Thursday, January 12, 2006

Make Money on Hybrids!

(Click image to enlarge; courtesy of

This one's a no-brainer. Energy Conversion Devices (ENER, $48.54) is set to capitalize not only on the solar boom (I neglected to identify ENER in my previous post on Solar), but hybrid/fuel-efficiency trend. The company profile of ENER on Yahoo Finance is described here:

Energy Conversion Devices, Inc. engages in the invention, engineering, development, and commercialization of materials, products, and production technology in the fields of alternative energy technology and information technology. The company also involves in research and development, and production of proprietary materials and products, as well as in designing and building production machinery. In addition, it offers Photovoltaics, which provides clean energy by converting sunlight into electricity. Further, the company, through a joint venture with Chevron Technology Ventures, provides nickel metal hydride batteries for various applications, including transportation, telecommunication, uninterruptible power supply, military, homeland security, stationary power, and other prismatic battery applications. Energy Conversion was co-founded by Stanford R. Ovshinsky and Iris M. Ovshinsky in 1960. The company is based in Rochester Hills, Michigan.

It is ENER's nickel metal hydride batteries that are used in Toyota's hybrid gas-electric technologies in its sensationally popular and chic Prius cars, the iPods of the automotive industry. See this article on a bullish forecast on hybrid sales by respected market analysts, J.D. Power and Associates (click here). At this week's 2006 North American International Auto Show, the theme "Small is Big" carried the day (see "What's Hot at the Detroit Auto Show", SmartMoney, Jan. 11, 2006). The market has spoken and it wants fuel efficient, smaller cars!

Some recent developments over the past few days:

  • Ford has shifted strategy to smaller passenger cars
  • Both GM and Ford are developing flex-fuel cars that run on both conventional gasoline and gasoline-ethanol blends
  • The Toyota Camry Hybrid to be released in 2007 will help seal Toyota's place as America's #1 auto company
  • The EPA is improving accuracy of gas mileage ratings by revising calculation methodologies (to prevent overinflated ratings)
  • Traveler's Insurance to provide hybrid users with discounted auto insurance premiums.
All these stories can be found at this wonderful blog: Green Car Congress.

ENER's leadership in nickel metal hydride batteries (and PV cells) make it a great bet going forward. It may be at a 52-week high $48+, but I think it's worth $60.

Note: I do not own ENER stock. Yet.

Energy Security in Peril

In an effort to post more often, I will now change my posting style to shorter, punchier posts. I start the new year with a look at the Russia-Ukraine gas supply spat, which has gained a lot of press coverage and analysis.

Most of the western press have characterized Russia'’s "compromise"” to restore gas supplies after two days as a defeat to Russia and an embarrassment to its new G8 presidency. However, an Asia Times article ("The Kremlin and the World Energy War", Jan. 9, 2006) convincingly argues that Russia mostly got the upper hand. I highly recommend this article for an in depth analysis of Russia’s motivations.

The Economist ("Nervous Energy", Jan. 7, 2006) misses the point. In interpreting the end-result as a Russian defeat, the venerable British newspaper argues that the moral of the Russia-Ukraine incident is that energy suppliers need its consumers as much as consumers rely on their suppliers. On the contrary, it has reaffirmed the potency of the energy weapon and more dangerously, undermined the U.S.' regime change drive in the former Baltic states. The ironic result of the U.S. driven Colored Revolutions in Eastern Europe is that it has instigated Russian backlash and exacerbated America’s energy security problem.

Natural gas has often been touted as the bridge of our oil-based economy to the hydrogen economy. But as Paul Roberts points out in his book, The End of Oil, the natural gas economy faces the same geopolitical risks as oil. Just as Oilsville has to contend with politically unstable OPEC, Natural Gasville has Russia and Iran to tout as its top two producers, not exactly the most democratic or Western-friendly of states.

U.S. foreign policy is not helping one bit.