Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Go Green, Invest in a Bioreactor!

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Investors may already be tired of the green movement. Keeping up with government subsidies for biofuels, wind turbines, and solar manufacturers can be an exhausting task. One day nuclear energy consumption is poised to grow at a torrid pace and the next countries avoid it like the plague. A recent report by Bloomberg New Energy Finance estimates that global investment in new green energy projects fell by 11% last year. Is the world committed to renewables or not?

Let me propose an alternative investment strategy for greening your portfolio: bioreactors. It seems that the term biotechnology gets applied to everything lately, but then again perhaps that is owed to the field's potential to transform almost every sector of the economy. Let's explore just three bioreactor specific applications.

Bioreactor 10,000 B.C.
You may overlook beer production for its simplicity. How can something I can do in my bathtub be considered a bioreactor? Well, as long as a bioreactor is defined as a precision-controlled vessel that supports a microbial environment you'll just have to accept it. And as long as beer remains the world's favorite beverage you'll be happy to acknowledge the industry as a prime investment candidate.

Boston Beer (NYSE: SAM  ) is a great company for its passion, relationship with shareholders (held its IPO through the mail), and brand recognition. Despite making up just 1% of the American beer market, the company is the largest American-owned brewer and the leader in craft brewing. Although shares have experienced quite a run-up recently and now trade at over eight times book value, Boston Beer sits with a market cap under $2 billion – pocket lint for trigger-happy Anheuser-Busch InBev (NYSE: BUD  ) .   

Anheuser-Bush is a neat bioreactor play for several reasons. In addition to gracing the top of the industry's leaderboard, the company also has reduced water usage at its facilities worldwide by 19% in the last three years. The $144 billion company offers Budweiser, Michelob, Shock Top, Stella Artois, Landshark, Bass, Beck's, and other brands. It also maintains a 47.7% stranglehold on the United States market.   

Treat your genes not your pain
The fastest growing market for bioreactors in the last few years has been biopharmaceuticals, or biologics. I recently wrote about the state of the industry, which generated $53 billion in 2011 from the top 10 drugs alone. As big pharma races to replace small molecule revenue lost to generic competition, biologics are poised to continue their awesome growth.

Roche (NASDAQOTH: RHHBY  ) , which I didn't cover in my recent article, is another great example of the transition from small molecules to biologics. The company's subsidiary, Genentech, has 20 biologic drugs in phase 2 or higher, compared to just nine small molecules. Growth is imminent, but investors should know that biologics face stiffer regulation. Unlike small molecules, a biologic will not be approved by the FDA until its manufacturing process is also approved. This may impede innovation, but it also creates a moat for companies with leading biomanufacturing capacity.

Fuels and chemicals
The riskiest plays in bioreactors remain to be companies with platforms targeting large-scale fuel and chemical production. Every day in research labs around the world grad students coax a host microbe into producing any number of useful products. So why is it so darn difficult to make it work at a bigger level? These experiments work well in clean flasks and well-controlled environments maintained by maniac professors, but it turns out that larger-scale fuel production often goes hand-in-hand with the word "dirty." A stable bioreactor – and therefore bioprocess – cannot operate under such conditions.

One company bridging the gap between low-value fuels and high-value chemicals is Gevo (NASDAQ: GEVO  ) . The company retrofits ethanol (two carbon) biorefineries with its proprietary isobutanol (four carbon) production technology. Doubling the amount of carbon supercharges the product pipelines of ethanol producers and allows for more attractive margins and partnerships. Last year Gevo suffered several drawbacks in isobutanol yield, patent litigation, and financing woes that provided plenty of shocks to share prices. Nonetheless, numerous markets and offtake agreements await the company should it achieve enhanced process metrics in 2013.

Foolish bottom line
These are just three of the possible applications for bioreactors that investors can tap for their portfolios. As always, there are risks implied with each – from fierce competition for market share in beer manufacturing to overnight failures of bioprocess platforms. While I acknowledge these drawbacks I am convinced bioreactors will have a great hand in the future. If you believe in the world's eventual transition to a bioeconomy, then you'll be sure to make room for bioreactors in your portfolio. 

Boston Beer Company's Samuel Adams brand helped to redefine beer and kick off the craft beer revolution in the United States. Bioreactors may not be enough to save it, though, and while just a few years ago Boston Beer had claim over most of the craft beer shelf, today the field is crowded. Can Boston Beer rise above the rest, or will it be squeezed between small local breweries on one side and global beer giants on the other? To help you decide, we've compiled a premium research report filled with everything you need to know about Boston Beer's risks and opportunities. Just click here now to find out whether Boston Beer is a buy today.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2219819, ~/Articles/ArticleHandler.aspx, 9/28/2016 10:15:29 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 27 minutes ago Sponsored by:
DOW 18,339.24 110.94 0.61%
S&P 500 2,171.37 11.44 0.53%
NASD 5,318.55 12.84 0.24%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/28/2016 4:01 PM
BUD $133.44 Up +1.56 +1.18%
Anheuser-Busch InB… CAPS Rating: ****
GEVO $0.48 Up +0.00 +0.29%
Gevo CAPS Rating: *
SAM $150.79 Up +0.50 +0.33%
Boston Beer CAPS Rating: ****