Renewables and Alternative Energy - Energy and Capital

Organic Food Profit Trends

The farmers' market was absolutely packed this past Saturday.

Of course, it was my own fault for getting up so late...

If you're not there by 7:00 a.m., you have to maneuver through the flocks of chatty stay-at-home moms and hungover hipsters that always seem to congregate around the Thai food stand that displays deep-fried spring rolls like delicate glass ornaments.

But despite the larger crowds that morning, there was still plenty of food to go around at the stand where I pick up my weekly share of fruits and vegetables.

You see, I belong to a local CSA (Community Supported Agriculture). I pay a few hundred dollars at the beginning of the year, then throughout the summer and fall, I get a “share” of whatever my farmer grows.

This year, the Japanese eggplant, cantaloupe, and Thai basil have been exceptional.

I really couldn't be happier with our CSA. They're very reasonable; there's never a shortage of produce; and they're completely organic — something that's very important to me, and to a few million other U.S. consumers.

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Thriving sales in the Great Recession

While organic food and beverage sales only represented about 4 percent of all food and beverage sales in 2009, growth has been significant over the past two decades — moving from just $1 billion in 1990 to nearly $25 billion in 2009.

And globally, organic sales doubled from $25 billion in 2003 to almost $51 billion in 2008.

Even during recessionary times, organic food sales continue to grow... Perhaps not as much as pre-recession days, but according to market research firm Packaged Facts, the market for products marketed on the basis of ethical standards, including organic, is thriving despite the recession.

Here's what Don Montuori, publisher of Packaged Facts, had to say about the study:

Our survey indicates that more shoppers understand the environmental, social, and economic implications of their choices. The result is a sizable number of consumers who will purchase typically more expensive ethical products even in economically challenging times.

Certainly good news for organic food producers and retailers — and great news for Green Chip investors who have been playing a handful of organic food stocks this year!

Now while most of the stocks in the Green Chip Stocks portfolio are renewable energy plays, we also cover organic and natural food stocks. And if you take a look at three of the biggest organic and natural foods players out there, you'll see why.

Fat gains; healthy bodies

Every morning I start the day with a big bowl of organic steel cut oatmeal. I absolutely love the stuff... especially with a few dried cranberries and walnuts on top.

My favorite brand of steel cut oatmeal is Arrowhead Mills. Arrowhead Mills is a brand of Hain Celestial Group (NASDAQ: HAIN), a natural and organic food and personal care products company.

For Q4, Hain beat earnings by $0.02 and increased 2011 guidance. The stock got a ton of positive coverage following those results, including a near 10-minute spot on Cramer.

Today, Hain Celestial's getting a lot more love than it was getting just a year ago. But long term, we remain bullish. For the year, Green Chip Stocks members are up about 27% on HAIN.

Another organic and natural foods stock that's delivered for Green Chip Stocks members this year is SunOpta (NASDAQ: STKL).

SunOpta is a manufacturer and distributor of natural and organic food products. The company also operates a segment that provides pretreatment processes for the production of biofuels.

For Q2, 2010, SunOpta boasted revenues of $235.9 million compared to $216.1 million in 2009, and net income on a GAAP basis came in at $20.5 million compared to $1.8 million.

For the year, we're up 55% on SunOpta.

And of course, no coverage of the organic foods sector can be complete without discussing Whole Foods Markets (NASDAQ: WFMI).

Whole Foods is the king of the organic castle — boasting revenue of $8.03 billion for FY 2009, and $2.16 billion for Q3 2010.

Of course, same-store sales growth for the third quarter came in lower than the company had previously indicated, and that helped push the stock down last week. Today, WFMI is down about 12% since earnings; and certainly a broader market slide isn't helping matters.

That being said, Whole Foods is no slouch. And few stocks rebounded stronger than Whole Foods after the market tanked in 2008. After hitting a low of $7.04 in November 2008, the stock soared to a high of $43.18 just a few months ago.

That's a gain of more than 500% in less than two years!

And this was after an avalanche of negative press about the company's ability to survive during an economic downturn. Oh how easy it is to bash a company when the entire market is swan diving into the abyss!

As both an investor and customer of Whole Foods, I took offense to all the inane criticisms of Whole Foods, and responded with an article entitled, “Don't Underestimate Whole Foods.”

The stock is now up about 285% since I wrote that article.

Early stages of a food revolution

And although I have little doubt that today's economic nightmare is far from over — long-term, I still believe that Whole Foods is not a company that should be underestimated.

As well, I think we're still only seeing the earliest stages of a major food revolution that will cater to local organic food producers and retailers.

Recession or not, there continues to be a groundswell of support for local, organic, and fair trade products. And as a consumer of these types of products, I know I'm contributing to a healthier planet and supporting domestic job growth and security.

My garlic is not shipped from China; it's grown about 30 miles away at a beautiful organic farm that I can visit any time — no passport necessary!

Of course, I realize that not everyone gets as excited about locally grown organic food as I do...

But if you get excited about making money, don't sleep on this organic food movement.

Long-term, the potential here is solid.

And there's no doubt in my mind that this will prove to be one of the greatest investment opportunities of the next decade.

To a new way of life, and a new generation of wealth...

Jeff

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Chinese Water Stocks

You've probably heard about the recent flooding in China (and in Pakistan, but we're not focusing on that today).

Over the weekend, the Yalu River in Northeast China swelled to dangerous levels, killing four people and displacing 100,000.

This comes after floods in the South and West killed almost 4,000 earlier this year.

You've heard about this because it's the kind of story that's come to be known as 'man bites dog'.

Common occurrences — like dogs biting men — rarely make the news. But throw a little twist in there — some urgency, some natural violence, some death — and these kinds of stories become an editor's dream. By extension, this type of reporting makes statistically uncommon events seem to occur with great frequency.

There are plenty of examples of this: shark attacks, plane crashes, homicide... the list goes on. We wouldn't think these incidents were as common as we do if the headlines pointed out to us every day that passed without one of them occurring.

So if you didn't know any better — based on the headlines this summer — you'd think China was going the way of Venice.

That's a good way to miss out...

Just as allowing 'man bites dog' stories to keep you out of the water or off a plane can mean missing out on great experiences; falling victim to the Chinese flooding fallacy can mean missing out on a great investment.

Because the everyday story in China isn't flooding...

It's drought.

At the very same moment the media is caught up with the attention-grabbing story of raging rivers and washed-out villages, China began its biggest relocation program since the construction of the Three Gorges Dam.

Almost half a million Chinese will be forced to relocate to make way for the South-North Water Diversion Project, an endeavor aimed at diverting the Yangtze River to the Yellow and Hai Rivers to quench the almost waterless North, which includes Beijing.

Why?

Maybe because China has 20% of the world's population but only 7% of the world's water resources...

Maybe it's because half of China's largest 660 cities constantly face water shortages...

Maybe it's because 90% of Chinese cities' groundwater and 75% of its rivers and lakes are polluted, leaving 700 million people* to drink contaminated water every day.

(*If you're keeping track, that's twice the population of the United States.)

And it's definitely because areas south of the Yangtze have 80% of the water and 36% of the land, while the North has only 20% of the water and 64% of the land.

I guess Beijing is China's Las Vegas — only capable of being built through immense water infrastructure projects.

This isn't going away

In an effort to deal at least partly with this problem, China is willing to relocate an entire river and part of its population.

But the efforts won't stop there.

Just as China is going to great lengths to secure energy resources for its booming population (if you haven't seen Christian DeHaemer's video on how to profit from that angle, you should watch it immediately), it is going to similar lengths to secure water resources...

Not just moving rivers; but initiating a sustained effort to bring its water treatment infrastructure into the 21^st century.

Two companies fundamental to that progress will be Tri-tech Holding (NASDAQ: TRIT) and Duoyuan Global Water (NYSE: DGW).

And wouldn't you know it...

According to a press release, Tri-Tech “received a $6 million contract for the upgrade and expansion of a wastewater treatment plant in Kuitun City of Xinjiang Uygur Autonomous Region” just last week.

And Duoyuan recently beat earnings estimates, thanks to a surge in water equipment sales.

According to Reuters: “Revenue from water reuse equipment jumped 45 percent on continued demand for the company's circulating central water processors, fully automatic filters and electronic water conditioners. Water purification equipment revenue increased by 36 percent.”

This is a long-term investment that goes well beyond the market's recent tribulations.

I'd buy them, hold them, and love them.

And keep in mind that the sensational headlines you hear and see in the media rarely tell the whole story.

Call it like you see it,

Nick

P.S. I've also been telling you about a company that's signed a contract with a Chinese outfit to build and market nuclear powered desalination units. While it won't solve China's water problems, cheap desalination would help out a great deal. That company is also pursuing other nuclear activities that, much like China's drought, are being ignored by the media. Click here to learn what they're doing and how it could be a lucrative investment for you.

Alternative Energy Infrastructure

In the 1999 movie Office Space, there's a great bit of dialogue where three workers discuss the question What would you do if you had a million dollars?

I'll share the exchange with you here...

Peter: “Our high school guidance counselor used to ask us what you would do if you had a million dollars, and didn't have to work. And invariably, whatever we would say, that was supposed to be our careers. If you wanted to build cars, then you're supposed to be an auto mechanic.”

Samir: “So what did you say?”

Peter: “I never had an answer. I guess that's why I'm working at Initech.”

Michael: “No, you're working at Initech because that question is BS to begin with. If everyone listened to her, there would be no janitors, because no one would want to clean up sh** if they had a million dollars.”

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I remember a similar scenario that my guidance counselor presented to me in high school... And had this scenario played out in real life, you wouldn't be reading this right now, and I'd be a professional skateboarder.

But I suppose most kids go through this, pondering what exactly it is that they want to do with their life.

My freshman year in college, I wanted to be a lawyer. I wanted to be the guy that took on the crooked politicians and spent countless hours volunteering for little old ladies getting booted out of their apartments by a heartless landlord who twirled the ends of his mustache like a Dastardly Whiplash.

Then my cousin — who is a lawyer — schooled me on the “non-glamorous” realities of that profession. It didn't take much more than a day to realize that the illusion I had in my head didn't even come close to matching the reality of his job.

His days were not spent peacocking around in front of juries, putting bad guys behind bars... His days were spent clearing paths through jungles of bureaucracy for his clients.

I have to be honest, I wouldn't last two days doing that kind of work. I just don't have the patience.

Thankfully, I have a friend who's a lawyer — and he is usually more than happy to decipher the power purchase agreements and regulatory filings that I use when analyzing market movements in the energy sector.

Now last week, he gave me a call and wanted to know if I had heard about the latest approval from the Midwest Independent Transmission System Operator (Midwest ISO) regarding a new transmission line project in Michigan.

Yes, he actually called to ask me this question. I'm telling you, this stuff is his life!

But in many ways, it's ours, too.

You see, electric infrastructure may not sound like the most exciting thing in the world... But when it comes to the development of alternative energy, infrastructure is crucial.

In fact I'm not even interested in covering a new solar or wind developer unless I know that there's either transmission already in place, or it's at least actively being built.

I don't care how exciting your technology is or how much funding you have lined up; when it comes to power — if you can't move it, you can't use it. It's that simple.

And this is why we spend so much time following the development of grid upgrades and expansions.

Well, that and the fact that some of these infrastructure projects can make us even more money than the solar, wind, and geothermal projects they're intended to support...

A pretty big deal

Last Thursday, ITC Holdings Corp. (NYSE: ITC) announced that it had received approval from the Midwest ISO for the company's Thumb Loop high-voltage electric transmission line project in Michigan.

This is actually a pretty big deal.

You see, this project is intended to serve as the backbone of a transmission system that will deliver wind power from Michigan's “Thumb” area (a subregion of the Flint/Tri-Cities region) to locations where it's needed.

And thanks to the Midwest ISO's approval, ITC can finally apply to the Michigan Public Service Commission for expedited siting approval of the project — which by statute is defined as a maximum of six months.

Of course, this project is also just one part of ITC's grand plan for integrating more domestic wind power.

