Tuesday, August 25, 2009

Energized Portfolios: Five Power Picks

SmartMoney Magazine by Elizabeth O'Brien (Author Archive)

T. Boone Pickens grabbed headlines last year by adding wind energy to his ongoing investments in the oil patch. But across the country, investors who are not quite as famous are mimicking a new, pragmatic approach to energy investing—call it the have-it-both-ways tack. On the one hand, they’re continuing to invest in the traditional energy that will likely power our cars, heat and light homes, and run factories for decades to come. But they are also hedging those bets by plowing assets into greener and cleaner technologies.

It’s a strategy that echoes what some Big Oil companies are doing, from BP, which has spent $3 billion over four years on wind, solar and biofuels, to Exxon Mobil, which is spending $600 million on research into biofuels. Even some utilities are taking the dual approach, operating old-fashioned coal and oil-fired plants while sinking money into wind turbines and solar-energy farms.

Schlumberger (SLB)
The Houston-based oil-services firm helps customers—mostly major Big Oil firms, like Exxon Mobil—find and extract oil by setting up wells and maximizing their efficiency. About three-quarters of Schlumberger’s $27 billion in annual sales comes from outside the U.S.

The Houston-based company won’t drill unless oil is at least $40 a barrel and natural gas is at least $4.50 per million BTUs. So these days Apache (APA: 88.36, -0.51, -0.57%) is looking for oil but putting much of its search for natural gas on hold. But investors who have watched the company for years point to its long-term record of boosting production and reserves, through both acquisitions and efficient operations.

First Solar
This year it plans to double its worldwide production, manufacturing enough solar panels annually to provide about 1,000 megawatts of electricity. Analysts say this should give First Solar (FSLR: 124.08, +2.54, +2.08%) an edge, as solar technology evolves from a niche product to a more widely used energy source.

When New York State needed help unsnarling the state’s crowded roadways, officials turned to Telvent (TLVT: 25.54, +0.94, +3.82%). Traffic management is one of many services the company provides to improve efficiency in energy, transportation and other industries.

Massey Energy
Coal stocks have been “left for dead,” says Jerry Jordan, manager of the Jordan Opportunity fund, which owns Massey Energy (MEE: 30.46, +0.03, +0.09%) shares. For savvy investors, all those negatives could spell opportunity. Coal remains one of the cheapest and most abundant fuels—powering half of the nation’s electric output—and America isn’t likely to wean itself from coal for decades. Richmond, Va.–based Massey is poised to benefit: It’s the nation’s fourth-largest coal producer and the largest coal company in Central Appalachia, with 36 percent of the region’s reserves.

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