5 Winners in the Energy Megashift
06/25/2012 11:15 am EST
There's no doubt that fossil fuels will continue to be our main sources of energy in the near term, but conditions are ripe for technology and necessity to move developed and developing markets toward "smarter" energy sources and strategies, writes Michael Murphy of New World Investor.
The transition away from the oil-based economy is going to take decades, and there is a lot of new energy technology coming along to find more oil, use it more effectively, or replace it with alternative energy sources.
For example, the hybrid car is both a way to use oil more efficiently now through higher gas mileage, and to road-test the drivetrain for the hydrogen fuel cell motor, which is coming later. But I’m interested in any part of the energy chain where applying new technology will make a major difference.
Axion Power (AXPW)
Buy Limit: $1; Target Price: $1.50 in 2012; $6.30 or higher in a few years.
Axion Power makes automobile batteries in which they replace the lead negative electrodes in a lead-acid battery with carbon electrodes. With that one change, they have created a third-generation lead-acid battery precisely suited for the start-stop or idle shutoff application, and competitive in hybrid cars and locomotives.
Buy Limit: $5; Target Price: $10 in 2012; $15 in 2013.
Exide is a battery manufacturer recovering from a 2002-2004 bankruptcy filing. New management has rationalized the company, and the upcoming switch to stop-start microhybrids will create opportunities, as they have a technology agreement with Axion Power.
Infinity Energy (IFNY)
Buy Limit: $2; Target Price: $7 first target; could be $100-plus someday if they survive.
IFNY is a Denver-based oil and gas driller and producer, perpetually out of money. They own 100% of a 1.6 million-acre concession offshore Nicaragua, where I think there are five billion-barrel oil fields waiting to be discovered.
Ocean Power Technologies (OPTT)
Buy Limit: $8; Target price: $20, maybe, in 2012; $40 eventually.
OPTT develops and commercializes systems that generate electricity from ocean waves. The company has numerous patents on a wave energy converter, PowerBuoy, which turns the mechanical energy of a wave into low cost, clean electrical power. Its customers include independent power producers, public utilities, and a variety of governmental organizations and agencies.
Rentech Hold (RTK)
Buy Limit: $2; Target Price: $3 in 2012, $5 or $6 in 2013, and $8 in 2014.
RTK has patented technology to turn all US coal into oil. This “green” technology uses domestic resources to produce ultra-clean synthetic fuels from coal, natural gas, or biomass.