You see, ITC has launched a project called the Green Power Express — a broad network of 765 kV transmission facilities designed to move up to 12,000 megawatts of renewable energy in wind-rich areas to major Midwest load centers.

Once built, the project will cross the Dakotas, Minnesota, Iowa, Wisconsin, Illinois, and Indiana, using about 3,000 miles of extra high-voltage transmission.

Take a look:

Of course, when it comes to infrastructure development, we're still moving at a snail's pace — thanks mostly to a shaky economy and continued complacency in Washington, where bureaucrats are more concerned with the next election than they are with strengthening our energy economy.

Nonetheless, we continue to focus a lot of time and attention on these transmission projects, because the reality is the U.S. will continue to increase power generation in order to meet future demand.

And in the process, new transmission projects will have to be built out and upgraded in order to facilitate this new power generation — most of which will be coming from alternative energy sources, like wind, solar and geothermal.

To a new way of life, and a new generation of wealth...

Jeff

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Nuclear Start-up Companies

When billionaires want to get richer, they invest in nuclear energy.

I've already written twice (here and here) about Bill Gates' venture, TerraPower, and its goal to create modular nuclear reactors (100 MWe to 300 MWe)...

But now additional news is surfacing about billionaires looking for more fortune by playing the nuclear game.

I'll show you how to join them below, but first let's see if we can't untangle the web of nuclear investments being made by some of the world's richest men.

The billionaire nuke club

As mentioned, Gates has thrown down on TerraPower. It's a spin-out from Intellectual Ventures — a futurist firm focused on patenting breakthroughs of all kinds, and a known hang-out of Microsoft alumni.

But Gates is only one part of a former-Microsoft-bigwig-turned-nuclear-venture-capitalist profit ménage à trois.

Former Microsoft chief scientist Nathan Myhrvold is also invested in TerraPower. (Vinod Khosla has taken a stake, too, but he's small potatoes in this basket.)

Fellow billionaire and Microsoft co-founder Paul Allen is taking a different route...

Through his own venture firm Vulcan Capital, Allen is heavily vested in Tri Alpha Energy — a stealth nuclear start-up focused on, dare I say it, plasma fusion. But don't tell anyone, it's supposed to be a secret.

Even so, recent reports say the company just raked in $50 million to $80 million in venture capital. Other investors include the venerable Goldman Sachs (NYSE: GS), Venrock, and New Enterprise Associates.

Yes, Goldman Sachs is investing in nuclear fusion. They — like Bill and Nathan and Vinod and Paul — have money, love money, and want more of it.

And they all seem to think a nuclear breakthrough is the way to get it.

Join them...

Good luck getting a personal piece of TerraPower or Tri Alpha Energy. The billionaire boys are playing it close to the vest, wanting to keep any future profits for themselves.

But there is a publicly-traded entity pursuing similar activities and causing quite a stir in both nuclear and investment circles.

For starters, it has signed an MoU with a company making modular nuclear reactors similar to TerraPower. The MoU is the first step in a joint venture that will allow the two companies to license, build, and market these fridge-sized nuclear reactors on a global scale.

They already have 150 purchase orders.

TerraPower, which you can't invest in, is in talks with Toshiba to make its reactors.

The public company has a deal in place, sales interest, and you can get shares now.

Forget fusion — this is better

Even if fusion can be figured out, it'll be years before it comes to market.

The company I'm telling you about is ready to deliver now.

They have the MoU for modular reactors mentioned above. But they also have another deal with a Chinese firm to build and sell nuclear powered desalination units.

As I told you last week, these units are 80% cheaper than the competition, and produce both electricity and freshwater.

Interest for these units is already pouring in as well. The desert gulf states want them... Australia wants them... Africa wants them...

And they cost $3 billion apiece.

That'll make for some nice revenue for a company still trading for less than a dollar.

And they'll be ready for sale long before fusion is developed and brought to market.

But if you still aren't convinced, this company has a third operation going on that could dwarf the other two...

It plans to import reactors to the U.S. and build the first investor-owned utility in three decades.

I first discovered this plan when the stock was down around $0.10. Today, it's approaching $0.80.

As word slowly gets out about this story, the share price is only going to continue to climb. And that's why you need to get in sooner rather than later.

To help you do that, I've put together this whitepaper on the opportunity. It'll tell you all about the company, its plans, and why you should consider investing.

It's the next best thing to getting in on the ground floor with a billionaire.

Call it like you see it,

Nick

Landing Energy Efficient Lighting Contracts

My grandfather served in the United States Navy.

Spending most of his career below the ocean's surface in some of the earliest nuclear submarines, he took part in some of the most dangerous naval missions in U.S. history.

I don't know all the specifics because most of that stuff was — and still is — top secret.

To this day, my grandfather is still tight-lipped. And if you ask him any specific questions, he just shrugs his shoulders and changes the subject.

So over the years, I've spent countless hours trying to learn what I can about his career and the submarines he served on. But to be honest, I've come up with very little.

I suppose it's probably better that way. After all, if this stuff truly is top secret, then a guy like me shouldn't be able to uncover sensitive military intelligence.

However, in my unsuccessful quest to uncover classified documents that would shed some light on my grandfather's military past, I did stumble upon something that I'm sure you'll be interested in...

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$416 million in potential Navy contracts

Here's the deal.

The largest consumer of energy in the entire world is the U.S. military — costing taxpayers more than $20 billion a year. And with every $10 increase in the price of oil, the Defense Department incurs more than $1.3 billion in additional energy costs.

So it's no surprise that with these energy costs only getting higher and higher, the Pentagon and the U.S. Defense Department are now forcing the military to drastically cut energy consumption.

In fact a recent Department of Defense Quadrennial Review report stated:

"The Department is increasing its use of renewable energy supplies and reducing energy demand to improve operational effectiveness and protect the Department from energy price fluctuations."

Now here's the profit angle...

It turns out that the U.S. Navy spends an absolute fortune in lighting costs. We're talking in excess of $1 billion a year.

But that's all going to change, thanks to a new program developed by the Defense Advanced Research Projects Agency (DARPA) — the same organization that gave us the Internet.

It's called the High Efficiency Distributed Lighting program (HEDLight), and its goal is to completely alter the design for lighting systems on U.S. military platforms so that they are stronger and more energy-efficient.

And we know of one company that's already in bed with DARPA on this project.

You can read our white paper on this company here.

HEDLight expects naval ships to save 87% of the electricity used on existing lighting systems.

Think about that for a second...

That means that for every $1 million the Navy was spending on lighting, they'll now only have to spend $130,000.

This is huge!

Imagine if a $25,000 car you wanted all of a sudden cost only $3,250. Or a $300,000 home you had been dreaming about buying now only cost you $39,000.

You'd jump on those savings in a heartbeat.

And that's exactly what the U.S. Navy's going to do with these lighting retrofits.

Now, we've done some quick calculations based on the Navy's entire fleet of battle force ships and the average potential cost of each lighting retrofit... My friend, we're looking at a potential value of $416.2 million.

And the company that's now working with DARPA on this project has. . .

Already retrofitted one Navy ship with new lighting systems
Landed another contract to retrofit a Virginia Class attack submarine
And just picked up another $2.8 million in lighting retrofit contracts for a handful of government buildings and industrial facilities.

Not bad for a tiny $2 microcap that hardly anyone's heard of.

You can see the details on some of those retrofit contracts here.

To a new way of life, and a new generation of wealth...

Jeff

P.S. This under-the-radar lighting retrofit stock has outperformed the Dow by 188% this year — and over the past three weeks, the stock has climbed almost 40%. Rest assured, it's not going to take much more than one more military retrofit deal to push this thing to $3.00... Read this report and get the information you need to invest early, before this ship literally sails.

CNOOC, Sinopec and Petro China

I was playing lawn darts and drinking beer when the Amish prostitute showed up. The last time I played lawn darts was in the late seventies. We used to throw them over the house just to see where they landed.

You can't get them anymore at the store, so my buddy Jeff pays $125 for them on eBay. They arrive via mail in their original packaging, some come with old, price stickers of $3.99. The plastic is brittle, so replacement is frequent.

The girl wandered over like a duck kneading dough and asked what we are doing.

"Playing cards" said Jeff as he tossed his blue missile next to the yellow circle.

"I'm wondering why the United States has no energy policy." I said.

"Oh," she said thinking a moment and tucking a wisp of hair under her white hat.

"But it does have an energy policy." She claimed. "The DoE, using TARP funds, just gave Beacon Power a $43 million loan to finance its flywheel based electric storage facility in New York."

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Beacon Power (NASDAQ: BCON)

I knew immediately what she was getting at. This was no idle pillow talk. Of course, it was common knowledge that Beacon Power Corp. had the best flywheel storage technology going.

When its factory was up and running they would be able to buy cheap power during low-use times, such as at night, and sell it back to the grid at high-use times, like during the day.

I had played Beacon Power many times over the years and happened to have a copy of the chart in my pocket. I smoothed out my wrinkled copy on a nearby picnic table:

I showed it to her and went on to explain that Beacon was a quintessential story stock. In fact, it had been riding up and down on the news for the past ten years.

I've made a lot of money buying Beacon at the lows and selling the news at the top. Every brown-out, natural gas spike, or government hurdle passed launched the stock 150%. But as often happens with such stocks, by the time it comes to fruition investors have given up, having been teased once too often.

True Story

Beacon has passed two rigorous government tests - one in California and one in New York - showing that it can be successfully hooked up to the grid as a low-cost energy storage device. It works and is two or three quarters away from being operational.

Other energy storage systems involve pumping water uphill during low power usage time and letting it fall through a turbine during high use times. It works, but it requires expensive and specific land and water.

Beacon is building a $69 million, 20 megawatt plant in Stephentown, New York. They have been running a smaller one in Massachusetts for the past two years. The company claims it will be up and running by the first quarter of 2011.

"But, if you invest in Beacon you have to worry about dilution," I said as I attempted to get my metal spike down range in a way to ward off Jeff's double strike.

"There has been some dilution in the past, but the float is only 180 million. That's not that crazy for a company with a market cap of $59 million." She countered.

"And the NASDAQ listing?" I asked.

"There is a chance that they could get delisted for being under a $1, but the NASDAQ has been fairly lenient in down times for companies that are two quarters away from ramping up revenue."

"Still," she admitted, "a flywheel plant in the middle of NY is not a coherent energy policy. Did you read the Mackenzie report?"

"Of course I've read the Woods Mackenzie report," I snorted at her ignorance while dodging an errant throw from my competitor. It ended stuck in a deck support column near my head. The red, plastic tail-fins quivered malevolently.

The Chinese Demand

"The Chinese have an energy policy," I boomed. "They are insuring their future by buying up all the oil, coal and natural gas they can find. They know these low prices won't last forever."

I could quote the numbers from the report by heart.

Overseas production for the Chinese big three oil companies - CNPC/Petro China, Sinopec Group, and CNOOC Ltd. - were now more than 1 million BoE per day. This was a new record.

Furthermore, this Three-headed Dragon has committed nearly $25 billion to asset and corporate acquisitions since April 2009, far exceeding previous annual spending. This represents 20% of the global deal value in the first quarter of 2010 alone.

The drive to acquire global oil assets is simple. China is now the worlds number one consumer of energy, and domestic demand continues to go up.

According to the Wall Street Journal, China requires total energy investments of some $4 trillion over the next 20 years to keep feeding its economy and avoid power blackouts and fuel shortages.

It is expected to build 1,000 gigawatts of new power-generation over the next 15 years. That's the total current, U.S. capacity, which took 100 years to build.

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Rock Solid

And it's not like these companies are being altruistic. All three have healthy cash-flows and strong balance sheets. CNOOC, for example, has $7.69 billion in cash and only $2.76 billion in debt.

Chinese energy demand is as clear and stable an investment trend as you will ever find. The three-headed Chinese oil dragon will continue to go out and buy energy assets to meet its needs, and deprive its competitors.

And in good news for the Chinese, Mongolia, a country sitting on their northern border, has more than 6 billion barrels of oil, 100 billion metric tons of coal, and 60,000 metric tons of uranium reserves.

