Filed Under:
Tickers in this Article: OTTR, KDN, TRN, GE, AMSC
The U.S. Department of Energy laid out a scenario in a recent report where wind could contribute up to 20% of required energy for the U.S. by 2030. Considering that, as of 2007, wind makes up less than 1% of the energy produced in the U.S., the 20% goal by 2030 would be a game changer for the energy industry.

Though lofty, the goal is not impossible. In 2007 Denmark received over 20% of its electricity from wind energy and Germany came in at 7%. Here in the U.S., Iowa and Minnesota both already get close to 5% of their electricity from wind energy. The big question that arises from investors is: who will be the major players? (To learn more about alternative energy investments, read Clean Or Green Technology Investing.)

The Players
Otter Tail
(Nasdaq:OTTR)
This is a very interesting company because it is known by many as an electric utility, but it has fingers in many pies. The most promising is its ownership of DMI Industries, which is one of the largest wind tower manufacturers in the U.S. DMI recently announced the expansion of plants that make wind towers in the Midwest. The president of DMI cited that demand for 2009 and 2010 production is so strong that expansion was needed. The stock also pays a healthy 3.0% dividend yield on top of the amazing growth potential. On a side note, Bill Gates owns 9% of Otter Tail. At this time, Otter Tail is my favorite wind-related stock.

American Superconductor (Nasdaq:AMSC)
The company surged nearly 20% in one day on the news that a Chinese firm ordered $450 million of its electronic equipment used in wind turbines. American Superconductor makes power converters that are used in the wind turbines. The big surge in early June has the stock at a new seven-year high.

Kaydon (NYSE:KDN)
Known as a bearing and seal company for years, Kaydon is now also North America's leading supplier of wind turbine bearings. Even though Kaydon is not a pure-play wind stock, it has the potential to be a silent winner in the great wind energy expansion. All turbines will need bearings, and why not turn to the industries leader for the product?

Trinity Industries (NYSE:TRN)
Trinity has a diverse business model that allows the divisions to benefit from each other. Primarily it is a railroad company, but Trinity is quickly becoming a leader in the wind tower sector. The company's Energy Equipment group, which includes the wind tower business, grew operating profit 80% during the first quarter of 2008 and is sitting on a backlog of $1.6 billion in wind tower orders. The Energy Equipment group ranks fourth in revenue with the rail group more than twice as large as any of its peers. That being said, the best growth in the entire company is coming from the wind towers.

General Electric (NYSE:GE)
In May 2008, oil tycoon T. Boone Picken's Mesa Power LLP placed an order with GE to purchase 667 wind turbines. The turbines will be used in Mesa's wind farm in Texas and are expected to generate enough energy to power 300,000 homes. Even though GE is a leader in the wind sector, it is tough to make a case for the stock because the revenue generated from the division is such a small portion of the total revenue of the company.

Noble Environmental Power
Noble Environmental Power has filed for an IPO and should begin trading on the Nasdaq in the near future. With over 4,000 megawatts of wind parks under development in the US, it will be the first pure-play wind stocks available on a major exchange.

Welcome to the Future
Wind energy has been emerging over the last few years around the globe, and the U.S. is now finally beginning to follow along with the rest of the class. According to a Jefferies Research report, China and India emerged to the top of the wind industry; the two countries combined for over 20% of global installations in 2006 and 2007. In 2007, the U.S. accounted for 27% of the installations. What makes wind energy so attractive as an investment is the growth in the U.S. as well as the high-growth emerging countries in Asia. Throw in Europe, which has been a major player in the sector for years and the potential upside is limitless.

For more on wind energy, and other alternative energy investments, read our related article Top 10 Green Industries, and What Does It Mean To Be Green?.

comments powered by Disqus

Trading Center