These Stocks Beat Alternative-Energy Stocks

It seems like a new megamillion-dollar deal for hundreds of megawatts of renewable energy sends wind power or solar stocks -- and investors' wealth -- soaring almost daily. But I've found investments from another sector that are beating the pants off alternative energy stocks -- and I know where you can find out more about them.  

Would the real hot stocks please come forward
The 5,500 stocks that the 115,000-member Motley Fool CAPS community has rated include descriptive "tags" that group them with other companies sharing similar qualities -- a country of origin, a sector, or an end product, for example. Clicking the Alternative Energy tag pulls up a list of 54 stocks that have collectively gained 8.1% in the past year.

But the alternative to the alternative energy group -- good 'ol Petroleum -- still far outpaces the broader market and the one-year returns from the alternative energy group. This group comprises 25 companies that have posted an astounding 28.1% average gain in the past year.

From macro to micro
You can sort tag groups by their CAPS ratings, from one to a maximum five stars, and then see which players -- from Wall Street to Main Street -- are bullish or bearish on a company, and why.

Here are a few of the stocks in the Alternative Energy group:

Company

CAPS Rating
(5 max)

1-Year Performance

Energy Conversion Devices (Nasdaq: ENER  )

***

155.4%

Evergreen Solar (Nasdaq: ESLR  )

***

12.1%

Trina Solar (NYSE: TSL  )

***

(26.4%)

VeraSun Energy (NYSE: VSE  )

*

(55.5%)

Source: Motley Fool CAPS, as of Aug. 21.

Now, based on the interest in the CAPS community, here's a sampling of Petroleum stocks that investors may want to consider.

Company

CAPS Rating
(5 max)

1-Year Performance

Schlumberger (NYSE: SLB  )

****

9.6%

Rowan (NYSE: RDC  )

*****

6.2%

Patterson-UTI Energy

****

36.5%

Nabors Industries (NYSE: NBR  )

****

26.4%

Source: Motley Fool CAPS, as of Aug. 21.

Sea to shining sea
Contract drillers and oil services companies are seeing dayrates tick higher as the continued escalation in energy prices has increased demand for rigs. Playing favorable market conditions, contract driller Rowan has been moving some of its shallow-water jackup rigs around to take advantage of better opportunities. One of its rigs is now with Saudi Aramco, and another contract enticed the company to move a rig to Angola.

The results have been speaking for themselves: Higher dayrates have helped Rowan to a better-than-expected second quarter with sequential increases in both revenue and operating income. The company has a bullish outlook for the remainder of the year and is confident in meeting its $900 million external revenue goal.

And although the company is, at its heart, an on- and offshore driller, the manufacturing subsidiary that serves the drilling and also mining and forestry markets is no slouch. Activist hedge fund Steel Partners saw opportunity as it took a big position in Rowan last year and has since been talking management into considering a spinoff of the manufacturing group to unlock its value.  

Selling off the LeTourneau Technologies subsidiary -- which has designed or manufactured about a third of the world's jackup rigs -- would give Rowan a lot of cash to play with and allow it to focus better on drilling. Overall, CAPS members like the prospects of Rowan, with nearly 97% of the 543 members who have rated the driller expressing confidence in its ability to outperform the market going forward.

Land-ho
While Rowan and others like ENSCO International are drilling at sea, landlubber Nabors has its focus onshore. The financial spoils that have helped investors buck the recession have been much the same, however, as Nabors has achieved a 23.4% EPS growth rate and a 17.3% revenue growth rate over the past three years.

Though Nabors already has the largest land-based drilling rig fleet in the world, it continues to grow its rig count to meet demand of new oil and gas discoveries. In particular, the Haynesville Shale in Louisiana is home to 32 of its rigs, up from 20 at the start of the year, with 50 expected by year's end.

With its large fleet, Nabors can accommodate the varied needs of customers like EOG Resources when they need high-end rigs or when Saudi Aramco, Nabors' largest customer, is looking for jackup rigs. CAPS members still generally see Nabors Industries positioned well to outperform the market. At least that's how nearly 96% of the 987 members rating the company have voted.

Before you buy ...
Of course, what's happened in the past is no indicator of where investors should be putting their capital now. But the underlying reasons behind dramatic run-ups in stocks or groups of stocks can clarify trends that may significantly affect investments. Just make sure to do your own due diligence rather than simply following crowds or individual recommendations.  

For three energy stocks that Motley Fool analysts believe will profit from "The Next American Oil Boom," check out our brand-new free report. You'll get three stock ideas from top analysts, plus some straight talk on our oil "crisis." Click here for access -- it's free!

When it comes to running long distances, Fool contributor Dave Mock lags more than he leads. He owns no shares of companies mentioned here. Dave is the author of The Qualcomm Equation. The Fool's disclosure policy beats all other disclosure policies, year-in and year-out.


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.

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: 712976, ~/Articles/ArticleHandler.aspx, 10/22/2014 10:33:16 AM

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...


Advertisement