Back at the house, we sat under the porch and sipped our beers as Jeff wrapped his T-shirt around his foot to stop the bleeding.

The girl spoke up. "You know, one way to play Chinese demand is to buy Mongolian energy companies. I know this guy who made 727% in about six months from a little known oil company. Last week he recommended an undervalued coal company that is up 20% already."

"Really?," I asked excitedly. "Is there anyway your average Joe can get in on those kinds of gains?"

"Sure," she smiled, "all you have to do is click here. In fact, its so good I may quit my day job."

Cheers,

Christian DeHaemer
Friday Editor, Energy and Capital

P.S. I hope you enjoy the rest of your summer. I'm off to sit by a mountain lake for a week and jump off waterfalls with my offspring. I'm looking forward to it.

Electric Car Opportunities

In 2007, I wrote an article about incompetence in Washington, and Detroit's inability to deliver a truly fuel-efficient vehicle that could compete with the Toyota Prius.

Today, the incompetence in Washington hasn't changed at all. In fact, I would argue that it has gotten worse. But Detroit, on the other hand, has actually made some strides over the past few years.

In that 2007 article, I wrote. . .

I know it's not New Year's yet. But my wish for the New Year is that Detroit finally gets its act together and delivers a real fuel-efficient vehicle for us to drive.

As you know, the new Chevy Volt will soon be in showrooms. And I'm pretty excited to see how this one pans out.

Yes, the price tag is hefty – as are the price tags of all new technologies. You think that 91% of the U.S. population would be using cell phones today if they still cost what they did back in the 1980s?

Not a chance.

Over time, and as we start to see economies of scale kick in, the costs of electric and plug-in hybrid electric vehicles from GM - and every other major auto maker - will fall.

There's no doubt about that.

In fact, the entire electric vehicle industry has grown dramatically since we first started covering this market nearly a decade ago. And much of this can be attributed to some serious cost reductions in manufacturing.

Now the Chevy Volt is definitely getting the lion's share of publicity these days, but the entire industry is developing rapidly. And as investors, we need to stay on top of every new development – from new deals with major OEMs to electric car enthusiasts who continue to up the ante when it comes to pushing this technology forward.

The Samurai's Secret that can Make You 2682%

700 years ago, the first true Samurai blade was born after a few grains of this metal was added. Today, that metal is indispensable to modern industry, and yet, we're running short.

Find out why the Chinese are now hoarding every ounce they can get their hands on... And how one company may have found the solution to a global crisis.

Trucks, buses and drag-racing Datsuns. . .

Heavy truck manufacturer Navistar (NYSE: NAV), announced last week that it has seen an uptick in interest in its all-electric truck, the eStar. This is the truck that's now in FedEx (NYSE: FDX) and Pacific Gas & Electric (NYSE: PCG) fleets.

The vehicle is a Class 2c-3 truck boasting an all-electric range of 100 miles and the ability to carry payloads of up to 2 tons. Perfect for urban applications where many of these vehicles don't even get close to racking up 100 miles in a single day.

The vehicle also includes a quick-change battery that can be swapped out in 20 minutes.

Navistar plans to have a total of 400 built this year.

Ener1 (NASDAQ: HEV) also made news last week after the company announced it had landed a deal to provide its lithium-ion batteries to Hyundai Heavy Industries, which will be using the battery packs for electric buses.

Those buses are expected to be on the road this year.

Incidentally, while Ener1 isn't basking in the glory of profitability, it should be noted that the company's latest earnings show that sales surged 113% in the second quarter 2010 compared to the same quarter a year ago.

And finally, for those who question the ability of an electric car to “keep up” with conventional internal combustion vehicles on the nation's highways, take a look at this video of a converted 1972 Datsun.

Equipped with a set of lithium polymer batteries, this little white Datsun ran a ¼ mile drag race in 10.4 seconds at a top speed of 117.21 mph.

Don't expect the new Chevy Volt to do that.

But do expect it to be a major game-changer that's sure to help usher in a new chapter in personal transportation.

For a list of the new electric vehicles coming down the pike over the next few years, check out our free report, The Electric Car Revolution Starts Now!

To a new way of life, and a new generation of wealth . . .

Jeff

Iranian Stocks are a Buy

In yet another example of why sanctions don't work, the Tehran Stock Exchange (TSE) is booming. In fact, the TSE just hit a record high, and it remains one of the most undervalued markets on Earth.

You know the deal...

Iran has been a supporter of terrorism for the past forty years. The current president is a rabble-rouser who plays to his most conservative Islamic base. He denies the holocaust, and threatens to destroy Israel on a regular basis.

He steals elections. His thugs in the militia beat and jail students who protested the sullied election. His judges sentence females accused of adultery to death by burying them up to the waist, and having their neighbors throw rocks at their heads.

Iran will have the bomb

On top of this, Iran is actively seeking the atomic bomb. And in a year or two they will have it. There is nothing to stop them from getting this weapon, just like there was nothing to stop India, Pakistan, North Korea or Israel. But that's not going to stop the powers that be from posturing like a guinea hen.

In fact, the U.S. believes Iran is such a threat that it has built up bases and carrier groups completely surrounding the country.

Chairman of the Joint Chiefs of Staff, Mike Mullen, said last week on "Meet the Press" that the Pentagon has plans for attacking Iran and that "military actions have been on the table and remain on the table."

CIA Director Leon Panetta, in late June, appeared on ABC's "This Week" and carefully hinted at covert war options against Iran's nuclear ambitions.

And the United Nations has written a strongly-worded letter and offered up a fourth round of sanctions on high-tech and military goods. Hillary Clinton gave away who-knows-what to get the Russians on board.

It is not working

Despite all the saber rattling and jawboning, Iran remains uncowed.

In fact, judging by the stock market, Iran is doing just fine. The Tehran Stock Exchange hit an all time high on Monday and is up more than 60% this year.

Furthermore, the TSE remains ridiculously undervalued.

The average price to earnings ratio is 5.5, and the average dividend yield is 15.8%. This is the average of 337 companies listed with a total market capitalization of $70 billion. The average.

That's incredibly cheap for the country that ranks third in the world in terms of petroleum and natural gas reserves.

In fact, the Tehran Stock Exchange's main index is up 27% since March 21 – about the time the saber rattling began.

This is because while the U.S. and Europe are trying to "put the pressure" on Iran, the leaders in the country are making it easier for foreigners to invest.

In fact, in the new sanctions there are no restrictions for foreign investors to invest in Iran. Capital gains taxes have been cut to zero. And as far as I can tell there are no restrictions on investing in Iran.

According to Reuters the sanctions are as follows:

The U.S. effectively deprived foreign banks of access to the U.S. financial system if they do business with key Iranian banks or Iran's elite Revolutionary Guards.

And EU measures set limits on the transfer of funds into Iran, requiring any transfer of over 40,000 euros to have prior government authorization.

Despite these sanctions Iran is taking a different course than America - Iran is trending toward capitalism. Iran will raise $12.5 billion this year by selling state firms, including two refineries. I forget how much Bush and Obama paid for GM, AIG, Freddie, Fannie, etc. Was it billions or trillions?

The truth is that Iran was the only country in the Middle East to hold candlelight vigils after 9/11. The vast majority of the country (two-thirds, or some 50 million people), is under the age of 30. They do not remember the Islamic revolution in the 1970s, nor do they care.

They want what we all want: peace, prosperity and freedom. And they will get it along with the bomb.

Despite what you may have heard, the atomic bomb has brought more peace for longer than any other item, thing or philosophy in history. In ancient Rome, the doors to the Temple of Janus were closed when Rome was at peace. They were closed on five occasions for a total of twelve years.

And as an aside, the Samurai sword killed far more people in WWII than the atomic bomb did. And the Roman short sword, or gladius, has killed more people than any weapon ever devised.

My point is that Pakistan and India used to go up 16,000 feet in the Hindu Kush and lob artillery shells at each other in the dead of winter. They were arguing over a boundary line in a piece of territory that no one could ever use or inhabit.

Since they both got the bomb all they do is strut at the border like chickens.

Don’t get me wrong, there are obvious political risks to investing in Iran. But right now there is tremendous upside. The more sanctions you put on the country the more they will pull their money back home. The political situation can’t be worse, so it will likely get better. They will find a Mikhail Gorbachev. Oil and gas will not get cheaper. No one can beat a diversified 15% dividend yield.

If I can find a way in I’m betting on Iran. I’m currently looking into ways to invest. I’m rounding up my contacts as we speak (if you know anyone who can buy Iranian stocks drop me a line).

The only way I know how to play it is indirectly by buying the Wisdom Tree Middle East ETF (NASDAQ: GULF), which I told you was a buy last week. GULF is far from a pure play however.

I’ll find a way sooner or later. And as I wait, I’ll be happy knowing my other frontier market, Mongolia, has given my readers 727% gains in six months. The best way to make the most money in stocks is to get there first with the most. I've done it in South Africa, Libya, and Mongolia. I’ll do it in Iran as well.

Keep in touch,

Christian DeHaemer
Energy & Capital

The Bullish Case for Energy Storage

I've said it before. Energy storage is the Holy Grail of the energy market.

Batteries are already a booming market, supplying juice for everything from power tools to smart phones to Kindles. And that trend will accelerate.

But we're also going to start using batteries — and other forms of energy storage — to power the grid and even our cars.

Here are the top four reasons you should be buying energy storage companies right now.

1. The presidential agenda

There's a reason Obama has made four highly publicized visits to battery factories since being elected. The Washington Post reported this week that the White House is making “an aggressive push to tell what one senior official called "the battery story" — the tale of a small piece of technology that could affect daily life and spur employment if properly nurtured.”

The stimulus awarded $2.4 billion to advanced batteries, and the administration has given an additional $2.6 billion in technology loans to Nissan, Tesla Motors (NASDAQ: TSLA), and Fisker to establish electric vehicle manufacturing facilities.

Which leads us to reason number two...

2. Electric Transportation

The top auto news this year has been all electric.

Any news about Chevy's Volt goes viral, including the announcement of its $41,000 price tag last week. (But you can get a $7,500 tax credit, thanks to reason #1.)

Nissan's Leaf and Ford's all-electric Focus are equally popular subject matter.

Two of the most highly anticipated recent IPOs were electric vehicle related. Ever heard of Tesla (NASDAQ: TSLA) or A123 Systems (NASDAQ: AONE)?

Every city I've been to recently has electric or hybrid-electric buses. Government and utility fleets are converting to electric.

Even Buffett has bought a battery company.

3. China

The company Buffett bought was Chinese. That should come as no surprise.

Just today, the country announced it will invest $15 billion to subsidize its green car industry. And a report out last month from the Beijing office of the Freedonia Group said “demand for batteries in China is projected to increase 8.5 percent annually to $41.6 billion in 2013."

Another recent re port by Global Resources (NASDAQ: GSOL) surveyed dozens of Chinese battery suppliers an found that they produced 1.9 billion units last year. And 90% of respondents were increasing capital expenditures to keep up with demand they expect to “grow by more than 20% in the coming months.”

China's position as the largest battery manufacturer in the world is only going to strengthen.

4. Renewables & the Grid

I'll yield to a segment of a report from Piper Jaffray entitled Energy Storage: Game-Changing Component of the Future Grid:

Thanks to government mandates across the world, particularly in the U.S. and Europe, as well as continually declining costs for renewable energy, we will see a growing proportion of electricity generated from renewable sources over the next several years. In particular, we expect wind and solar to account for ~40%-50% of the total energy generated through renewables by 2020. Also, we expect renewable sources to account for ~20% of overall energy sources. We expect the annual installed wind capacity to be ~160-180GW in 2020 (from ~28GW in 2008) and solar to be ~20-25GW (from ~4GW in 2008). As electricity generation using renewable sources increases over the next several years, utilities will need to adopt energy storage solutions to help integrate these renewable sources into the grid — mainly due to the intermittent nature of most of the renewable sources, especially wind and solar.

