BAY STREET WEEK AHEAD - MORE KEEN ON CLEAN AND GREEN
06.30.08 - Leído 20 veces. Enviar esta notaScott Haggett
With oil prices setting record highs and natural gas prices climbing to post-Katrina highs, interest in the profit potential of green energy is heating up
CALGARY, Alberta, Canada; June 30, 2008.- Wind, solar and other clean-power companies and their suppliers have garnered big attention this year. High energy prices and new technologies have helped level the playing field for clean power supplies that were once much too expensive to compete with more traditional sources, while the need to cut greenhouse-gas emissions has made solar power and biofuels more attractive.
“As energy costs go up things that allow you to either substitute energy, produce energy, or conserve energy become intrinsically more valuable,” said Duncan Stewart of Duncan Stewart Asset Management and manager of the DSAM IQ CleanTech Fund.
Canada’s headline name for the clean power trend has been Timminco Ltd, which supplies high-grade silicon for use in solar power cells. With its shares up eightfold over the past 12 months, the sometimes-controversial firm has been the leading performer on the Toronto Stock Exchange over the past year.
Other Canadian names in the green sector, which lumps environmental service firms and biofuel manufacturers with the power companies, include Xantrex Technology Inc, which makes power inverters that convert the direct-current electricity produced by solar panels into alternating current, or Vancouver’s BioteQ Environmental Technologies Inc, which makes water-treatment plants that can remove metals and sulfates from mining waste water.
More familiar may be international names such as Danish wind-power turbine maker Vestas Wind Systems A/S or solar-power heavyweight First Solar Inc, a US maker of solar modules with a market capitalization of almost US$21 billion.
“The (clean power) stocks have done well for two reasons,” said Daniel McClure, manager of Investors Group’s Summa Global Environmental Leaders fund. “A very solid double-digit growth backdrop for the foreseeable future and less transparency. Not a lot of investors are familiar with the space so as people get up the curve more research is starting to come out from traditional investment banks identifying the opportunities.”
McClure said that in some cases there is a supply squeeze going on for some of the green firms. Though many of the companies are small and still growing, the sector has been hot enough to spark institutional interest, which can see big chunks of equity held for the long term.
“There’s a bit of a scarcity premium for some of these companies,” he said. “You’ve had some very large institutions go in and buy up 10 or 15 percent of these companies. So there’s no stock available and they tend to trade at a premium multiple.”
High energy prices have also served to lift the clean power sector, with the shares sporting a solid correlation with oil. But while many of the firms have risen on the back of record oil prices, Stewart said he doesn’t expect much of a reversal in their share values should crude prices moderate temporarily.
“If oil prices go back to US$90 we will see oil stocks go down. But (clean-power firms) will probably not go down as much.”
There are still risks significant risks for the sector. Government subsidies could be lowered or utilities could be forced to cut back on spending on new solar or wind farms if interest rates rise.
“My outlook is in the short term (the stocks) could be somewhat volatile because there is so much that could impact them from a demand standpoint, a regulatory environment that’s not really controlled and the interest-rate environment,” McClure said. “But we are in the very very early days.”
(Reuters)
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