Daily Gains Letter

Four Companies Rewarding Patient Investors

By for Daily Gains Letter |

Patient InvestorsThere’s more to renewable energy than just wind and sun. And thank goodness for that, because our interest and investment in traditional renewable energy sources like solar panels and wind farms seems to be on the decline.

The amount spent on deals to finance clean energy and efficiency projects tanked 12% in 2013 to $254 billion—a quicker pace than the 9.1% drop in 2012 from a record level of $318 billion in 2011. (Source: Goossens, E., “Clean Energy Support Falls Again to $254 Billion in 2013,” Bloomberg, January 15, 2014.)

The drop in investment and interest in traditional renewable energy sources is a setback when you consider annual investments in renewable energy sources need to double to $500 billion by the end of the decade—and then double again to $1.0 trillion by 2030. That represents a huge clean energy investment gap.

Decreased interest in some renewable energy sources also comes on the heels of the discovery of abundant sources of non-renewable energy, like shale oil. And since we don’t really like change all that much and prefer the path of least resistance, our dependence on non-renewable energy sources like oil is not going to diminish anytime soon. That said, the scales will eventually tip in favor of renewable energy sources.

With that in mind, when it comes to your investments, some analysts recommend allocating five percent of your retirement portfolio to clean energy.

After years of silence and disappointing investors, optimism on the heels of a number of large contracts are helping companies that make fuel cells reward really, really patient investors.

Plug Power Inc. (NASDAQ/PLUG) got the fuel cell spark going after it announced a number of high-profile contracts, including an order for 1,700-plus fuel cell units from Wal-Mart Stores, Inc. Since the beginning of February, Plug Power’s share price has soared roughly 270%. That said, profit-taking and prevailing sanity has unplugged the tear on its share price.

After a long, slow 14-year descent, Ballard Power Systems Inc. (NASDAQ/BLDP, TSX/BLD) is showing signs of life. The company’s share price has been on a tear since reporting strong fourth-quarter and year-end 2013 results and predicting elusive profitability as early as this year. Over the last month, Ballard Power’s share price has soared more than 250%. The company gets roughly 10% of its revenue from Plug Power Inc. and 25% from Volkswagen AG. With Ballard Power’s share price ripe for profit-taking, many think long-term corporate growth will only come when automakers start using fuel cells en masse, and usage from telecommunications companies increases.

FuelCell Energy, Inc. (NASDAQ/FCEL) makes large power systems that generate electricity for campuses, factories, and utilities. The company recently announced solid first-quarter revenue growth and narrowed losses. On top of that, the company announced the completion of the world’s largest fuel cell park in South Korea and the largest fuel cell park in North America. Meanwhile, it is expected that the fuel cell energy power plant in London will be commissioned during the second quarter of 2014. The company’s share price has climbed 145% since the beginning of March, but it is currently in the throes of profit-taking.

With all three fuel cell companies realizing strong gains in a short period, it shouldn’t be a total surprise to see them giving up some solid ground to profit-taking. This gives patient investors more than enough time to do their own research in these and other fuel cell companies—like Power Solutions International, Inc. (NASDAQ/PSIX). It also gives investors time to decide for themselves whether or not fuel cell stocks should find a place in their investment portfolio.

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