We believe energy storage for stationary power will prove to be an important component of the future “Smart” Grid and will help utilities optimize power transmission and distribution. Also, an increasing proportion of energy generated from renewable sources such as solar and wind over the next several years will almost mandate the need for storage to assist in integrating these intermittent energy sources into the grid. Based on our proprietary checks with several utilities across the U.S. and Europe, we expect initial energy storage growth opportunities will be driven first by independent power producers (IPPs)/unregulated utilities followed by regulated utilities. We estimate spending of ~$600B+ on energy storage solutions over the next 10-12 years.

$600 billion...

With that kind of anticipated spending, you should seriously start thinking about allocating a portion of your portfolio to energy storage companies.

Call it like you see it,

Nick

P.S. In anticipation of this coming bull market, I've prepared a full investor briefing on the battery company that Buffett took a major stake in. It's making electric vehicles as well as batteries for the grid. The briefing details why Buffett's right-hand man calls it “one of the most interesting small companies in the world,” and why you should be buying shares right now.

Smart Grid Reaching Critical Mass

If going green is the expensive energy option, why has Kohl's (NYSE: KSS) saved $50 million by converting 500 of its stores to Energy Star buildings?

It's because while clean energy was once the expensive energy, it gets cheaper and cheaper every day. So every day you wait to invest in the sector means profits left on the table.

In Kohl's quest to green its operations, it's disproved almost every clean energy myth out there.

It's the second-largest purchaser of renewable energy in the country, using it for 100% of its electricity needs. And it's saving money.

It's the largest retail host of solar power on the continent with 88 installations. And it's saving money.

It's built 45 Leadership in Energy and Environmental Design (LEED) certified green buildings, and has committed to building all new stores this way. And it's saving money.

It's retrofitted all stores with building automation systems that control interior and exterior lighting, and has replaced all 75 watt incandescents with 24 watt metal halide bulbs. And it's saving money.

If clean options are so expensive and job-killing and GDP-damning and economy-crushing... Why has a retail chain with a $14 billion market cap that has to answer to shareholders thoroughly embraced it?

Because as it turns out, it's not expensive. It actually reduces operating costs and creates an economic edge over the competition.

And it can create and economic edge for you as well.

They save it; you make it

While companies and countries across the globe save billions by reducing energy costs, you can profit by investing in the companies providing the energy-saving solutions.

Let's just take a look at the fourth step in Kohl's plan: efficiency.

By implementing building control systems and retrofitting all its lights, Kohl's has adopted the smart grid.

And they aren't alone in their endeavor...

Already a dozen and a half U.S. utilities have ushered in the smart grid, installing smart meters in 16 million households.

South Korea will invest $24 billion over the next 20 years to fully adopt the smart grid by 2030. LG and Hyundai are already lining up deals.

China has a three-step plan to adopt by 2020, to be carried out by the State Grid Corporation. The company has said it will invest $37 billion this year to build a nationwide smart grid network. It's also in talks with Duke (NYSE: DUK) to upgrade transmission lines here in the States.

China plans to spend $600 billion on the smart grid in the next decade.

The U.S. committed $4.5 billion to the space in the stimulus. And its impact is already being felt.

Demand response. Building automation. Smart appliances. Lighting. Efficient transmission.

Hundreds of billions are being poured into these technologies to save both energy and money.

Here are some ideas on how to profit from the rollout.

Smart grid investment themes

You can't talk about smart grid investment without talking about smart meters.

Bank of America (NYSE: BAC) says contracts for 79 million smart meters have already been announced, and 140 million will be installed by 2020.

The best play here is Itron (NASDAQ: ITRI), which already has significant market share thanks to contracts with Southern California Edison, San Diego Gas & Electric, CenterPoint (NYSE: CNP), and others.

You can get exposure from GE (NYSE: GE), Cisco (NASDAQ: CSCO), Siemens (NYSE: SI), and Honeywell (NYSE: HON), but it's only a fraction of their business.

(You should know that GE just launched a $200 million fund to foster smart grid technology and its CEO was quoted last week saying “the market is still in its infancy.”)

Demand response also deserves investment attention. This is when a company gets paid to reduce a community's electricity usage by the utility.

So instead of adding megawatts of production with solar, wind, coal, or nat gas, the utility pays a company to reduce demand by the same amount.

EnerNOC (NASDAQ: ENOC) and Comverge (NASDAQ: COMV) and the leaders here, and are guaranteed to see increased business in the future.

There are also straight-up efficiency plays.

Echelon (NASDAQ: ELON) provides turnkey systems that can make entire neighborhoods (or parts of them, like street lights) more efficient by employing various monitoring and automating products.

Companies like Whirlpool (NYSE: WHR) are making smart appliances capable of communicating wirelessly with the homeowner and the utility via a smart meter. Whirlpool has received $20 million in stimulus funds to do this, just beat earnings estimates last week, and is up 60% in the past year.

And lighting companies like Cree (NASDAQ: CREE) and Veeco (NASDAQ: VECO) — each of which have more than doubled in the past year — are making smart investors rich as they provide efficient lights to customers like Kohl's. Though I think this lighting company will deliver even better returns.

But the real Holy Grail of the smart grid is energy storage. It's the glue that makes everything stick.

Storage makes the sun shine at night; it makes the wind blow when it isn't.

And it can make the grid much smarter and efficient by not having to deal with intermittent sources of renewable energy.

We're on the verge of some serious storage breakthroughs with molten salt, flywheels, magnets, and ultracapacitors.

But right now the profits are in batteries — specifically, lithium batteries.

A new lithium ETF is scheduled to launch this week, but I've found a much better way to play the boom...

It's a small Chinese outfit that is using its batteries not only for smart grid applications, but to build the fastest growing car company in the world.

Buffett is already in, and you can read about how to stake your early claim here.

Call it like you see it,

Nick

How to Get the Last Flu Shot You'll Ever Need...

Hate the lines, the sickness, and the painful jabs? Consider that a thing of the past.

We've recently stumbled upon one under-the-radar biotech firm that's about to create the last flu vaccine we'll ever need.

It's no pipe dream -- they've already had success in early test trials...

And once these guys breakthrough their Phase III trials, we could see them bringing early investors returns of up to 1000%.

Click here to find out more.

Asia Establishes Cleantech Dominance

I've got the Asian itch, and it won't be hard to see why...

I've got this itch because the region's economies continue to grow while economic tremors continue to rock Europe and the United States.

I've got this itch because Asia's investment in cleantech continues to grow while it shrinks in other areas:

I've got this itch because Asian governments turned to cleantech as the obvious choice for financial stimulus — with China, South Korea, and Japan allocating $20 billion more to the sector than the United States:

I've got this itch because China out-invested us 2:1 last year in new energy technologies:

Which makes their long-term cleantech investment curve look like this:

While ours looks like this:

Scratching the itch...

With a financial investment edge like that, you can bet Asia's — particularly China's — dedication is translating to wins in the public markets as well.

Five years ago, you'd be hard-pressed to find more than one or two Chinese companies on global top ten lists...

Now, they've taken three of the top 10 global wind spots and six in the solar race:

And not only are they whooping us in investment and production capacity; European and U.S. companies look silly next to Chinese stars:

That's why 19 of the last 60 or so winners I've closed in the Alternative Energy Speculator have been China-based.

But my itch isn't satisfied yet...

You see, only Asia's dominance of the solar market has been thoroughly established in U.S. markets, where Chinese ADRs are common.

And while their dominance of wind and smart grid industries is definitely being plotted and executed, there's been no way to play it in domestic markets — until now.

Sinovel (the #3 company in the table above) has announced ambitions to be the world wind leader in the next five years. I'm guessing this company, along with a few other Chinese entrants, will go the initial public offering route.

And if you think there's work to be done on our grid, you should have a look at Asia where, in some places, there is no grid at all.

In fact it's being built from scratch.

Just last week, Bloomberg broke news that “smart grid technology will be one of the key industries for research and development support in China’s upcoming 12th Five Year development plan, due to be enacted at the beginning of 2011.”

China’s largest grid operator, the State Grid Corp., has already said it will invest $37 billion this year alone to build a nationwide smart grid network.

So to recap...

China has leveraged its massive economy to become world leaders in solar and wind technology, outinvesting other nations by far.

Now they're turning to the smart grid, which we'll be necessary if they're ever to harness that solar and wind potential effectively.

And make no mistake — only the Chinese survive in China. They take care of and nurture their own.

Like the Chinese solar companies now sharply outperforming their foreign competitors, I've found the one company about to become a global smart grid and electric car juggernaut.

As you can tell from all the data above, China is betting on a clean energy future.

And it's winning.

While the U.S. continues to lag behind, you can satisfy your Asian itch by following China's lead.

Call it like you see it,

Nick

P.S. China's thirst for energy is incomparable. And it's not just clean energy they're after... My friend Christian DeHaemer is fresh off a trip to Mongolia, where he cozied up with a tiny company sitting on $51 billion worth of crude. And China wants it — bad.

He's going to release a full report on the company and its massive find tomorrow. But because you're a loyal reader of Energy & Capital, I figured I'd give you early access to it today.

The Samurai's Secret that can Make You 2682%

700 years ago, the first true Samurai blade was born after a few grains of this metal was added. Today, that metal is indispensable to modern industry, and yet, we're running short.

Find out why the Chinese are now hoarding every ounce they can get their hands on... And how one company may have found the solution to a global crisis.

New Mortgage Broker Hires Point to End of the Credit Crunch

The end of the credit crunch is here.

The last two years on Wall Street — nay, the entire global economy — have been dedicated to the destruction of the housing market and the subsequent unwinding of the real estate bubble.

Until this point, the excesses of the mid 2000s have been shored up in a vain attempt to stop the inevitable repricing of real estate.

The bailout of the financials by moving assets from the Wall Street to Washington has only deepened the debt and delayed the return of a healthy housing market.

Oil's Surprising Replacement

The new era of alternative fuels is here...

BP's catastrophic oil spill proved once again that our addiction to oil is downright dangerous.

With our need for new fuels comes a new frontier for investors of these cheaper and more reliable future fuels.

In fact alternative energy expert Nick Hodge found one "champagne of fuel" company that he expects can hand you over 1,925% gains — and you can read all about it right here.

History — in the form of Japan — has taught us that the more you hide assets and protect the big banks, the longer your economic malaise.

What you want is an immediate write-off of bad debts to clear the markets and let the housing prices find their natural value.

They will find their natural price regardless of how many and how often you use props, crutches, and delaying tactics.

You need to let those that took excessive risk fail and be replaced by those who can succeed.

Instead we have had denial, tax payer funds to subsidize the markets, continued rewards for excessive risk takers, and a hidden inventory that has stopped the requisite revaluation of the real estate market that is required for a functioning and healthy market to return.

That said, this is still America.

We may fall into the same political back-scratching nonsense as other countries, but we tend to recognize the problems and move though them faster than most.

I submit that we are nearing the beginning of the end of the housing crisis. If you believe in the standard three stages of a bear market — denial, concern, and capitulation — we are in the third stage.

Stage one was 2005 to 2007... Concern/fear characterized the last year and a half... Now we are in the acceptance stage.

I provide four points of evidence:

May saw a 3 percent drop in the national foreclosure rate — including mortgage defaults, bank repossessions, and scheduled auctions, according to RealtyTrac.
Mortgage rates are at the lowest they’ve been in 50 years. You can now get a 20-year fixed loan for 4.06%.
Housing sales have fallen 30%. No one is in denial.
Banks are hiring mortgage brokers, a sign of action.

Let's attack the second point first.

Back around 1980, my father used to tell a story lamenting his 16% mortgage, pointing out the fact that his aunt had sold her house, financed it herself to the buyer, and was paid a measly 2% interest rate.

At the end of June 2010, the average rate on a 30-year fixed mortgage was 4.69%, compared to 5.42% a year ago.

The rate fell to 4.58% this week.

That puts your mortgage payment on $100,000 at $511 a month — compared to $1,344.76 per $100,000 my father was paying in 1980.

That’s cheap no matter how you slice it.

