed the Dow Jones Industrial Average (^DJIA ) by about 50% for the year. Take a look at the chart below:

Comparison: Wilderhill Clean Energy Index (ECO) versus Dow Jones Industrial Average (DJIA)

But the Dow wasn’t only the major index that was outperformed by so-called alternative investments. The NASDAQ Clean Edge US Index (^CLEN) outshone the S&P 500 Index (^SPX ) in similar fashion, as evidenced by the following chart:

Comparison: NASDAQ Clean Edge US Index (CLEN) versus S&P 500

And I’m not done yet. Even alternative ETFs outperformed many of Wall Street’s favorite investment sectors. The PowerShares Cleantech ETF (AMEX: PZD ) made investing in oil and gas look silly as it topped the AMEX Oil Index (^XOI) by some 14%. Take a look:

Comparison: PowerShares Cleantech ETF (PZD) versus AMEX Oil Index (XOI)

And if you stack that oil and gas industry index up against the renewables indices mentioned earlier, it looks even worse. In each of those cases, indices connected to the cleantech sector outperformed their fossil counterparts by well over 40%.

I guess all the hype surrounding high oil translated into even higher gains for those looking to hedge against not only high energy prices, but against rising social concern over emissions and foreign sources as well.

And individual stocks in the clean space shone as well, compared to their often media-soaked opposites. All year we’ve heard about Suncor Energy Inc. (NYSE: SU ) and how it’s the pure play to dominate Canadian oil sands action.

But what about First Solar, Inc. (NYSE: FSLR ), which made Suncor look deader than a bag of hammers? You can see who came out on top in the following chart:

Comparison: First Solar Inc (NYSE: FSLR) vesrsus Suncor Energy (NYSE: SU)

While you could’ve made 50% or so by playing Suncor, you might have pulled in the 800% that First Solar delivered in just one year!

Or the 386%, 220% and 150% Green Chip Stocks delivered on WorldWater & Solar Technologies Corp. (OTC: WWAT ), US Geothermal Inc. (OTC: UGTH ) and Raser Technologies, Inc. (NYSE: RZ ), respectively.

Take a look at just those first two (black and blue) when compared to the PHLX Gold and Silver Index (^XAU):

Comparison: WorldWater & Solar (OTC: WWAT), Raser Technologies (NYSE: RZ) and AMEX Gold Index (XAU)

I’d say there’s a clear winner there as well. And that’s with gold trading up at $840 per ounce.

I do hope you were part of Green Chip Stocks to take advantage of those gains. Because, day after trading day, we’re realizing the returns of the companies benefiting from serious world energy and climate issues.

Don’t be fooled by the mainstream media, oil and gas tycoons or the nostalgic view of how to get rich on The Street. Today’s money is being made in clean and renewable energy. The charts above illustrate that, plain as day.

To come along for the ride in 2008, as the energy crisis heats up and we get a change of political leadership, click here.

Happy New Year,

nick hodge


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