Hope and Dreams Portfolio

November 21, 2008

The stocks in this group fall under the green/conservation/water umbrella. They are generally solving problems by doing good for society. Oh, and they make some money in the process.

Think positive and your dollars will respond in kind.

AMSC – supplies electrical systems used in wind turbines; sells power electronic products that regulate wind farm voltage to enable their interconnection to the power grid; licenses wind energy system designs to manufacturers of such systems, and provides consulting services to the wind industry.

BMI – is a manufacturer of flow measurement and control products, serving water utilities, municipalities and industrial customers worldwide. Measuring a variety of liquids, from potable water to oil and lubricants, to industrial processes, the Company’s products provide timely measurement information to its customers.

CCC – is a provider of products, and solutions for purifying water and air.

CDZI – is primarily engaged in acquiring and developing land and water resources. Its primary assets consist of 45,000 acres of land in three areas of eastern San Bernardino County, California. The Company’s portfolio of water resources are located in proximity to the Colorado River and the Colorado River Aqueduct, the principal source of imported water for Southern California, and provides the Company with the opportunity to participate in a variety of water storage and supply programs, exchanges and conservation programs with public agencies and other partners.

CLHB – is a provider of environmental services and an operator of non-nuclear hazardous waste treatment facilities in North America. The Company performs environmental services for over 45,000 customers, including more than 325 Fortune 500 companies.

CREE – focuses its expertise in SiC and GaN on light emitting diodes (LEDs), which consist of LED chips, LED components and LED lighting solutions. It also develops power and radio frequency (RF) products, including power switching and RF devices.

CWCO – develops and operates seawater desalination plants and water distribution systems in areas where naturally occurring supplies of potable water are scarce or nonexistent.

ELON – develops, markets, and sells system and network infrastructure products that enable various devices such as air conditioners, appliances, electricity meters, light switches, thermostats, and valves to be made smart and inter-connected. The Company’s products and services are offered to the principal markets, which include electric utilities, building automation, industrial automation, demand response, street lighting, home control and transportation.

FSYS – designs, manufactures and supplies alternative fuel components and systems for use in the transportation, industrial and power generation industries on a global basis.

FTEK – is an integrated company that uses a suite of technologies to provide boiler optimization, efficiency improvement and air pollution reduction and control solutions to utility and industrial customers worldwide. Fuel Tech’s special focus is the worldwide marketing of its nitrogen oxide (NOx) reduction and FUEL CHEM processes.

GRC – designs, manufactures and sells pumps and related equipment (pump and motor controls) for use in water, wastewater, construction, industrial, petroleum, original equipment, agriculture, fire protection, heating, ventilating and air conditioning (HVAC), military and other liquid-handling applications.

HAIN – is engaged in manufacturing, marketing, distributing and selling natural and organic food products, and natural and organic personal care products under brand names, which are sold as better-for-you products.

HEV – has developed a working prototype of its hybrid electric vehicle (HEV) battery pack and is producing sample cells for testing for an electric vehicle (EV) battery pack.

– provides a portfolio of products and services to utilities for the energy and water markets throughout the world. The Company is a provider of metering, data collection and software.

LNN – is a designer and manufacturer of self-propelled center pivot and lateral move irrigation systems, which are used in the agricultural industry to stabilize crop production while conserving water, energy, and labor.

– is a global player in providing products and systems used worldwide in the movement, storage, treatment and enjoyment of water.

– is engaged in providing a range of services, including water production, treatment and distribution; wastewater collection and treatment; utility operations and maintenance services; and utility infrastructure construction.

TTEK – provides consulting, engineering, construction, and technical services for resource management and infrastructure in the United States and internationally. Its services include research and development, applied science and technology, engineering design, program management, construction management, construction, and operations and maintenance.

WGOV – engages in the design and manufacture of energy control and optimization solutions for reciprocating engine, aircraft and industrial turbines, and electrical power system equipment used in various industries worldwide. The company primarily provides integrated control systems and control components, such as electronics, actuators, valves, fuel systems, and combustion systems to OEMs of gas turbines for use in aerospace and industrial power markets; to OEMs of diesel engines, gas engines, steam turbines, and distributors for use in power generation, marine, transportation, and process applications; and to OEMs of electrical power generation, distribution, conversion, and quality equipment using digital controls and inverter technologies.

– is a supplier of products for use in the water quality, water safety, water flow control and water conservation markets.

Subtle Shades of Green

June 2, 2008

Erika Brown
It’s not too late to find cheap “green” stocks. Look beyond the obvious to companies quietly boosting the sector’s growth

Say what you will about global warming, there’s no denying that “green” stocks–the ones promising to help the world burn less fossil fuel–are hotter than a July day. SunPower, a maker of solar cells and panels, is trading at $84, or 371 times trailing earnings. That makes First Solar, at $285 a share but only 121 times earnings, a relative bargain.

If you’d like some exposure to green stocks but fear getting scorched by such multiples, look around–beyond the billboard players. “When your average investor thinks of renewable energy, he thinks of solar, wind and biofuels,” says Shez K. Bandukwala, “but there is so much more opportunity hidden in the green tech sector.”

Bandukwala, 42, worked on public offerings at William Blair & Co. before moving in 2005 to what is now the San Francisco investment bank ThinkPanmure. As the Chicago partner in charge of alternative energy, he has done offerings for First Solar, SunPower, Evergreen Solar and Real Goods Solar.

You have to be a true believer to find stocks like these appealing; companies available at low multiples of their sales or earnings are pretty scarce (see table). One Bandukwala favorite is New Age carbon fiber maker Zoltek. Headquartered in Bridgeton, Missouri, and a ThinkPanmure client, it originally designed carbon fiber for car brakes. These days it sells the lightweight material to wind-power generators like Gamesa to make huge windmill blades. Despite Zoltek’s stratospheric price/earnings multiple (120), Bandukwala says it can’t make its product fast enough to meet demand.

Xantrex Technology makes components that help convert–or, more specifically, invert–power from direct to alternating current. That process is necessary to turn dc power collected in solar panels into ac power usable inside homes. The Toronto-listed shares trade at $9.49, giving a $292 million market value to a firm that had but $234 million in revenue last year.

Metalico is a Cranford, New Jersey company that recycles copper, aluminum and other metals. With commodity prices rising, its sales rose 61% in 2007 to $334 million. This one is cheap, after a fashion; its shares go for 17 times the earnings that analysts expect this year.

Fuel Tech, a firm in Batavia, Illinois, produces a chemical spray that cuts down the acid-rain-producing nitric oxide spewed by power plants. Fuel Tech is one of the few firms addressing this problem, says Bandukwala.

Sanghvi Movers, which trades on the Bombay exchange, rents out heavy equipment, including 300 cranes. Most of its growth is coming from Indian wind farms and other alternative energy projects. It also leases gear to chemical plants and refineries.

Westport Innovations, listed in Toronto, has partnered with enginemaker Cummins to develop technology to shoot clean natural gas into diesel truck engines. This could be a reasonable business if states and cities mandate or subsidize natural gas engines. Itron, of Liberty Lake, Washington, sells meters to utilities to monitor (and to prevent wasting) water, gas, electricity and heat. “From the substations, where energy is created, to the premises, where it’s used, there are a lot of opportunities to minimize waste,” says Bandukwala. “Meter readings are a key component in that process.”

American Superconductor sells power converters and superconductor wires to energy companies, including wind-energy producer Sinovel Wind. Its parts help connect wind turbines to power grids. The company, whose sales are expected to rise 52% this fiscal year to $170 million, also designs wind turbines.

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