Mortgage rates are low because investors are bum-rushing treasuries due to a fear of equities.

But that’s another article altogether...

Houses: Buy one, get one free

The May numbers for housing speak for themselves. The number of buyers who signed contracts in that month dropped 30% — much more than the market expected, but an obvious trend to anyone who was paying attention.

The National Association of Realtors reported last week that its seasonally adjusted index of sales agreements for previously occupied homes fell to 77.6 from 110.9. May's reading was the lowest dating back to 2001.

The index was down 15.9% from a year earlier.

Furthermore, two days ago, the Mortgage Bankers Association reported that mortgage applications for purchases fell again last week, the seventh time in the past eight weeks.

The MBA's purchase index remains at 13-year lows despite the lowest interest rates in decades.

It is obvious to anyone who ever traded so much as a bubblegum card or a Beanie Baby that as soon as the $8,000 tax credit ended, housing prices would fall...

Not that I can tell you why someone would buy a $300,000 house in a falling market based on an $8,000 tax credit, but then again, no one ever went broke underestimating the American public.

The upshot is that you now have a unique situation where interest rates are at 50 year lows and the price of housing is coming down.

Realtytrac claims that foreclosed houses sell at an average 26% discount to regular listing. This is due to two factors: People who can’t afford the loan can no longer get it, and 25% of the houses in this country are under water.

Banks hire home mortgage lenders

But something strange is going on that you won’t see in any headlines or on the nightly news.

The banks are hiring again.

Chase alone is hiring 300 home mortgage lenders. Morgan Stanley hired 100 mortgage brokers and plans on hiring another 500.

According to BusinessReport:

In New York, 6 800 positions in the financial industry were added from the end of February to May, the largest three-month increase since 2008, according to the New York State Department of Labour.

Morgan Stanley and Citigroup are among banks that are hiring to replenish their ranks, while Nomura Holdings and Jefferies have been recruiting talent from larger firms in a bid to increase their standing on Wall Street.

"Candidates are now getting multiple offers, and companies risk losing their desired candidates if they don't act quickly enough — and that's a real change," said Constance Melrose, managing director of eFinancialCareers.

The company has seen a 75 percent rise in investment banking jobs from a year earlier.

Bloomberg is reporting that Bank of America is hiring 2,000 mortgage brokers due to low mortgage rates and the possibility in a boom in refinancing.

All of this means that if velocity of money isn’t here yet, it will be in the next two quarters.

Bad loans will be written off, housing stocks will be moved, and investors will start buying.

It means the numbers now work. It is the beginning of the end.

Later,

Christian DeHaemer
Editor, Energy & Capital

Military's Latest Energy Report Will Give You the Willies

Inside, they confess a shocking truth... without any new developments, we only have 16 months of oil left!

Before the media catches wind and panic drives the price of oil through the roof, I'll show you how one group of companies solving the problem could make you filthy rich by Christmas.

Click here to find out more.

The Year of the Electric Car

Yesterday, I got in touch with this cute, red-headed girl I used to know back in my salad days.

I hadn't seen her for awhile, so I was ecstatic and chipper when we met to have lunch at one of those sidewalk cafés that have sprouted up in Baltimore in recent years.

She wore a floral print sundress that relieved her freckled shoulders. The sun cast soft shadows through a tulip tree, and it was surprisingly pleasant for a day in June in Maryland. The talk was of old times, family, and long lost friends.

After laughter and the usual recalled memories of antics from another time, the conversion turned to more serious matters...

Masamune's Secret Metal

Six centuries ago, a Japanese sword master accidentally dropped some into the steel he was making... creating the first ever true Samurai Katana blade.

Today, it's the cornerstone of a $987 billion-a-year industry.

Find out how you can bank up to 2682% as one tiny mining company taps into one of the world's last remaining untouched deposits.

Death in the family

It seems that her father had recently died after a long fight with cancer. She said it was more of a relief to her at this point...

She and her mother and had had enough of hospital rooms and suffering. And due to wise investment many years ago, she was able to quit her job and was now thinking about opening a boutique or an antique shop.

Here's where it gets interesting...

She had one of those legendary stories you hear about in the stock market. You see, over forty years ago, her father bought some shares in a small upstart Asian car company.

He never sold and after all the stock splits, the adjusted entry price was for less than a dollar a share. Well, it turns out that investment of her father's was now worth several million dollars. And he was able to leave it to her.

The name of that company was Toyota Motors (NYSE: TM). Back in the 1970s — when “Made in Japan” was a joke to most investors and consumers alike — this company started selling cars in the U.S.

As you know, in spite of its recent problems, Toyota is now the largest car company in the world.

And get this...

My friend just sold some of her shares in Toyota and bought another small, Asian upstart car company. But there's a twist which I'll tell you more about in a minute....

In 2011, the auto world goes electric

Right now, there is a massive buildout of charging stations in anticipation of three major electric car roll-outs: the Nissan LEAF, the Chevy Volt, and the Ford Focus EV; as well as four smaller ones: the Coda, the Fisker Karma, SmartCar 2, and the Think City.

Let's face it... The biggest inhibitor for driving electric cars has always been the range. The industry terms this “range anxiety.” The Volt has cured this by using two engines. The LEAF will let you go 80 to 100 miles on a charge. The Tesla Roadster claims a 245 mile range.

One way to solve range anxiety is to have charging stations at work and at gas stations. Jeff Siegel, resident green guru at Angel Publishing, told me that architects who are drawing up new parking garages all have charging stations built into these plans.

4,600 free chargers

But it gets better. In anticipation of the year of the electric car, a private company called Coulomb Technologies is giving away 4600 charging stations suitable for public gas stations or home charging — free of charge, at no cost to you...

This largess is being funded by $37 million in grants and will be offered in nine U.S. Cities: Austin, Detroit, Los Angeles, New York, Orlando, Sacramento and the San Jose/San Francisco Bay area, Redmond, and Washington, D.C.

This buildout could be a game-changer.

People's worries of running out of juice before they get home will be allayed... If you are out of power, just plug it in and go to lunch!

The sad part of this tale is that Coulomb Technologies is a private company. You can't invest in it.

AeroVironment (AVAV)

There is another company called AeroVironment (NASDAQ: AVAV) that is installing 100 electric-car charging stations in South Carolina. These stations will be up and running by December 1st.

AeroVironment, despite its ridiculous name, has a fairly decent valuation. The company has a (YOY) quarterly earnings growth of 43.50 percent. They have a forward P/E of 21.24, $119 million in cash and no debt.

I haven't done extensive DD on this one yet, but it seems reasonable on the surface. I'll have to dig deeper and see if I can find and red flags. I'll tell you what I find next Friday.

But there is one thing I do know...

The real growth will be in China

As part of China's new five-year plan — which coincides with the release of electric cars — they will put half a million electric cars on the road by 2012.

The reason is simple: China is the largest and fastest growing car market on earth. And they simply can't afford to import all that oil for gasoline.

JBC Energy estimates China's passenger fleet will be 9% electric by 2020. If the auto fleet were to increase to 15% electric, they say this will reduce China's petroleum demand by 200,000 barrels/day (7.5%).

Much like the United States government, the Chinese government is offering $8,800 subsidy for every EV car sold. They have set aside 5 billion yuan for this program; they are also spending another 1 billion yuan on research and development.

They like it

In China, electric cars don't have an "uncool" factor like they do in the U.S. Recent polls state that 60 percent of Chinese would consider buying a plug in or hybrid electric car. That's a positive opinion that leads the world.

And get this: Not only does China have the lion's share of the world's lithium (a key component in electric vehicles); but they also lead the world in battery technology in terms of developing a battery that produces a lot of energy in a small package, at a low weight and a good price.

Right now only two out of every 100 Chinese people own a car. But you'd better believe the other 98 want one...

If car ownership rose to just a fraction of the 68% it is in Germany, and all of these people bought gas powered cars... The cost of gas would skyrocket and there simply wouldn't be any oil left.

One of my bets is that a large portion of Chinese (Indian, Brazilian, etc...) will want to own gas-powered cars, which is why I'm long on Mongolian oil.

But another obvious bet is that a large number of people in China will want to own the cheaper-to-run eclectic car.

Here's how to profit...

There is one company in China which makes the best battery in the world. It's top secret, but the company calls it a Lithium Fe and claims its cars will get 205 miles between charges.

There are many skeptics to this claim, but one thing we do know it that it's the fastest growing car company in China (61% YOY). It also has great potential... So much potential that Warren Buffett bought 10% of its shares, and Daimler AG teamed up with them to produce a Mercedes-Benz model.

I like this company a lot.

If you were going to make a 40-year bet on one company like my friend's father did, this is the company. Heck, if you were going to make a six-month bet on the roll-out of electric cars and infrastructure both in China and the U.S. — this is the company you want to own.

Did I mention this company is setting up shop in Los Angeles and are hiring 2,000 people?

And last but not least, this company is as cheap as it will ever be. Due to the recent sell-off of the Shanghai exchange, it is 30% off its highs and $0.80 above major resistance. The downside is limited and the upside legendary.

Act now. You won't regret it.

And your children will love you for it.

Sincerely,

Christian DeHaemer
Editor, Energy & Capital

The "War on American Retirement" EXPOSED

While our nation's eyes are fixed on Iraq and Afghanistan, Congress launches a hidden assault right here in the homeland...

Against your IRAs and 401(k)s.

You can surrender and lose everything - or make this "guerilla wealth" move and retire rich, with your assets intact.

Click here to learn more

DoD: We've Seen the Future of Light

Growing up, I was pretty much your typical American teenager...

I drank, I partied, I chased girls — not always with success, mind you, but I tried.

As you would expect, most of my friends were just the same way.

A typical Saturday night would involve boozing at the home of whoever’s parents were gone away for that weekend. Maybe a party, maybe a get-together, or maybe just a couple of us getting sloshed off the old man’s gin.

Wind Farm Construction is down a whopping 71% for the year...

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And when there was no house available, we’d just hit a local field and do our thing until the cops showed up. Of course, sooner or later, the cops always showed up.

With habits like that, just living to see high school graduation was a feat in and of itself.

We all did it; it was part of growing up, at least for all of us.

All of us, that is, with the exception of my buddy John. He was like our big brother, even though we were all the same age.

John rarely missed our nights out during those years, but in all our little excursions, I never once saw him drunk or out of control.

He was a star athlete and a perfect student, and when all of us were wobbling around, leaning on each other just to maintain balance, he would be walking out in front, making sure that no trouble found us.

He drove when we couldn’t; he negotiated with the state troopers when we were already in the back of the squad car; and when it came to our parents, he could do no wrong.

I lost count how many times John saved our skins — how many times he and he alone kept us alive through our stupidity.

The kid could have gone anywhere, done anything, been anybody... but the day after graduation, when we were — you guessed it, drunk again — he was at the U.S. Navy recruiting office.

John wanted to become a Marine.

And that’s exactly what he did.

He breezed through basic training and something called 'indoctrination.' When the rest of us were embarking on our third year of college, he was heading off to Iraq, to fight in the first gulf war.

He was a scout sniper, operating ahead of the front lines with just one other guy working beside him.

Now, I don’t know much about what he did in those few months in 1991, or in the handful of other operations he served in after that...

But God help whoever wound up in his crosshairs. I am almost certain that as records of his service become declassified, his name will be among some of the greatest there were. That's just the way he was.

Sadly, John and I lost touch for much of this time.

With his deployments, and with my own career and family developing, we grew apart. Years went by, in fact, without me knowing how he was, where he was, or what he was doing...

But all that changed just last week.

In his early 40s now, John is no longer on active duty. After a final tour in Iraq in 2004, he came home for good, and with his choice of posts.

His choice: The Department of Defense — more specifically, the Defense Research Projects Agency, a top secret technology development branch of the DoD known in the inner circles simply as DARPA.

So, as you may expect, when I met John at a bar in Arlington last Wednesday (he’s become a bit of a party animal in his old age and can drink as many as 2 beers a night now), he didn’t have a whole lot to tell me about what he’s been doing.

