All sorts of drillers and developers are on the list. But the most interesting name may be NRG Energy (NYSE:NRG).
That's because NRG isn't a driller. It's the driller alternative. NRG builds, sells, and trades electrical power, much of it in the form of solar power. At its current price of about $16.40, it's trading at a PE of about 14, south of IBM (NYSE:IBM) and north of Microsoft (NASDAQ:MSFT).
What makes NRG a bargain is the renewable fuel halo. Corporate electricity users like Starbucks (NASDAQ:SBUX) and Kohl's (NYSE:KSS) buy "green energy credits" that represent the difference between market prices for electricity and NRG's costs, which they use to claim "no carbon footprint."
It's not a government subsidy, but in the market it's just as good as one. This "energy credit" business is why Berkshire Hathaway's (NYSE:BRK.A) MidAmerican Energy Holdings has been quite happy to go into business with NRG, buying into its Agua Caliente plant in California.
In addition to wind and solar, NRG has bets on biofuels. That's a tough business so it's not going alone. BP (NYSE:BP), GE (NYSE:GE), Google Ventures (NASDAQ:GOOG) and ConocoPhilips (NYSE:COP) are all among its partners in CoolPlanet Biofuels, which recently demoed what it calls "negative carbon gasoline" - the "waste" from its production process can actually sequester carbon.
Maybe this cellulosic ethanol project is the next big thing. Maybe it isn't. NRG's downside is limited, and look at the names it has in its Rolodex now. It also knows how to spin the media, rolling out a "smart home on wheels" during CES. And that's one of its brand names, Reliant, on the Houston Texas' stadium.
All this adds up to the highest earnings per share growth rate in the independent power production industry. And you can get it on sale.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.