It can be a gamble to invest in alternative energy

Consider Owens Corning oc, which makes insulation. The company has seen its shares fall 34% the past 12 months, in large part because of the housing slump. Nevertheless, it is expected to earn $1.01 per share in 2009, which gives it a forward price-earnings ratio of about 20 — not cheap but not hideously expensive.

Another good conservation play is Johnson Controls, jci which offers a number of energy-saving devices for large and small buildings.

If you prefer not to pick stocks, several funds specialize in alternative energy:

• New Alternatives fund, the granddaddy of alternative energy, was born in the energy crunch of the 1970s. Ticker: NALFX

• Firsthand Alternative Energy ALTEX was launched around the first of this year.

• Calvert Global Alternative Energy, also launched this year, trades under the ticker CGAEX.

You can also consider a few exchange traded funds. The PowerShares WilderHill Clean Energy fund tracks a portfolio of green power companies and trades under the ticker PBW. Market Vectors offers the Global Alternative Energy fund GEX.

You don't have to believe that the world's oil supply is running out to be convinced that gas prices will remain high. All you have to believe is that there's something better out there, says Wilder. "The Stone Age didn't end because they ran out of stones," he says.

John Waggoner is a personal finance columnist for USA TODAY. His Investing column appears Fridays. Click here for an index of Investing columns. His e-mail is jwaggoner@usatoday.com.

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