I know the gist though… Everything you’ve ever seen in sci-fi movies — from lasers to camouflage that makes a man literally invisible, to tissue thin fabric that can stop a rifle bullet — he’s probably seen it all.

Which was why I was especially surprised when he told me what he did.

“LEDs are the new thing man… We’re about to corner the market on them.”

“You mean those little things they‘re putting into high end car headlights nowadays?” I asked, a bit disappointed.

“Nothing little about them,” he replied. “Two years from now, you’re not gonna see an Edison light bulb anywhere anymore. It’s all going to LEDs.”

“Incandescents,” I clarified. “I just bought a cartload at Sam’s Club. Damn things burn out faster than 80s actors named Corey.”

“Well, they’ve been banned by Congress. By 2012, they’ll be off the shelves.”

“No kidding.” I sighed. Light bulbs? Illegal? Was that even possible?

“No kidding. Congressional ban. Biggest of its kind — ever.”

“I had no idea… ” I said, trying to wrap my mind around the concept.

“What about fluorescents?” I asked, quickly recalling how my own power company sent me a couple of those strange, curly bulbs a couple years back when I complained about my skyrocketing electric bill.

“Forget them. EPA hates them almost as much as the incandescents. They don’t waste as much power, but the cost of disposal is several times higher. All that Mercury makes them a hazardous material once the glass casings are broken.”

“I don’t get it, why is the DoD into lighting?”

He leaned in a bit closer and whispered. “We’re retrofitting every ship, sub, and patrol boat with them… They’re so efficient they don’t produce background heat. Makes our subs that much harder to spot underwater. Almost no heat signature.”

“You’re saying that the old bulbs actually made our subs visible... ”

“It’s been a problem for years,” he nodded, sipping his beer.

“Anyway, I know you’d be interested in this stuff. Not too many are. We’re contracting this tiny company to supply us with the LEDs. The contract alone will more than double the company’s size. In a few years, I wouldn’t be surprised if they had the entire market cornered.”

“You mean civilian?”

“You got it,” he nodded. “Flatscreen TVs, computer monitors, brake lights, lamps that don’t affect the temperature in refrigerated display cases... They’re saying it’ll be a $9 billion market by the time incandescents go out for good.”

Was it even possible? I thought to myself... After all, the light bulb’s been around for 130 years...

Well it turns out, for the last 130 years, Edison’s bulbs have been among the worst commercial energy wasters out there.

Just how bad?

Consider this: 98% of the energy you pump into Tom Edison’s old incandescent light bulb is lost to heat. Only 1 watt of every 50 contributes to actual brightness.

So maybe John’s little revelation about the submarines does make sense.

It got me to thinking about what he said and this company he was talking about...

Of course, he wouldn’t give me the name of it.

For him, that’s a breach of trust, and trust isn’t something that gets breached — no matter what the potential profits may be.

But he's John, and that means that deep down inside, he’s still looking out for me.

He gave me just enough details for me to figure it out for myself.

When he said this was a small company, he wasn’t kidding. In fact, with a market cap of right around $26 million, it’s about as small a government contractor as I’ve seen around.

It took me a while to assemble the information, but as I pieced this puzzle together, a very clear image began to emerge...

Just as John told me, this company is on the verge of some major moves that will position it to become a big-time tech player for the next several decades.

Next week, we will be sending readers a full report so they too can find out what John was talking about, and how a DARPA-led $9 billion LED revolution could make millionaires out of strategically-minded private investors in the next 18 months. Keep an eye out for this report in your inbox.

To your wealth,

Brian Hicks
Publisher, Energy and Capital

The "War on American Retirement" EXPOSED

While our nation's eyes are fixed on Iraq and Afghanistan, Congress launches a hidden assault right here in the homeland...

Against your IRAs and 401(k)s.

You can surrender and lose everything - or make this "guerilla wealth" move and retire rich, with your assets intact.

Click here to learn more

Ballard Power: A Promising Fuel Cell Stock

Ballard Power (NASDAQ:BLDP) is an energy fuel cell company. They make zero-emission proton exchange membrane (PEM) fuel cells.

About ten years ago, this was the darling of Wall Street... rocketing up to $120 a share, before starting its long, slow slide to a bottom of just under a buck. But over the past fews months we've seen a turnaround.

Higher Highs, and Higher Lows equals Bull Market in Ballard

The benefits of a fuel cell is that it has "zero" emissions at the point of use. It is quiet, stable and can use hydrogen, one of the most abundant elements in the universe, as a power source. You may remember the host of news stories where the reporter would drink the pure water that came out of the tailpipe.

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Ballards products are used in backup systems in telecommunications towers, transit buses, and forklifts among other niche products.

Ballard has been a leader in this technology for more than ten years and has over 2,000 patents and licenses. The company has a state-of-the-art factory and is teamed with Daimler AG and Ford in a private venture to develop hydrogen fueled cars.

I've never been an investor in Ballard before, nor have I recommended it. But it's starting to look interesting.

Story Stocks

As is usually the case with cutting edge technologies, the story gets ahead of the reality. In the case of fuel cells there are serious barriers to meeting mass market acceptance.

There are infrastructure problems, and there are cost and pollution issues in getting the hydrogen separated from oxygen or gasoline.

That said, things are starting to turn around. This is the nature of a story stock. Just at the time when all of the early investors have given up on the stock - when the story has been so wildly disseminated as to be completely discounted - the fundamentals start to change.

The technology is on the cusp of finding a market.

For example, Protonex Technology Corporation (PTX: LSE:AIM) is a small company that makes fuel cells for the military. It just picked up another $3.34 million contract from the U.S. Army.

They build a methanol-fueled generator the size of a microwave that is rugged and can run without noise for eight hours. Obviously, this is something the modern, computer-equipped army could use in the field.

They are also working to produce a propane fueled system that will be aimed at the recreational vehicle market. Protonex is a very small company and should be considered speculative. I just put it out there to show there are possiblities.

It's Wicked Cheap

Ballard's a little different. The company now has a market capitalization (number of shares times share price) of only $208.4 million. They also have $82.2 million in cash and only $2 million in debt. If you net out the cash and debt, they have a market capitalization of $128 million.

You have to think a value of just $128 million puts them in a buyout range of a number of companies. Their patents have to be worth that.

Exxon Mobil (XOM:NYSE) has $10 billion in cash. They could buy Ballard for the PR value. Ford (F:NYSE) has $32 billion in cash. That makes Ballard a rounding error.

Earnings Are Getting Better

Ballard Power Systems reported a loss of $0.08 on sales of $13 million on April 29, 2010. For the full year, analysts expect the company to post a loss of $0.33. In the year-ago period, the company reported a loss of $0.21 on sales of $8 million.

In the previous quarter, the company reported a loss of $0.01, which was better than the loss of $0.08 the market was expecting.

But again, the future looks promising. According to its website, Ballard expects to:

Grow revenues in excess of 35% over the 2009 level
Improve cash flow from operations by 30% from the 2009 level.
With this performance trajectory in 2010, Ballard expects to be positioned for positive EBTIDA performance during 2011.

The company is selling products to Motorola, FirstEnergy Corp, Plug Power, and recorded sales of five, 60-foot articulated buses last year.

Companies that go from losing money to making money tend to get noticed pretty quickly.

For example, my good friend and alternative energy expert Nick Hodge recommended JA Solar Holdings (JASO: NASDAQ) as it went from a loss of $0.21 in March of 2009, and a smaller loss of $0.06 in June of 2009, to a profit in the third quarter.

It has been profitable ever since. As you can tell the stock price doubled.

Nick has found another small energy company that makes the world's best lithium batteries for cell phones, cars, and rechargeable batteries. This company is so good Warren Buffet bought ten percent of of it.

The CEO, who is China's richest man, claims that their lithium battery technology will make them bigger than Toyota by 2025. You should check it out here.

Good Hunting,

Christian DeHaemer
Energy and Capital

Unique Water Investments

Water is a precarious beast.

It can cause flood or drought. Feast or famine. War or peace.

But most importantly, it can bring great wealth or cause immense poverty.

And both sides of all those dichotomies can be seen each and every day.

Flood or Drought, Feast or Famine

When I say each and every day... I certainly mean it.

After two record rains this month, several rivers in New England are set to spill over their banks. Rhode Island says it's bracing for "the most severe flooding to hit the state in more than 100 years."

A sewer treatment plant failed in Warwick. A bridge gave out in Freetown, Mass. A $16 million apartment complex in Jewett City, Conn. — and probably many others — was under four feet of water.

Thanks to a little-known California law, this wind energy stock is about to become

One of the most sought after wind plays on the planet.

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There will be plenty of money to be made when the waters recede. And that's not mean-spirited... that's opportunistic. Infrastructure companies will make a killing.

And in our breadbasket, the Red River crested to 37 feet this week — its fifth highest level in the past century. It's eventually expected to reach 47 feet.

Last year, the river only hit 41 feet, but that was enough to keep farmers in the area from planting nearly 500,000 acres of corn, wheat, and soybeans.

A commodity bet is a good way to play failed crops — from either too much or too little water. I like the PowerShares DB Agriculture ETN (NYSE: DAG).

But just because there's flooding in some places doesn't mean there isn't drought in others... And both are profitable.

The Wall Street Journal is reporting this week that China is experiencing its "worst drought in a century." It has left farmers with dusty land and 24 million people without adequate drinking water.

China has pledged $923 million to "mitigate the immediate effects of the drought and bring drinking water to the affected population."

Sounds like a great time to buy Tri-Tech Holdings (NASDAQ: TRIT), a Beijing-based outfit that assists the Chinese government manage natural and municipal water supplies by implementing hardware and software solutions.

Water can make you money come flood, drought, feast or famine.

War or Peace

While no one is dropping bombs over water yet, there is plenty of modern day conflict over this precious resource.

Georgia has been in a raging 20-year-long legal battle with Florida and Alabama over access to Lake Lanier, a federal reservoir northeast of Atlanta. Last year, a federal judge ruled that "Atlanta does not have the right to take drinking water out of Lake Lanier," and gave the states until 2012 to reach an agreement.

In response, Gov. Sonny Perdue requested and got a water conservation bill from state legislators. Companies like Layne Christensen (NASDAQ: LAYN) will conservation efforts are pursued in Georgia and dozens of other states.

That conflict may have a relatively civil solution, but don't rule out physical violence as a result to water woes.

India and Pakistan have been bitterly fighting over the issue.

The Indian Express just reported:

There has been a vicious anti-India campaign in the Pakistani media for some time now, and it is getting worse. India is accused of "stealing" Pakistan's water; reducing river flows; stopping the Chenab; constructing "illegal" projects on the western rivers; desertifying Pakistan; and so on. Terrorist outfits have picked up this issue and given an ultimatum to India: "Let water flow or face war."

Yes, water is that valuable.

But before any bullets fly, you can bet governments and global organizations will spend billions — if not trillions — allocating water assets in an effort to prevent conflict.

Harnessing that spending by investing in companies on the receiving end is one surefire way to generate water wealth.

Water Wealth

As droughts, floods, and water conflicts continue to arise, the perceived value of water as well as the companies that deal with it are only going to climb.

And there are plenty of ways to profit.

You can buy some of the companies I've mentioned here. I've advised my premium readers to do the same, and we've already banked some serious water gains this year.

You can invest in water utilities. You can invest in commodities that have high water inputs, especially grains.

But the best way to make money from water may be through desalination: taking free water from the ocean, removing the salt, and selling it.

Global conglomerates have quickly entered this high-profit industry. GE (NYSE: GE), Siemens (NYSE: SI), and Dow Chemical (NYSE: DOW) each have a big stake in the business, with operating plants all over the world.

But I wouldn't invest in them as a desalination play...

Instead, I'd be buying the one company supplying a unique device that allows desalination plants to cut costs by 83%. The profit potential here is huge.

GE is already using the product. Buffett has already loaded up on shares.

He knows — as you now do — that this company literally holds the key to an abundant freshwater future.

This new report tells why its shares will only climb as the world turns to this company to provide cheap, clean water from the ocean.

