by Hilary Kramer | March 11, 2014 5:00 pm
If you know me, you know that I am a big fan of game-changing companies. These are the companies that can change the way we live and thrive. When you think of innovation, technology probably tops the list, and health care is up there, too.
But don’t forget about energy. Some of the alternative sources that investors were excited about years ago haven’t become as widespread as quickly as many thought they would, but the game is changing in energy.
Think about Tesla (TSLA[1]) for a moment .The stock has shot off like a, well, race car and I think this is just the beginning. I’ve kept my eye on this company for a long time. In fact, I did something I don’t usually do and recommended it in my GameChangers service shortly after it went public in 2010.
We made a quick profit on it, gaining nearly 30% in just three weeks, and we sold because some of the big automakers were making more rumblings at that time about electric cars, and Tesla’s CEO was being talked about in the media as someone who might have been unrealistic in his expectations.
The Tesla story has been a game-changing one through and through. Back in 2010, it was the only company of its kind to not only produce a commercial, federally compliant highway-capable electronic vehicle, but to do so with style.
Electricity isn’t new, but many had tried to use it to power cars. Tesla single-handedly changed the image of electronic cars, which once were seen as clunky motorized Yugos, into iconic “made in America” objects of aspiration. Fast-forward four years, and the company is still making headlines with its strong earnings reports and new technologies to make its cars even more efficient.
You see, TSLA is part of the new-look energy sector, which has consumers and investors very, very interested. This trend is so powerful that I look for the sector to grow exponentially over the next 50 years as the world weans itself off of oil. Technological advances will enable solar, wind, nuclear and other sources to supply a significant percentage of the energy consumed. In addition, there will be equally important technologies that help traditional energy sources operate cleaner and more efficiently.
TSLA has gotten a jump on this trend, and I expect it to keep riding it for quite a while. However, while I do like the stock, it’s not the only energy play out there.
I’m also a fan of a smaller and much lesser-known company named Renewable Energy Group (REGI[2]). It is the largest U.S. producer of biodiesel, and is a strong play on the continuing march toward clean energy.
Biodiesel is made from a number of different recycled “feedstocks,” including soybean oil, cooking oils and animal fats, and the government says advanced biodiesels can cut greenhouse gas emissions from cars and trucks by 50%. Biodiesel is becoming increasingly available as an alternative to traditional diesel, which some studies claim to be more harmful to the environment (and people’s health) than gasoline. And as government mandates drive adoption, this stock is poised for solid growth ahead.
REGI has a production capacity of more than 250 million gallons of biodiesel per year, while smaller players typically produce a fraction of that tally. The company has eight plants, which it acquired over the years, and will be able to produce more than 380 million gallons of biodiesel annually once another four plant currently under construction come on line.
The alternative energy trend is growing stronger and stronger, and I’m excited about the opportunities that will come out of this exciting sector. Right now I like Tesla and Renewable Energy, but I expect many more as progress continues.
Source URL: https://investorplace.com/2014/03/top-energy-plays/
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