Wind Energy Stocks: Forecast & Trends

Posted on | September 3, 2008 |

The growth rate of the wind industry is literally enough to blow you away.

From 2000 to 2007, the wind industry has grown 482% on a global scale, from about 14,500 installed megawatts (MW) to nearly 90,000 installed MW.

Of course, that’s old news. But what’s about to come is equally impressive.

From now until 2012–just four years–the wind industry will double twice more, to nearly 268,000 installed MW. The fastest growing wind markets during that time will be Turkey, Mexico, Brazil, China, and Poland.

Those are the fastest growing markets, but certainly not the largest market. The largest wind markets call home to China, U.S., Spain, Germany, and India.

But you really can’t make any money investing in wind energy stocks by knowing where the majority of wind installation are taking place. What we really need to know is who is providing the turbines and construction services.

Wind Energy Companies & Wind Stocks

Let’s begin with the U.S., since that’s our domestic market. Although, I will tell you, many of the wind leaders here in the States are international companies.

By volume of installed turbines, the largest wind companies operating in the U.S. are:

• GE Energy (NYSE: GE)

• Vestas (CPH: VWS)

• Siemens AG (NYSE: SI)

• Gamesa (MCE: GAM)

• Mitsubishi Power Systems

• Suzlon Energy (NSE: SUZLON)

• Clipper Windpower (LSE: CWP)

• Nordex (XETRA: NDX1)

Each of these companies is good way to gain exposure to the domestic wind market, but some are pure plays and others are not. GE and Siemens obviously fall in the latter category.

The others, especially Vestas and Gamesa, are pure plays, and will each expand revenue as the wind market grows. We learned early that the global wind market will double twice more in the next four years. The U.S. wind market will nearly triple in the same time.

Using what we know, it’s probably wise to look at the companies with the most wind contracts in the countries poised to have the most growth in coming years.

When I run those numbers, the same companies keep showing up.

Vestas is the far-and-away winner. Clipper and REpower Systems have also received their fair share of contracts. Nordex is also among the big winners.

But there are two sleepers in my opinion. Composite Technology (OTCBB: CPTC) and AAER Inc. (TSX: AAE) have each received a decent number of contracts. In fact, AAER is providing turbines to an installation for the U.S. Marines.

While their contracts aren’t near the volume of the larger players, the low shares price of CPTC and AAER offer more upside than investing in the other companies. Plus, they’re both pure plays.

Investing in Wind Energy

Opportunities abound in the domestic and international wind markets.

The most secure way to play the coming boom is to invest in the large international companies that are dominating the scene.

It’s probably also worth picking up shares of GE and Siemens as a stalwart, non-pure play.

Beyond that, purchasing shares of the two North American companies mentioned is a good way to play the domestic wind growth.

In coming issues we’ll dive into other ways to play the wind market, including through utilities that own wind assets and through companies that provide logistics and construction rather than turbines.

To green energy and green profits,

Chris
www.CleanEnergySector.com

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