Call it like you see it,

Nick

Your IRA and 401(k) are in Washington's sights...

But you'll never hear about it in the mainstream media until it's too late to save your retirement assets.

Click HERE for the "guerilla wealth" secret to keeping your hard-earned nest-egg in your own hands - and perhaps even growing it by 378% every five months.

An Investment in Smart Grid Software

It has taken awhile to arrive, but one of the more interesting — if unsung and unsexy — sectors in energy right now is software. (Below, I share a smart way to profit right now off this burgeoning sector.)

A whole array of new applications is finally hitting the streets: Systems that let consumers monitor their energy usage. Software that helps utilities redesign their grids to accommodate more distributed generation. Solar system design tools. Smart grid management systems. Bigger, better databases of actual solar insolation (sunlight), actual component performance, and actual customer usage, all slowly being integrated together.

Consider, as an example, the transformation that has happened in solar site evaluations in just four years.

The Next GE

Thanks to a push to revolutionize our power grid…

A small group of hi-tech startups is about to take a major chunk out of a $297 billion/year market.

In the coming years, these outfits will become the next GE, the next Google, and the next Microsoft.

Get their names and ticker symbols now, before they take off.

Swapping Hardware for Software

Here's what I had to do to bid on a rooftop solar PV system in 2006.

I would arrive at the customer's house with a 16-foot folding ladder and a backpack full of gear. I would spend half an hour going through several years of paper bills (if they had them), copying the kilowatt-hours used each month onto a piece of paper.

Then I would climb up on the roof and look for the best, unshaded location to install the modules. I would use a bulky, domed device to make a drawing of the shading profile on a paper grid.

Then I would spend an hour or more making a hand drawing of the roof, measuring every surface and penetration. I needed two kinds of physical tape measures and a laser measure. I carried a special, foot-long angle meter to measure the slopes. A hand compass would give me the right orientation for all my gear... if some nearby interference didn't throw off the magnet.

I would shoot dozens of pictures and video clips of every roof, hoping to capture details that I might have missed on my hand drawing.

Back at my office, I would re-create the drawing in a CAD program, which could take hours.

I copied the usage data into a spreadsheet, which had very coarse-grained historical data for the hours of sunlight typically received in a given city. Then I would eyeball my drawing of the shading profile, and enter the amount of shading that I thought the system would receive at each hour of the day at various times of the year.

This tool allowed me to estimate the output of a given system design.

Then I would return to the CAD drawing and try to fit the equipment I needed onto the roof, consulting the photos and video as I went. Then I'd have to change the equipment in the estimation spreadsheet.

Rounds of adjustments would be needed to get the system right. Then I would draw in all the associated equipment, and calculate the racking down to the last nut and bolt.

A final spreadsheet would take data from the other spreadsheets and let me generate a financial model based on coarse historical data about the price of energy. And all of the spreadsheets were created in-house by a talented software engineer.

It would take a minimum of six hours just to produce a detailed bid, before the sale was even made. It often took far, far more. It's one reason why I decided to get out of the business.

Now consider what it takes today, just four years later.

There are now over a dozen apps that will almost replace that backpack full of gear with an iPhone.

The angle meter? Gone. You can lay the iPhone on the roof and it will tell you the angle, or you can stand on the ground and shoot the roofline and it will calculate it. The compass? Gone. Even the camera — gone. You can shoot pictures of the site with the iPhone, then automatically stitch them together into a panoramic photo.

Name your site, and the latitude, longitude, elevation and altitude are automatically downloaded via GPS. Pan the camera around, and it figures out the shading, then shows you the path of the sun at various times of the day and the year. Check your overhangs and your solar window, and work around your roof penetrations in a snap.

Then just choose your equipment of choice from the built-in database and the enter the local price of a kilowatt-hour.

Boom. In a couple of minutes, I could do what used to take hours. Sun plot and shading maps, an equipment list, and rough estimates of the system's production and the financials—done.

Other apps will even help you size the wire and conduits, convert units (like Btu to kWh), and make graphs.

For a field rep, the advancement is nothing short of phenomenal. All that's missing now is a way to download customer usage data from the utility right into an app, and some next generation solar add-ons to CAD software.

Software for Efficiency

Software is poised to make as much improvement in energy auditing as it has in PV site evaluations, and in about the same period of time.

Just a few years ago, a highly trained energy auditor would spend hours (or weeks) crawling all over buildings and mechanical rooms, counting light bulbs, copying down nameplate data from HVAC and other systems, poring over floor plans, taking lots of photos, doing data entry in clunky homegrown spreadsheets, and eventually trying to integrate it into various modeling tools that didn't work well together. But no more.

A new system by startup kWhOURS, Inc. promises to slash the time required to perform an audit to a fraction of what it was, and automate the production of reports. It will export spreadsheets and play nice with standard analysis software developed by the DOE.

The San Francisco company Recurve has developed an internal system to streamline its own energy auditing and make it easier to design energy efficiency retrofits. Various builders across the country are now testing the software, which is likely headed for licensing.

On the hardware side, Recurve founder Matt Golden (a friend of mine) has also recently helped formulate a proposal for a new federal efficiency program called HOMESTAR, which would offer rebates up to $3,000 for a host of home efficiency upgrades including windows, insulation, caulking, and sealing for ducts, doors, and windows. President Obama outlined the program this month, touting the thousands of jobs it will create, and savings of as much as $500 a year for participants.

As my readers know, I have long been a champion of energy efficiency retrofits as the low-hanging fruit in addressing our energy challenge. And as Golden points out, over 90% of the materials needed to perform them are "Made in the U.S.A."

Software for PV on the Smart Grid

A slate of software projects recently approved for $9.3 million in grants under the California Solar Initiative Research, Development, Deployment and Demonstration Program are tackling some of the larger challenges of the "smart grid"...with substantial matching funds.

The projects will be administered by Itron, Inc. (NASDAQ: ITRI), a longtime smart metering favorite.

One in particular, a proposal from Clean Power Research (CPR), caught my attention. With a budget of over $3 million, it will develop a model of solar resources using satellite data. Spatial resolution will be enhanced from 100 km² today to 1 km², and temporal resolution from 1 hour to 30 minutes. The system will be built upon an open-source distribution engineering and analysis tool used by utilities, and integrated with PV performance and economic screening data, to help identify the locations with the best potential for high penetration of PV systems.

When completed, the system will be made freely available to the public in California, and should vastly improve the industry's ability to deploy and integrate distributed solar into the network. The participation of various entities from New York and Arizona in the project suggests that the tool could be adapted eventually by other states.

A similar $1.3 million proposal from SunPower Corp. (NASDAQ: SPWRA) will improve temporal resolution of solar resources all the way down to 1 second, and integrate with SunPower's monitoring data and standard simulation tools to help grid operators maintain grid stability in near-real time as sunshine comes and goes in various areas.

Six other projects will work on communications between PV systems, smart meters and utilities; help customers determine the right mix of efficiency measures, energy storage, demand response, and PV; help utilities identify and correct weaknesses in the distribution infrastructure; improve inverter performance; and enable utilities to improve grid control, maintain voltage stability as cloud cover comes and goes, and perform better forecasting.

Recently, my colleagues at Green Chip uncovered a still hardly heard of company with the technology that could, in fact, be the backbone of the new Smart Grid. This technology is a next generation electrical system that's quickly replacing the antiquated and outdated current electrical grid.

In just three months' time, this tech allowed our publishing offices in Baltimore to cut energy bills by 44%, because this particular device saves energy in a way we've never before seen. It is this kind of innovation that will allow us to monitor energy usage, use energy as efficiently as possible, and preserve the future of our grid.

The best leadership in the energy revolution that Silicon Valley can offer is not in seeking the "next big thing" as Vinod Khosla is doing, nor is it in trying to drive carbon to zero in energy, as Bill Gates exhorted in his recent TED conference address.

Instead, it's in doing exactly what it's best at: software and embedded systems. Not silver bullets, but silver BBs.

Hey Bill G — How about working on an open standard with Apple and Google and appliance manufacturers to deliver some sexy consumer energy monitoring solutions for the iPhone?

No, really.

Until next time,

Chris

Radical technology promises to break Big Pharma profit records

One small American company's "cell-shock" technology will soon be the global Gold Standard for the treatment and prevention of all the major cancers, influenza, malaria, HIV, and more...

It's expected to save millions of lives — and bring over 10,000% returns to investors of this medical miracle.

Click here to earn 1,000 times your money...

American Superconductor Stock

Bad information costs us all money...

Say you get a hot tip that a company is about to crush an earnings report. You go all in, the company misses, and you're out big.

Or the opposite happens, and someone tells you a company is about to take a hit, so you short it. Then they get a new contract or the rumor gets disproved and the stock takes off... leaving you holding the bag.

No one likes bad information. But there's a bout of it going around.

Military's Latest Energy Report Will Give You the Willies

Inside, they confess a shocking truth... without any new developments, we only have 16 months of oil left!

Before the media catches wind and panic drives the price of oil through the roof, I'll show you how one group of companies solving the problem could make you filthy rich by Christmas.

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An American Company in China

This week, Citron Research published an extremely bearish report on American Superconductor (NASDAQ: AMSC), a stock I view as a top wind and smart grid play.

While the group laid out several bearish points, only one had any validity at all. And that one is based on a theory that may or may not play out.

Before I get into the tit for tat — and how it could make you a quick gain — you should first understand what American Superconductor does. It's a technology company that makes electromechanical systems for wind turbines as well as high-temperature wires and power converters that regulate and stabilize voltage for the grid.

And they've done well to harness this current high-growth market. But Citron takes another view.

Here are their issues and my rebuttals.

A Story Stock

Citron claims that AMSC is a "classic old-school 'story stock'... a company with an electric distribution grid innovation" that has "never been monetized."

What they are referring to is AMSC's high-temperature superconducting wire (HTS), which delivers more power than traditional cables, helping to solve grid and transmission problems with lower costs.

But this isn't the company's main product. Not by a long shot. It's disingenuous to claim that it is.

If AMSC was a story stock — and it isn't — the story would be about its wind turbine components, and how they are now being installed in 40% of the wind turbines in China, generating hundreds of millions in revenue each year.

No one is investing in AMSC because of its wire. They're investing to get exposure to the Chinese wind market.

Death Panels for Wind Turbines

Citron also reported that "Miao Wei, vice minister of Industry and Information Technology came out and called many China wind power projects "vanity projects" made the whole industry sit back and give one collective headscratch." They also cited "sandstorms" as detrimental to wind development in China.

This can only be classified as a death panel moment for cleantech.

Citing the words of Miao Wei has little impact in the face of countless positive announcements from Chinese officials that have been backed up with real laws and incentives.

Just this month, Zhang Guobao, head of China's National Energy Administration, made a media tour touting China's green credentials. His talking points included:

China's plan to get 15% of its energy from renewables by 2020 (the U.S. has no such goal);
China's goal of reducing carbon intensity by 40 to 45% by 2020 (the U.S. has no such goal); and
The establishment of a "Super Ministry" to fast-track clean energy projects.

And that's without mentioning the $217 billion China will spend on cleantech development in the next five years...

Or the studies showing China will install 3x its 30 gigawatt wind target by 2020...

Or the Renewable Energy Law they just amended, which requires utilities to buy every single drop of clean power generated in the country.

Or the fact that 2009 marked the first time ever that China produced and installed the most wind turbines in the world, with Sinovel (AMSC's largest customer) moving into the top 5 producers in the world.

So it begs the question, "Who is Miao Wei and why should he matter?"

Relationship with Sinovel

Somehow, Citron also found AMSC's relationship with Sinovel (the largest turbine producer in China) to be a risk, saying "AMSC's filings disclose that its Sinovel revenues represent 67% to 76% of its revenues for various periods spanning 2008 and 2009. So investors had better heed the company's relationship to this one customer... if Sinovel gets a cold, AMSC catches a flu."

The 67% to 76% part is true. In fact, the actual number is 69% of revenue through the third fiscal quarter 2009 came from Sinovel.

