Clean Tech
The clean tech umbrella covers myriad businesses ranging from farm-efficiency technologies and electricity-usage meters to industrial sensors and controls. Clean tech is now the third-largest venture capital sector, says Rafael Coven from Cleantech Indices, who acknowledges that not all of these investments are well thought out.
"There's money going into good and bad deals," he says. But Coven adds that clean tech on the whole is filled with demand-driven opportunities on a global scale that provide long-term opportunities.
"That said, some of these businesses won't grow at exponential rates like Internet companies did," he says. "Some will take more time to scale up."
John Quealy, an analyst at Canaccord Adams, says one of his top choices in the clean tech space is Itron, whose products help utilities operate more efficiently. It's the world's leading electricity metering company and the second-largest gas metering company, prompting Quealy to call it the Microsoft of metering.
Itron's stock doubled last year before it imploded in November because of delayed purchases Quealy blames on the product-cycle timing of one of its next-generation products. He says an expected product-cycle upgrade and a recent big contract to supply smart meters to California's largest electric utility sets it up for solid improvements in this year's second half.
Itron is also a top pick of Hilary Kramer, president of GreenTech Research, a hedge fund focused on alternative energy and clean tech investing. One of her favorite themes is companies that help put alternative energy on the grid and that help manage the energy after it's on the grid, a list that includes American Superconductor, Comverge and Enernoc.
Kramer's fund is also big on companies that will play a role in China's expected wind boom, and it likes waste-to-energy companies such as Covanta Holding Corp. and Environmental Power Corp. The latter, one of the few publicly traded companies that converts livestock waste to energy, turns methane from manure (a more potent greenhouse gas than carbon dioxide) into biogas. But the company's small float and recent $4 stock price make it a risky investment.
The Long Haul
As with the Internet boom, green tech offers both hope and hype, and will spawn both fundamentally sound businesses that profoundly improve the world, and speculative companies that never deliver the goods. And it's going to have its ups and downs.