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If they ever write a rule book for green investing, Rule One should be: don’t get your advice from a traditional financial analyst. When Enron came a cropper several years back, the Street soured on alternative energy. A generation of green financial experts who would now be at the top of their game were unceremoniously shown the door.

Instead, turn to industry specialists – people who, while they can’t tell you if Widget Corp. is going to earn 2 cents or 3 cents a share next quarter, can see how the clean and green energy economy is coming together and which companies could ultimately be big winners.

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Case in point: Mike Millikin, who runs the authoritative web site Green Car Congress. Chatting with Millikin is always an eye-opener, because he sees green investing with the trained eye of a scientist and politician combined. Last week Millikin took time to speak with EnergyTechStocks.com and, true to form, his insights were at once a head-scratcher and potentially very rewarding for long-term investors.

He began by emphasizing that California’s new low-carbon fuel standard could make it impossible to use Canadian tar sands oil to produce gasoline. As a result, Millikin expects oil companies to sharply increase investments in renewable hydrocarbons, particularly bacteria and algae. Millikin is big on bugs. He expects laboratory-grown bacteria will become the basis for a much more economical alternative to traditional oil exploration and production. It will still be gasoline, just not from the ground.

While Millikin had previously highlighted Shell (NYSE:RDS.A) and Chevron (NYSE:CVX) as oil companies poised to capitalize on bugs (see Green Tech Expert Mike Millikin: The Potential Of These Bugs Is Mind-Blowing - Part 2 of 2), this time he highlighted the French outfit Total S.A. (Symbol: TOT) because of its recent investment in the privately-held advanced biofuels company Gevo. Millikin emphasized that Gevo’s genetically-engineered bugs appear to hold great promise for producing renewable hydrocarbons, not just for cars and trucks, but also for airplanes and a variety of petro-based chemicals. Hooking up with Gevo, Millikin inferred, could be very advantageous to Total’s bottom line over the long term.

Meanwhile, Millikin said it looks very unlikely to him that President Obama will reach his goal of one million plug-in electric vehicles by 2015 due to the need to further develop both the required technology and infrastructure. Expecting most cars to continue running on gasoline for a long time to come, Millikin mentioned the “really interesting papers” that Honda Motor Co. (Symbol: HMC) recently presented on its variable compression ratio engine. “Think of it as a piston within a piston,” Millikin explained, though to investors the more important point is that Honda’s newest advances in this area position the automaker to increase vehicle efficiency while using more biofuel, all without sacrificing power or vehicle size.

Millikin said a colleague had indicated that if anyone other than Honda had said it was going to be making a more efficient and environmentally-friendly engine that still gave consumers the size and power they want in a car, that car company would have been laughed at. “But Honda (already) makes good engines,” Millikin remarked.

And, apparently, it is about to make even better ones that could be a big boost to sales.

Disclosure: No Positions

Source: Odd Couple: How Honda and Total Could Make a Winning 'Green' Investment