The 55th U.S. presidential election is just 17 months away; it may seem a long way off, but investors who begin unearthing "hot topic" stocks now could find themselves with some windfall gains.

HotClimate The Hot Topic
During election years, hot-topic related stocks can find significant buying support, as investors perceive media and legislative backing. And in the case of alternative energy, the aforementioned can mean government subsidies - a great possible boost to the bottom line.

In the upcoming election, there's one subject I can assure you will be a headline issue: global warming.

Over the past half-decade, erratic weather and elevated crude prices have really opened the media's eyes to some of the heated climate issues that simply aren't going away. What's more, China's massive pollution problems coupled with a more than 500% surge in the price of uranium over the past two years is further highlighting the importance of alternative energy.

Toss on Al Gore's film "An Inconvenient Truth", followed by testimony before Congress, and the overall equation equates to greater public awareness of environmental issues, which both Republican and Democratic candidates will certainly highlight.

Regardless, the environment is going to be a huge issue in the 2008 elections, and so will alternative energy. All of the aforementioned could be shaping a perfect storm for a massive bull market in alternative energy stocks. (For a broader perspective on green investing, see Clean Or Green Technology Investing.)

Top Three Alternative Energy Candidates

1. Standalone Clean Fuel
FuelCell Energy (Nasdaq:FCEL) is a global leader in the development of fuel-cell power plants, which generate clean energy using renewable and domestic fuels. Because fuel cells are also standalone producers of energy, they're perfect for applications that would not normally be wired to a power grid.

But fuel cells also make for great "base-load" power plants on major grids, as they are cheaper than normal sources of energy. Base load in this context means fuel-cell plants that consistently provide 40% of a grids power, all year long. Other power demands are met by other, more expensive sources, such as coal.

While the company is not yet profitable, its longevity and dedication to developing emission free energy is nothing less than amazing, especially considering the company has been around since 1969. Finally, the company has a strong cash position of $178 million and has a 7.6 current ratio. If there's a fuel cell company out there that's going to make it big in this area, FuelCell Energy is at the top of my list.

2. Conserving Power
Energy Conservation Devices (Nasdaq:ENER) invents and develops alternative energy products, including solar. For the nine months ended March 31, 2007, the company's solar segment accounted for 86% of the company's revenue. Solar is booming now too, as shown in the company's announcement that solar revenue would grow 18% to 33% percent in the fourth quarter.

Like FuelCell Energy, Energy Conservation is also in a strong cash position with over $270 million on the books. And with a 7.5 current ratio, the company could pay its short-term obligations at least seven times over, if all revenue stopped tomorrow.

It's always a little worrisome to see a founder or executive sell stock, as one of Energy Conversion's co-founders just did. However, considering the guy's been at it since 1969, it's understandable why he exercised options for 23,000 shares. The sale really wasn't anything that would raise a red flag in my mind.

3. Insane in the Proton Exchange Membrane
Proton Exchange Membrane (PEM) is a type of hydrogen fuel cell that basically has a different middle layer than other designs. In short, same animal, different internal organs. However, PEM technology also allows Ballard Power (Nasdaq:BLDP) to manufacture smaller fuel cells - cells that are ideas for portable personal electronics. The company is working on commercially viable fuel-cell stacks for hydrogen-power cars too.

In the company's first-quarter 2007 earnings statement, Ballard reported a 44% surge in revenue, year over year. The company also announced that full-year 2007 earnings are expected to show a 30% growth in revenue from continuing operations.

One exciting point to note, last April, the company announced it had secured contract extensions with DaimlerChrysler to provide service to Mercedes-Benz fuel-cell bus fleets in Hamburg and Amsterdam in 2007 and 2008.

Just like the first two candidates in this election-mode article, Ballard is still operating in the red; however, as fuel cells become more economical, and as media prompts new businesses to order fuel cells, Ballard could quickly find itself in the black.

Alternative Energy Grabs The Spotlight
Overall, the upcoming election year could easily boost stocks that are in limelight, simply due to their relevance with key issues. And, with oil trading over $70 a barrel and global warming continually grabbing headlines, alternative energy will most likely only heat up even more over the next year.

Looking to cook up a market-stomping stock portfolio? Check out our FREE report "7 Ingredients to Market Beating Stocks" and get started right now!

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