McCain: Panderer, or Green-Thinking Genius?

• Email
• Share
• Print

John McCain isn't dumb; he knows how to work a crowd. All politicians do.

But is the Arizona senator's plan to pay for auto innovation, announced yesterday in a speech at Fresno State University, pandering? Or is it a genuine opportunity for investors? A little of both, I think.

Remember that drum-wielding bunny on TV?
McCain doesn't offer many details. According to an article in The Wall Street Journal, he's seeking a device that would "leapfrog" today's technology for 30% of the cost of existing hybrid and electric engines.

McCain also would give taxpayers a $5,000 tax credit for every zero-emissions vehicle they buy, according to the Journal. That could boost sales for Ford (NYSE: F), General Motors (NYSE: GM), and other automakers -- if they can successfully mass-produce zero-emission cars.

It'd be easy to accuse McCain of pandering here. Some surely will. I won't; I'm too intrigued by how the idea mirrors what we're seeing from NASA and its Centennial Challenges.

Seven of them are active now, including a $2 million race to create a lunar lander that's being managed by X Prize Foundation. Sound familiar? It should. Burt Rutan's Scaled Composites won a cool $10 million when SpaceShipOne reached sub-orbital altitude twice within a week. SpaceDev's rubber-burning rocket engine was key to the victory.

SpaceDev is a small California outfit that failed to deliver the returns I had hoped for when I invested. I've since sold -- better opportunities for my money exist elsewhere right now -- yet I still believe that small entrants are best positioned to disrupt the space industry. Virgin's Sir Richard Branson and Amazon's Jeff Bezos agree; each is investing to make the heavens more accessible.

The payoff is still years away. But with a moon landing expected before 2020, there's plenty of innovation -- and, thereby, investing opportunities -- still to be had.

Is your portfolio ready for the challenge?
Fuel economy is a more pressing issue than space travel. Oil prices soared above $140 a barrel recently. ExxonMobil (NYSE: XOM) is setting profit records every quarter. Toyota (NYSE: TM) is making a killing selling hybrids.

McCain, therefore, has a point: Improved fuel economy is a crucial step toward reducing U.S. dependence on oil, and his plan could spur innovation. At the very least, it would bolster the investing case for Energy Conversion Devices (Nasdaq: ENER), an unloved growth stock with a thriving hybrid-engine business.

FuelCell Energy (Nasdaq: FCEL) could also profit. Last year, the company devised a method for transforming paint into energy for Ford. Yeah, I know; a paint-to-energy converter isn't the same as an auto engine. Nevertheless, FuelCell, fundamentally, is in the business of producing ... fuel cells. The know-how to meet McCain's challenge could be buried within its walls.

But those are just two ideas. Should McCain win the White House and enact legislation, the effects could be staggering. Which companies would win? Which would lose? Use the comments box below to make your picks and pans. Or to tell me why McCain's idea is more pandering than genius.

Fool on!