Sunday, May 25, 2008

Surf the Wave Power Stocks

Wave power, is the capture of the energy from waves on the surface of the ocean. It is one of the newer forms of renewable or 'green' energy under development, not as advanced as solar energy, fuel cells, wind power, ethanol, geothermal companies, and flywheels. However, interest in wave power is increasing and may be the wave of the future in coastal areas [no pun intended]. All of the following companies participate in wave power, however for most of the following stocks, wind power is only a very small part their business.

Pacific Gas and Electric Company (PCG) is building the first American commercial wave power plant in Northern California, in conjunction with Finavera, which will be located 2.5 miles offshore and is expected to begin operating in four years, powering about 1500 homes. The contract to begin the project was signed in 2007. The stock has a PE of 15 , a PEG of 1.77 and a yield of 3.9% .

Siemens AG (SI) is a joint venture partner of Voith Siemens Hydro Power Generation, a leader in advanced hydro power technology and services, which owns Wavegen, Scotland's first wave power company. The stock has a PE of 8 , a PEG of 0.81 and a yield of 1.6% .

Ocean Power Technologies, Inc (OPTT) develops proprietary systems that generate electricity through ocean waves. Their PowerBuoy system is used to supply electricity to local and regional electric power grids. The company recently generated negative earnings of $1.38 per share. This is a very low cap stock of $95 million and should therefore be considered very speculative.

Finavera Renewables (FNVRF.PK) is a Vancouver, Canada based company which is building a wave farm 2.5 miles off the California coast near Humboldt County, and will be using their product called the Aquabuoy. They are also working on projects in British Columbia. The company has been generating negative earnings. This is an extremely low cap stock of $40 million and should therefore be considered extremely speculative.

Pelamis Wave Power, formerly known as Ocean Power Delivery, is a privately held company which has several owners including various venture capital funds and Norsk Hydro ADR (NHYDY.PK). Norsk Hydro has a PE of 5 and a yield of 5.5% .

Endesa SA ADS (ELEYY.PK) is a Spanish electric utility which is developing, in partnership with Pelamis, a full scale wave power farm off Agu├žadoura, Portugal which should eventually power 15,000 homes. The stock has a net profit margin of 20.8% and a return on average equity of 4.04%.

RWE AG ADR (RWEOY.PK) is a management holding company with six divisions involved in power and energy. They are developing wave power stations in Siadar Bay on the Isle of Lewis off the coast of Scotland. The stock has a PE of 24 and a yield of 3.9% .

Author does not own any of the above.

By Fred Fuld at Stockerblog.com

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