This is a blessing — not a problem, since Sinovel seems to be immune to the flu. They just filed for an IPO that will bolster their dominance in China and facilitate global expansion. The company has already become a top 5 global turbine producer and says it's seeking the top spot in five years' time.

More business for Sinovel means more business for AMSC. In addition to 40% Chinese market share, they've already got a U.S. project lined up.

When did it become a bad thing to do business with the most dominant company in an industry?

What's more, AMSC does have other customers, but since Sinovel has been so dominant, most of the revenue has come from them.

But its other customers are growing quickly, and include Hyundai, XJ Group, CSR Zelri, Ghodowat, and Dongfeng.

Having already secured the alpha dog, AMSC will have no problem getting other customers in Asia.

CEO Selling Shares?

Citron goes on to report that "CEO Greg Yurek alone has sold over 375,000 shares just this year, and consistently bangs out his options as they are earned, retaining fewer shares than he's sold just during 2010."

All bunk.

Yurek was forced to exercise those options and sell stock as part of his contract. The dates of the sale were predetermined.

A 60 P/E?

This is the most egregious of them all.

Citron reports that "after reporting huge losses for years, the best they have been able to put up in 2009 is an 12c qtr., a run rate which prices the company for a 60 P/E."

I can only hope this is an oversight.

Here are the company's actual earnings per (EPS) share for the past three quarters:

June 2009, $0.12
September 2009, $0.19
December 2009, $0.20

Those last two are certainly higher than $0.12. And the estimated earnings for the next quarter are $0.17 per share, which would give the company full fiscal year earnings of $0.68 per share.

With a current share price of $26.50, that works out to a price to earnings (P/E) ratio of 38.87 — much less than Citron's 60.

Conclusion

The bearish report concludes: "when in doubt, Citron advises readers to 'follow the money.' The furious rate of CEO Yurek's insider selling should cause any investor to ask why they should be on the other side of his trade."

Of course, that's bogus advice. We've just learned that the CEO wasn't dumping shares, but rather doing so as part of a predetermined contract.

Yes, follow the money. But follow the $700 million in orders AMSC has already received from Sinovel. Follow China's 30 GW wind target for 2020. Follow $217 billion China will spend on cleantech in the next five years.

But don't follow manufactured research with clearly bearish intentions.

Call it like you see it,

Nick

P.S. This is the type of quality research and analysis you get in our premium publications. In Alternative Energy Speculator, we're long AMSC with a $40.00 price target. And we played it two different times in 2009 for 27% and 59%.

Better for you, this is one of three companies I think could get a big boost from a high-level energy policy meeting taking place later this year. This annual event has been driving certain stocks higher for more than a decade, and if you want in on it this year... you've got to read this report before the meeting happens.

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The Global Energy Race

There's an energy war going on... and it's been raging for decades.

The Middle East, North Africa, Ex-Soviet States... all have witnessed turmoil because of their massive energy reserves.

And in each of those regions — amid the turmoil — fortunes have been made.

From the oilfields of Iraq to the gas fields in the former U.S.S.R., billions have changed hands as nations jostled for energy supplies to fuel growing economies.

Now though, the global picture is changing...

Developing countries are entering the race for energy and the destination of the finish line is constantly changing.

It's like getting a piece of the automobile market back in 1908.

And not just Ford either. We're talking about the market as a whole. Oil, rubber tires, road construction... the whole nine yards!

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The Global Energy Race

For the past three decades, only a handful of developed nations were competing for large shares of fossil energy reserves.

The United States, Europe, and Japan, for the most part, had no trouble dominating other countries in the quest to secure oil and gas to fuel their world-leading GDPs.

But things have started to change in the past few years...

Brazil, Russia, India and China — the so-called BRIC nations — have emerged as great forces in the global economy. And as their economies grew, so did their thirst for cheap energy.

You've probably seen some of the headlines that have resulted.

China's been cozying up to nations that have what can still be considered hefty oil reserves. India's boosting its nuclear capabilities. Brazil has leveraged its sugar crop to get more than 50% of its liquid fuel from ethanol.

Indeed, these growing nations have been doing all they can to secure their energy future. And if there's one thing they're all realizing, it's that future energy needs to be generated domestically — not imported from other nations.

This has led to new ambitions in the world's developing economies. And if we don't take note, we could quickly see ourselves falling behind not only in the pursuit for energy, but in the pursuit for global status.

Keeping Energy Dollars

Take China, for example: This is a country that has taken the energy market by complete surprise.

After failing to develop robust automotive and computer markets, China was viewed as a technology laggard. Great at production, yes; but lagging with regard to capacity for innovation.

But their thirst for energy changed all that...

China has been very serious about planning its energy future. And they're dead set on making sure the energy comes from its own soil.

You see, not paying for imported energy keeps those billions of dollars in the country. In fact, it boosts the economy because new energy sources are being developed domestically, spurring spending and creating jobs.

It's a lesson the West is slowly learning — some of us slower than others. But it's a very important lesson, because every dollar we spend on imported energy is a dollar out of our economy and in someone else's.

China's intent on not falling into that trap.

They've created what BusinessWeek calls a "Super Ministry": the National Energy Commission, which will create and enforce new energy policies.

Some of these measures may seem extreme. But not only are they necessary; they're creating a lot of wealth.

One of China's most recent laws, for example, requires that utilities buy all the power produced by renewable energy generators. Unlike the U.S., that means developers don't have to worry about finding an end market for their power. If a Chinese company builds a wind or solar farm, there is a guaranteed market for their product.

According to China's State Council, "Power enterprises refusing to buy power produced by renewable energy generators will be fined up to an amount double that of the economic loss of the renewable energy company."

What's more, the country is on target to meets its recently announced requirement of getting 15% of its energy from renewables by 2020. The U.S. doesn't even have such a target and would be hard-pressed to meet one of that caliber if it tried...

And the Chinese government has already pledged $217 billion over the next five years to ensure their country emerges as an economic and energy leader, with plans for a $650 billion investment over the next decade.

The U.S. pledged about $80 billion to cleantech in the recent stimulus, but only a fraction of it has been spent. Meanwhile, we gladly spend well over $500 billion annually on imported oil.

It's not hard to see who will be keeping their energy dollars in the new millennium.

The Investment Angle

So what's the investment angle? It couldn't be any clearer.

Invest in companies with leading clean technologies doing business in countries with progressive energy policies.

It sounds easy enough, but you'd be surprised at the number of people that just don't grasp the concept. But here's the proof...

Exxon Mobil (NYSE: XOM), Chesapeake Energy (NYSE: CHK), and Peabody Energy (NYSE: BTU) are unequivocal leaders of the oil, natural gas, and coal industries, respectively.

Canadian Solar (NASDAQ: CSIQ) and China Wind Systems (NASDAQ: CWS) are leaders in their namesake industries in China.

Here's how they stacked up against each other over the past year:

That's the difference between the new energy economy and the old; between the status quo and the profit potential of new solutions.

Yes, we'll still need coal, gas, and oil for some time to come. And that's why stocks like Peabody and Chesapeake nearly doubled over the past year.

But a time is coming when those energy sources will be supplanted. As that happens, well-positioned clean energy companies will continue to deliver 1,000% plus annual returns.

The countries that transition first will emerge as the most powerful.

The energy companies making it happen will be the most profitable.

And the investors that react the earliest will pocket the most money.

Call it like you see it,

Nick

P.S. China's ambitious energy goals have allowed cleantech companies operating there to make early investors a fortune. And while we've been slow to respond, our neighbors to the north are moving much more swiftly and aggressively. They've created a government agency called the Energy ATF — similar to our ATF, FBI, and CIA — that has just one mission: to systematically eradicate all sources of coal and oil powered energy.

And a few companies — detailed in this report — will be paid billions to replace old generation sources with clean ones. The 1,000% gains seen in China will surely be repeated. This time, you can read about the companies before they make other investors rich...

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Chinese Cleantech Companies: Made in the USA (by China)

As you'd expect, the China panel was a focal point at last week's RETECH 2010 conference in Washington D.C. So I passed up the Renewable Energy Project Finance and Carbon Credits panels to be there.

I'm glad I did, because you'll be amazed at what the Chinese are doing in the energy sector... and at how much money early investors stand to make.

China's 'Manhattan Project'

As we've clumsily tried to stimulate our way out of recession — spending billions mostly on pet projects — China has acted with concentrated focus.

Their goal: To dominate what will be the largest emerging industry this century — cleantech.

Our country's stimulus poured $66 billion into the sector. But a buckshot approach — funding everything from nuclear cleanup to federal building retrofits — failed to address the main issues facing the industry, namely securing capital and streamlining large projects.

And what funds were made available are still largely tied up with bureaucratic red tape.

In contrast, China has allocated $218 billion to be spent on cleantech in the next five years. And red tape there is mostly non-existent.

As Reuters recently put it:

Beijing's top leaders have made clear their intention to have their nation dominate this new industry, up and down the value ladder. And in their quest for the prize, they are not burdened by concerns facing their Western counterparts — such as the impact of wind turbines on landscapes, higher energy prices for consumers, or investor returns.

And yet, there are plenty of investor returns... because their plan is working.

$12 Million/Hour

That's what the Chinese are spending to beat us in the cleantech arms race. Victories are already being claimed.

The Global Wind Energy Council (GWEC) has reported that China "doubled its entire installed capacity each year since 2005." Last year, they became the largest wind market in the world, passing the U.S. and Europe.

We installed 9.9 gigawatts; they installed 13.

China is now also producing nearly 50% of the world's solar cells annually, but that's likely to grow to 70%. And they're doing it more cheaply than their established German counterparts. (In fact, German companies have been finding it's cheaper to buy from the Chinese than it is to make their own.)

This is leading to a surge of Chinese-based cleantech companies — some of which you've never heard of — that are generating huge revenues and building massive wealth for their shareholders.

I'm talking about companies like GCL-Poly (now the world's third largest polysilicon producer), Sinovel and Goldwind (global top ten turbine producers), Duoyuan Global Water, and Trina Solar.

Take a look at how those companies are performing relative to U.S. cleantech giants like First Solar (NASDAQ: FSLR):

It's almost embarrassing... unless, of course, you've been investing in Chinese cleantech companies.

And this is only the beginning. The Chinese edge is becoming sharper every day.

Made in the USA (by China)

Perhaps you remember the stink made when it was learned a Chinese company was selected to provide turbines for a $1.5 billion U.S. stimulus-funded wind farm in Texas.

The company was Shenyang-based A-Power Generation Systems (NASDAQ: APWR). And they quickly squashed the opposition by announcing they'll build a manufacturing facility in the U.S. that will employ 1,000 workers while cranking out parts for wind turbines.

Yingli Green Energy (NYSE: YGE) has announced plans to build a solar manufacturing facility on U.S. turf.

At the conference, executives from both GCL-Poly and China Guangdong Nuclear Wind Power said they'll soon be establishing a U.S. presence.

And, in the most revelatory example of all, the Wall Street Journal reported: "Duke Energy Corp. is in talks with State Grid Corp., China's biggest electricity distributor, over a joint venture that may involve cooperating on power transmission lines in the U.S."

While we were arguing about landscapes (I'm looking at you, Cape Wind), debating a national renewable energy standard (RES — still hasn't been passed), and decrying cap-and-trade, the Chinese went ahead and leapfrogged us.

During a session at the conference, Hunter Jiang, president of GCL-Poly, didn't mince words about his country's position. After ruminating on China's laggard position throughout modern history's industrial revolutions and commenting on how automobiles and computers were cradled elsewhere, he said, "Today we are the leader."

So tell your senator to invest in the USA, but tell your broker you want to buy China.

Call it like you see it,

Nick

P.S. One tiny company is leveraging China's cleantech spending blitz to take the global battery and auto markets by storm. Its groundbreaking lithium-ion battery is already being used in cars and tools across Asia, and sales are expected to begin in Europe and Asia this year. Warren Buffett has already bought in — and turned a tidy profit — but it'll double several times over as the company becomes one of the largest advanced battery makers in the world.

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