Now that the big mid-term election is over, Wall Street needs to assess potential winners and losers among the various sectors. One clear beneficiary of increased Democratic influence is likely to be alternative energy.
But that’s not an easy sector for investors to play. Some companies are very small and their stocks are quite volatile. On the other side of the coin is a firm like Archer Daniels Midland Co. (ADM). Increased demand for ethanol should boost sales, but increasing costs for corn, a key raw material, could pressure margins.
Rather than try to handicap individual names, it may be worthwhile to consider exchange traded funds (ETFs) geared toward alternative energy. PowerShares has three offerings in this area.
The grand-daddy of the group, the PowerShares WilderHill Clean Energy Portfolio (PBW) which debuted on March 3, 2005, invests in “companies that focus on greener and generally renewable sources of energy and technologies that facilitate cleaner energy.”
On Oct. 24, 2006, the repertoire was enhanced by the addition of two more offerings: the PowerShares Cleantech Portfolio (PZD), which invests in companies that produce “any knowledge-based product or service that improves operation, performance, productivity or efficiency, while reducing costs, inputs, energy consumption, waste or pollution,” and the PowerShares WilderHill Progressive Energy Portfolio (PUW), which invests in “companies that are significantly involved in transitional energy bridge technologies, with an emphasis on improving the use of fossil fuels.”
Also noteworthy is the PowerShares Water Resources Portfolio (PHO). It’s not alternative energy. But its mandate, investment in “companies that focus on the provision of potable water, the treatment of water, and the technology and services that are directly related to water consumption,” has the sort of environmental flavor that might benefit from the halo of any good news impacting alternative energy. Besides, Democrats are often seen as being more environmentally oriented, something that could also help these stocks.
The tables below list the top 10 stocks, as of Nov. 7, for each ETF.
Table A WilderHill Clean Energy Portfolio (PBW), top positions
| Company | % of portfolio |
| OM Group Inc. (OMG) | 4.18% |
| SunPower Corp. Cl A (SPWR) | 3.89% |
| Energy Conversion Devices (ENER) | 3.86% |
| American Power Conversion (APCC) | 3.84% |
| Medis Technologies (MDTL) | 3.67% |
| Ballard Power Systems ()BLD.TO | 3.62% |
| Ormat Technologies (ORA) | 3.50% |
| Kyocera (KYO) | 3.21% |
| Suntech Power Holdings (STP) | 3.21% |
| Applied Materials (AMAT) | 3.10% |
Table B Cleantech Portfolio (PZD), top positions
| Company | % of portfolio |
| American Power Conversion (APCC) | 2.14% |
| Commercial Metals (CMC) | 2.04% |
| Watts Water Technologies (WTS) | 2.00% |
| SunPower Corp. Cl A (SPWR) | 1.91% |
| Medis Technologies (MDTL) | 1.87% |
| Metal Management (MM) | 1.87% |
| Pentair (PNR) | 1.86% |
| Ballard Power Systems (BLD.TO) | 1.85% |
| Capstone Turbine (CPST) | 1.83% |
| O2Micro International (OIIM) | 1.81% |
Table C Progressive Energy Portfolio (PUW), top positions
| Company | % of portfolio |
| Tenneco (TEN) | 4.74% |
| Chesapeake Energy (CHK) | 4.57% |
| Headwaters (HW) | 4.54% |
| Sasol Ltd. (SSL) | 4.50% |
| Baldor Electric (BEZ) | 4.05% |
| Aventine Renewable Energy (AVR) | 4.04% |
| Methanex (MEOH) | 3.94% |
| SunOpta (SOY.TO) | 3.92% |
| Linear Technology (LLTC) | 3.90% |
| ON Semiconductor (ONNN) | 3.85% |
Table D Water Resources Portfolio (PHO), top positions
| Company | % of portfolio |
| Watts Water Technologies (WTS) | 4.73% |
| Pentair (PNR) | 4.09% |
| Franklin Electric (FELE) | 3.67% |
| Millipore (MIL) | 3.65% |
| Danaher (DHR) | 3.64% |
| ITT Corp. (ITT) | 3.55% |
| Nalco Holding Co. (NLC) | 3.51% |
| Companhia de Saneamento Basico do Estado de Sao Paulo (SBS) | 3.44% |
| Aqua America (WTR) | 3.42% |
| United Utilities PLC (UU) | 3.41% |
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6 comments so far
I FOUND THIS INFO. HELPFUL. THANK YOU
- Posted by AL SMITHSmall private firms with revolutionary breakthrough energy technology, such as ours, are, of course, not included.
Yet, this technology may prove to be the Microsoft of the energy business.
- Posted by Mark GoldesI am thinking that, since this is an emerging industry, I would prefer to have a fund that activitly tracks and manages its investments vs. an ETF. Are there mutual funds that are similar to these?
- Posted by Tim Bakerdoes powershares have a uranium etf fund? or any etf or mutual fund or sector fund ?
- Posted by bill boycei still have not found a uranium fund! are they all in canada?
- Posted by bill boyceif anyone knows of a uranium etf or sector fund my e-mail is whboyce@sbcglobal.net
- Posted by bill boyce