Text size: Small font Default font Larger font

Have an account? Please log in.

.
TSI Network
Patrick McKeough is one of Canada’s top safe-money advisors. The Wall Street Journal, Forbes and The Hulbert Financial Digest have all recognized his ability to find stocks with hidden value. He is editor and publisher of The Successful Investor, Stock Pickers Digest, Wall Street Stock Forecaster and Canadian Wealth Advisor; inventor of the Quick Profit/Value System and the ValuVesting System™. A best-selling Canadian author, he wrote Riding the Bull, the book that predicted the 1990s stock-market boom.

How to cut your risk in wind power stocks

March 31, 2010 -  Be the first to comment
Posted by: Pat McKeough Filed in: Green Stocks
  • Comments
  •  
  •  
.

The seeming attraction of wind power stocks is obvious — these companies operate (or make parts for) wind turbines, which offer a source of clean, endlessly renewable energy that can replace fossil fuels like oil, coal and natural gas. However, like other alternative-energy firms, wind power stocks face significant costs and risks.

One of the main problems with wind power is that varying wind speeds cause its electricity output to fluctuate. In many areas, the wind is stronger in the daytime, when demand is lower, and dies down in the evening, when consumers use more appliances. As well, electrical power can’t be stored efficiently, so to make economic sense it must be used when it is produced. As a result, utilities must maintain back-up power capacity that is equal to their reliance on wind power.

Wind power stocks also face high construction costs. These include the cost of the turbines themselves, plus buying or leasing the necessary land. Installation can also be expensive, depending on the terrain and distance from the power grid. Not surprisingly, many of these companies are heavily reliant on uncertain government subsidies and political support.

“What works in Canada is working in the U.S.” That’s what Mr. Peter Brimelow of Dow Jones MarketWatch recently wrote about Wall Street Stock Forecaster, one of a group of “remarkable Canadian newsletters” that have “assembled a long and very strong record.” The record, as compiled by the authoritative Hulbert Financial Digest, shows that the compound annual return of Wall Street Stock Forecaster has beaten the Wilshire 5000 Total Market Index by almost 30% over the past decade. You are not getting the full potential out of your investments if you do not include a selection of the best U.S. stocks in your portfolio. And the results show that Wall Street Stock Forecaster uncovers the American stocks with the greatest growth potential. As a new investor, you can get the first month FREE plus you will start profiting from our weekly hotline updates and recommendations immediately. Reply now. Click here.

Infrastructure suppliers have much less risk than wind power stocks

A good way to profit from rising demand for renewable energy (including wind power) at lower risk is to focus on companies that build components for electrical-power grids.

In spite of the weak economy, governments around the world continue to invest heavily in upgrading their electrical grids. That’s partly because power-grid upgrades are important to the continued development of renewable energy projects, including wind farms.

While most power plants are located near big cities to keep costs down, wind farms tend to be in more remote areas with steady winds. As well, a lack of transmission capacity has been a major problem for wind projects.

One electrical infrastructure supplier that stands to benefit from continued government investment in transmission-grid upgrades is Switzerland-based ABB Ltd. (symbol ABB on New York). We updated our buy/sell/hold advice on ABB in a recent issue of our Wall Street Stock Forecaster newsletter.

Rising demand for wind power should help ABB

ABB makes transformers, transmission switches and other equipment for distributing electricity.

In late 2009, ABB received a $30-million order for specialized power equipment from Ontario’s main electricity utility. The company will deliver this equipment in 2011. This order is small next to ABB’s annual revenue of $35 billion U.S. But it could lead to more orders as Ontario closes its coal-fired power plants and invests in green-power projects. ABB is also seeing higher demand for its power equipment from developing countries.

ABB’s revenue and earnings fell slightly in 2009. However, the company is doing a good job of controlling its costs; it has been cutting jobs, closing plants and buying more raw materials from low-cost countries. These factors, along with rising demand for electrical infrastructure, could mean strong gains for ABB in the coming months.

As a member of TSI Network, you may have already seen Canadian Stock Market Basics: How to Trade Stocks and Make Good Investments in Canada. If you haven’t yet read this new free report, click here to download your copy today. I’d also encourage you to share the report with a friend by forwarding this email to them. It’s my “thank you” just for signing up for my free daily updates.

Be the first to comment
.

Permalink: http://www.tsinetwork.ca/?p=38607


All of our articles are available for republishing as long as you provide a link back to the original article.

Tags: , , , , ,

  • Comments
  •  
  •  
.

Would you like us to inform you when new articles are posted?

What do you think? Go ahead and add your comment.

Please be respectful with your comments and help us keep this an area that everyone can enjoy. If you believe a comment is abusive or otherwise violates our Terms of Use, please click here to report it to the administrator.

Comments are closed.

.

Free Subscription to
The Successful Investor Network Daily

  • Daily investment advice you can act on
  • Free access to our special stock market reports
  • Plus much, much more! Try it today
Twitter Facebook
Follow TSI Network on Twitter and Facebook!

TSI Network Products

In today's economy, it's more important than ever to have clear investment advice that is tailored to your own personal goals. This is where Pat McKeough's conservative safe-investing philosophy comes in. Through TSI Network, you get access to reports, monthly newsletters and premium services that go beyond the daily headlines to give you all the advice and information you need to build a portfolio with long-term growth potential. Simply click on the links below to discover which service is right for you.

.
.