2 For 1: Chinese Clean Energy Stocks

With more than 10% growth per year, China's economy is an unstoppable train. I call it "the money train". The booming Chinese economy makes it heaven for the hyper-growing companies there. We as investors are having a once in a life time opportunity to benefit from these unique global market conditions. Our focus should be on the Chinese stocks, or ADRs traded on Wall Street.

Another unique opportunity comes from the global-warming issue. Coupled with high oil prices, global warming makes the renewable stocks a gold mine for investors. Governments all over the world are now willing to subsidize clean energy, and even the UN declared that massive investments should be done. For example, China's energy czar, Chen Deming, said that China needs $265 billion in investments to meet its renewable energy goals for the next 12 years. $265 Billion! The US has a 'twenty in ten' target, China has a 10% target for renewables by 2020, India has a 10% target by 2012, and EU countries have recently signed up to a 20% mandatory target for energy consumption from renewable sources. In 1997, Ernst & Young predicted global investment in renewable energy would reach US$70b by 2006. At the time, this figure was considered ambitious, but in fact, investment in the renewable and clean energy sector reached just over US$100b in 2006 and could rise to over US$750b by 2016 at current rates of growth.

The sophisticated investor should try to enjoy both worlds of opportunity; if you seek cheap Chinese energy stocks, you will enjoy the benefits of fast growing industry (clean energy) in a comfortable economic environment (China). In the renewable stocks sector, there is the solar industry, which enjoys the fastest growth rate, so the sophisticated investor should look for his gold there.

But one should be careful in picking those stocks, since most of them are not as cheap as they used to be only few months ago. To name few: JA Solar (JASO) with expected P/E=56 for the year and f P/E=36 for 2008, Yingli Green Energy (YGE) with expected P/E=81 for the year and f P/E=42 for 2008, or Sunpower (SPWR), investor's favorite, with P/E=89 for the year and f P/E=59 for 2008. Those are not so cheap, but if you're willing to give your trust to fresh IPOed stocks, you can check Canadian solar (CSIQ) with an expected forward P/E=13 for 2008, or Trina Solar (TSL) with an expected forward P/E=14 for 2008. Oil is now already above $91 and we should see another boom in the Chinese Renewable Stocks.

Disclosure: Author has a long position in some of the above-mentioned securities

Comments

[growthvalue:]

SNEN.OB is another quality clean energy play for CNG powered cars, taxis and buses. With the support of the Chinese gov, providing tax breaks to the company, I see this being a great long term growth hold.


Boone Pickens, founder of Californian based natural gas fuels provider, Clean Energy Fuels, is said to be eyeing up China for investments supplying fuel for natural gas vehicles. Reuters reports that Pickens was in China last week in talks with state oil firm CNOOC. The report says talks centred around the company teaming up with Chinese companies to build natural gas fuelling stations for buses and trucks. Pickens is a long-time advocate of natural gas as an alternative fuel for transport, saying it is a more valuable use of the resource and to use it for power generation.

It seems to me SNEN is already ahead of the game....I wonder if Pickens would ever try to intergrate with SNEN

2007 Nov 01 05:56 PM