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Megatrend:
Wind Energy on Pace to Quadruple by 2020 |
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Remember
John Naisbitt's books 'Megatrends' from 1982, and then 'Megatrends
2000' from 1990? In it, the author talks about massive socioeconomic
paradigm shifts we all need to understand, so we can profit or benefit
from. Well, we've got a 'megatrend' idea of our own for you today....one
that could also make you a lot of money between now and the year 2020.
 The
megatrend is wind energy, and we weren't kidding when we said the
industry could quadruple in size by 2020. If plans don't change
significantly, it will do just that.
The best part
for investors is how the manufactures in the field are booked solid, and
demand is growing faster than manufacturing capacity is. There are
also plenty of ways for wind energy technology to improve (i.e. be more
cost effective), meaning the sector's components won't be a mere commodity.
A 'better mouse trap' may well translate into a better stock.
Though there
aren't a lot of pure wind energy stock plays out there just yet (and evenfewer
U.S. wind energy stocks), that's ok - we're just laying the groundwork
now so you can spot the best stocks when the time is right.
Below, you'll
find the stats and information you need to get the most out of the wind
energy megatrend.
Confession time
- we've actually already published the results of our research. Where?
In the blog (one more reason it pays to check out our home page on a
regular basis). However, given its importance, we want to make sure
we present the information to everyone. We'll recap and post a link
to each section below.
 Fan
Blades - The Wind Energy Industry's Budding Niche
Back when nothing
about
wind energy was particularly efficient, the ineffectiveness of the blades
on a windmill wasn't even a concern - there were bigger things to worry
about. Now, however, airflow modeling technology has exposed mis-shaped
wind blades as a serious trouble spot. Good news though... those challenges
can be addressed.
It's not just
the shape of the blades though. The materials used to make these giant
fan blades (some hundreds of feet long) also make a huge difference
in weight, durability, and flexibility. Even the materials suppliers are
set to experience a noticeable bump in demand if the industry continues
to grow.
Those manufacturers
and suppliers are also investment opportunities.
Cost-Effective
Wind Energy Relies on Better Gearboxes
 Though
fan blades may be the most obvious - and biggest - part of any windmill,
the gearbox may actually be the most important. Why? That's
where all the torque starts to turn a turbine. It's also where the majority
of the wear and tear (and maintenance expense) is. Needless to say, a better
gearbox may push the industry over the edge when it comes to making wind
energy cost-competitive with gas and coal.
Interesting
nuance about gearbox manufacturers - the biggest ones aren't necessarily
the best ones. They are the biggest ones though... for now.
Some of the smaller players in this niche could soon beat those bigger
companies at their own game though.
As with the
fan blades, gearbox manufacturers and parts suppliers (for the entire windmill
mechanism) are investment opportunities. Many of them are already publicly-traded
companies. Some of those specific companies and their leading-edge technologies
are highlighted in this portion of our research.
Wind
Energy to Quadruple by 2020 - A Massive Opportunity
The success
of this megatrend really all boils down to one thing... demand.
There's lots of it, and it's not just a minor, 'perceived' demand. Billions
(yes, with a 'b') of dollars are poured into the resource every year, and
the number is set to increase every year between now and 2020.
As for the reality
of the energy resource, many investors may be shocked by just how
many windmills are already up and running, and how much power they provide.
Tens of millions of homes are already powered by wind, and millions more
are on the way. That's the opportunity behind it all though. Waiting
to invest until you see those fans blades spinning on a horizon near you
will, frankly, be too late.
This section
puts that demand into perspective, backed by real dollars.
The contest
of who can create the most unique, specialized exchange-traded fund has
produced wind energy ETFs as well, like the First
Trust Global Wind Energy ETF (NYSE:FAN), and the PowerShares
Global Wind Energy ETF (NASDAQ:PWND).
At first glance
these two tools may seem like the easy, perfect way to capitalize on this
megatrend. And, they're not bad in that capacity. They're not great
though.
The problem
is, there are so few publicly-traded wind energy companies, some of
the ones you get with the ETF may not be ones you want. There are also
some non-public wind energy companies held by the ETFs. That's not
necessarily a bad thing, but there's a lack of transparency with a privately
held company... how do you really know what the ETF should be worth
if you don't know what its components are worth?
We contend there
are enough publicly-traded wind energy companies out there - or related
support/supplier companies - to tap into this megatrend without
using the ETFs. The detailed three-part report referenced above will help
you start finding them, and spotting them as they materialize in the future.
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Updated: 8:15 pm PDT (03:15 GMT), November 2, 2010
