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How To Play Alternative Energy Stocks
By Dr. Steve Sjuggerud
April 18, 2007

"I don't care how you feel about global warming..." Rick Rule told us yesterday.

"The reality is, $19 billion has been raised for 'climate change' investment funds. But there's less than $1 billion worth of investments out there that have a chance of succeeding."

Rick's implication, of course, was that the alternative-energy (like wind, solar, and geothermal) companies that "have a chance" of being viable could absolutely soar in value as all of this money piles into the sector. 

Rick Rule, if you don't know, is a legendary energy and natural resources investor. Among his many hats, he runs the brokerage firm Global Resource Investments. Rick was speaking at a private S&A meeting we held at the Ritz-Carlton in Naples, Florida.

"Look, for the most part, alternative energy doesn't work," he said. He was talking about alternative-energy sources in an economic sense, saying they can't compete with the old technologies.

"Two technologies do work... and they are geothermal power and wellhead hydroelectric power."

Rick's point was that this $19 billion is going to get invested... And the big Wall Street firms that raised the money and get a 1% or 2% annual fee are going to make sure their $200 million or $400 million annual fees are safe. So they'll likely direct that toward the most viable businesses. 

The easiest way to play alternative energy stocks is through the Powershares WilderHill Clean Energy Fund (PBW). This ETF is a basket of companies dealing in hydroelectric, wind, solar, etc...

While Rick didn't mention this fund in particular, the trend in the price of PBW confirms Rick's idea... The fund had been stuck around $17 a share since last summer. But now that oil prices are recovering, it has recently broken out and hit $20 a share. 

At DailyWealth, we're skeptical of alternative energy investments – we believe that it will be a long time before these businesses become profitable, if they ever do.

But when it comes to energy, Rick Rule is smarter than us. And he's telling us that the demand for alternative-energy investments is far greater than the supply of worthy investments.

This enormous pile of cash will get invested, and will push alternative energy plays higher. Your feelings about Al Gore are irrelevant. According to Rick, these stocks are going up.

Good investing,

Steve

P.S. Here in Naples, I made sure I saw guitar player Andy Wahlberg. If you didn't know, I am a guitar fanatic... I love playing 'em, collecting 'em, restoring 'em, whatever. You name it, I'm interested.

I am hard to impress when it comes to the guitar. But Andy's instrumentals on his 11-string "harp" guitar were about as extraordinary as it gets for guitar players. I highly recommend ordering his solo harp guitar CD called "Collections." Check Andy out.

Editor's note: Steve Sjuggerud is a regular contributor to DailyWealth, a free investment newsletter focused on the world's best contrarian opportunities. We write with a simple belief in mind: You don't have to take big risks to make big money with your investments.

Sign up today to read more investment ideas from Steve Sjuggerud.

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ANOTHER GIANT EXTREME VALUE WINNER

The hot streak of our colleague Dan Ferris continues...

This time it's illustrated by the all-time high reached this week by Hong Kong-based holding firm KHD Humboldt Wedag (KHDH). The stock has returned 295% since Dan's recommendation in his Extreme Value advisory. It's also one of seven stocks with triple-digit gains in his portfolio.

What's Dan’s secret? He does more homework than anyone we know... and he loves to buy companies that make the average investor cringe. (His most recent recommendation is in the lending business). Whatever the reason, we can't imagine being an investor without reading Extreme Value.

We even spoke with one of the world's top resource bankers – a man worth hundreds of millions of dollars - who said, "Extreme Value is very likely the most useful investment letter in the world."

– Brian Hunt

The British pound broke through the $2 mark on Tuesday for the first time in nearly 15 years after new data showed an unexpected surge in inflation, prompting speculation of interest rate increases.

Because of the pound's appreciation over the past few months, a Big Mac sandwich at a McDonald's restaurant in London now costs the equivalent of about $4, and a pint of beer at a local pub costs more than $5.

The pound was at its highest level since "Black Wednesday" in September 1992, when Britain crashed out of the European Exchange Rate Mechanism.

- AP

British finance minister Gordon Brown faces claims he ignored Bank of England advice and sold half the country's gold stocks at the bottom of the market.

Senior central bank figures expressed misgivings about the decision to auction 400 tonnes of bullion between 1999 and 2002, according to the Sunday Times.

The central bank's then governor, Eddie George, had described the move as a "perfectly reasonable portfolio decision," according to the spokesman.

- Herald Sun

Hillary Clinton announced that she will now meet with the Rutgers women's basketball team.

In a related story, Bill Clinton announced he's going to meet with the Rutgers women's swimming, volleyball, and gymnastics teams.

- Conan O'Brien

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