If I Had the Energy, I'd Invest in this Sector (Seattle P-I)
"If you are inclined to take a flier on an investment, might we suggest not a specific stock but a specific sector: energy." --Bill Virgin, P-I columnist.
by Denis Du Bois
September 28, 2006
September 28, 2006
Virgin wasn't writing about utilities, or cutting-edge alternative energy sources, in his Seattle Post-Intelligencer column "If I had the energy, I'd invest in this sector."
He was referring to infrastructure construction companies and manufacturers of pipe, wires, turbines and the like. Virgin cited several reasons:
- Record high temperatures in the West.
- BP's pipeline problems.
- Grid congestion in the Northwest.
- Bonneville's 2011 allocation plan.
- Wind power activity, including plans of Puget Sound Energy.
- Natural gas pipelines under discussion from Alaska.
- LNG terminal under discussion for Oregon.
He said this gold rush of activity could be good for the stocks of companies that supply the picks and shovels.
"All of which promises to be great news for utility construction companies and manufacturers of pipe, wires, turbines and all the paraphernalia that falls under the umbrella of infrastructure. More demand equals higher prices as utilities get their orders in and backlogs build...they'll also have to deal with maintaining or replacing older facilities. And if measures pass such as Washington's proposed Initiative 937, which mandates the amount of "renewable" resources utilities have to use, that will help increase the demand for -- and the price of -- wind turbines and the like."
He also notes that it's the utility ratepayers who will pay for all the new construction and maintenance, so they might as well make a little money back in the stock market.
Comments
In the UK, one journalist acknowledges alternative energy growth, but has doubts about the viability of biofuels:
"American solar power companies attracted $150m of venture capital last year, twice as much as in 2004. The much bigger global wind power market could grow from last year's $11.8bn to nearly $50bn during the next 10 years, it has been estimated. Henderson Global Investors thinks worldwide investment in renewable energy projects could grow fivefold to $100bn a year by 2015. With numbers like that being bandied around, no-one wants to play party pooper, but sceptical voices are starting to make themselves heard. And nowhere more loudly than around ethanol, currently the hottest ticket in alternative energy investment."
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/08/08/ccinv08.xml
Posted by: DD | September 28, 2006 06:46 PM