American Wind Energy Companies

I get a lot of people asking about domestic or American wind energy companies.

To be clear, what they’re really asking about are American wind energy stocks, of which there are only a handful. And there are even less than that if you count only the investment-worthy companies.

Making the picture even less clear, there are wind stocks or funds that trade on American exchanges but are based or made up of foreign companies.

This piece is meant to sort all that out, and identify the best wind investment vehicles that trade on domestic exchanges.

American Wind Stocks: What to Avoid

I may have mentioned this stock before, but mounting economic pressure has all but slammed the door on Composite Technology (OTCBB: CPTC).

In the past three months the stock has skid from more than $0.35 to $0.16. With other pure play wind investment options available, CPTC should only be watched, not played, at this point.

The same holds true for other small time players like AAER (TSX.V: AAE), which has lost 40% of its value in the past year, despite a nice over the past month or so.

With such grim overarching conditions, we must realize that the road to recovery will be loner–if at all–for these small time players–even with mounting federal support.

Developers, too, should be avoided, as they rely on financing mechanisms that have become obsolete in the new world of constrained credit.

I’d even avoid non-pure plays on the wind industry like Otter Tail (NASDAQ: OTTR) and Trinity (NYSE: TRN), which have been touted by the Jim Cramers of the world, but are really irrelevant in the current wind game.

To get good returns on wind stocks, here’s where you should be looking.

American Wind Stocks: What to Buy

The best domestic wind stock available for purchase right now is American Superconductor (NASDAQ: AMSC).

In addition to providing products that enhance the transmission of clean energy, AMSC also profits by licensing a proprietary wind energy system to third party manufacturers. (AAER, coincidentally, is one of them.)

What’s more, even though this is a domestic company, over 66% of its revenues come from Asia. Their model is to license their wind turbine intellectual property to low cost manufacturers.

And they’re doing a great job at it.

I like this company under $20.00, and certainly at the ~$15.00 level, where it currently trades. Apparently, the Street likes it at these levels, too.

Look what the stock did this morning on news China (one of its major markets) was going to pass a economic stimulus:

That’s 15% in a day. But there’s much more to come from this one.

As I see it, AMSC really is the only domestic pure play wind company in town. GE (NYSE: GE) dabbles, but is a widely diversified conglomerate. And its share price is getting whacked lately.

The only other way to play the wind trend is through an ETF that holds big foreign players. PowerShares Global Wind Energy (NASDAQ: PWND) and First Trust Global Wind Energy (NYSE: FAN) are the two to look at there, though I like the latter a bit better.

More on wind energy and related investments in coming issues.

To green energy and green profits.

Chris
Clean Energy Sector