Alternative Energy Stocks on the RiseAugust 18th, 2009 by Barry Potier
Green technology investors have more to smile about than most at the recent upturn in sentiment in stock markets. This sector, which includes wind farms, solar energy and biomass suffered badly during the credit crunch.
After four years of stellar growth, new investment in green energy plunged from $41bn in the final quarter of 2007 to only $13.3bn in the first quarter of 2009. However, investors who have stayed with the sector have been rewarded with a spectacular rebound. Share prices rose 36 per cent between April 1 and June 30 compared with a recovery of only15 per cent in the S&P 500.
Two factors behind the surge are the continuing increase in oil prices, which benefits green energy companies by making them more competitive with conventional power, and recent stimulus packages unveiled by governments around the world who have committed over $512bn of the global economic stimulus outlined so far to green projects, with 22 per cent of this to be spent in 2009
Serious problems remain, however as many green technology companies require heavy investment in infrastructure, such as wind turbines and solar panels and debt financing is more difficult to come by and more expensive than for conventional technology.
The public markets also remain a hostile place. And there were only four green technology initial public offerings in the first quarter of 2009 and two in the second quarter.
A dearth of interest in flotations has however driven many companies to seek new investment opportunities from other sources, but as with any young market, the green technology sector is still highly volatile and likely to remain so for years to come.
However from small acorns large trees can grow! If you have seen or been affected by this new wave of investment opportunities please let us know.