The Next Millionaire-Maker Megatrend

I don't know about you, but I'm starting to forget what life was like before the Internet.

I can't even remember the last time I used a pen to write a letter ... or went to the library to do research ... or looked up a stock quote in a newspaper.

In a lot of ways that's sad. But it's also incredible to think that a technology that evolved out of the U.S. government's reaction to the USSR launching Sputnik has come to dominate our lives.

Even more incredible ...
Investors who foresaw how profoundly the Internet would change our world have been able to make an absolute fortune off it.

Take those who understood the potential of e-commerce, for example. Most people scoffed at the idea of buying retail goods "online," but early investors in Amazon.com (Nasdaq: AMZN) and eBay (Nasdaq: EBAY) have grown their money anywhere between 1,200% and 4,800%.

And while it's doubtful that anyone ever thought Google (Nasdaq: GOOG) would become one of the most popular words in the English language, those who got in early are up 410% in less than four years. And that's after the recent market slide that cut Google's shares nearly in half.

Needless to say, the Internet revolution turned out to be an unprecedented source of wealth creation. That's why I was blown away when I read that a well-respected venture capitalist now sees a megatrend on the horizon that he says could be ...

"Bigger than the Internet by an order of magnitude"
In case you're unaware, an order of magnitude is a multiple of 10.

That's right ... venture capitalist Ray Lane recently told The Wall Street Journal that he's found something he thinks could be 10 times bigger than the Internet.

And he would know. After all, he's a partner at the famed venture capital firm Kleiner Perkins Caufield & Byers. He was also an early backer of Internet companies like Google, Amazon, and Netscape.

And he's not the only one who's taking notice
In a recent shareholder update, Fidelity Magellan manager Harry Lange outlined several reasons that his fund has begun to focus more on cleantech in general and on solar energy in particular.

• Technological advances and greater economies of scale are making it cheaper to produce electricity from solar energy.
• Thanks to a declining cost curve and the rising cost of conventional fuels, solar energy is becoming more competitive in areas with high electricity costs.
• Governments worldwide are providing tax incentives for both producers and consumers of solar energy.

All of these factors are contributing to Wall Street's new love affair with solar energy, and they also led to some heady gains among top solar stocks last year:

From the look of things, Ray Lane may actually be understating the case, but does that mean it's time for us all to hop on board the solar-powered money train?

No way!
With oil still well over $100 a barrel, gas prices at an all-time highs, and the strong possibility that we'll have a much more environmentally friendly administration come 2009, it's looking as though solar stocks really could be the next millionaire-maker megatrend.

But as anyone who was a 20-something slacker working in Silicon Valley in the late 1990s can tell you, the Internet spawned more big losers than big winners by an order of magnitude.

And the dismal performance of the following solar stocks so far in 2008 seems to indicate that this trend isn't unique to the Internet:

Granted, some of this poor performance can be blamed on general market turmoil or ever-present recession fears -- and some solar stocks, like LDK Solar (NYSE: LDK), are even starting to make a strong comeback -- but it also serves as a reminder that just because you recognize a developing megatrend, you aren't guaranteed to cash in on it.

In fact, more often than not, those who jump on board without doing their due diligence will end up losing a fortune.

A better approach ...
At Motley Fool Rule Breakers, we're doing plenty of research on cleantech, and keeping a close eye on solar stocks in particular -- but you won't find us recommending every solar stock under the sun.

Among our recommendations, you will find a few carefully selected cleantech companies, including a proven leader in the solar industry, a Chinese company taking the lead on forays into new clean-coal and nuclear power technologies, and an alternative-energy exchange-traded fund.  

These were picked using Motley Fool co-founder David Gardner's Rule Breakers criteria, which were designed to uncover top-notch growth stocks by finding companies that have:

• Top-dog and first-mover status in an important, emerging industry.
• Sustainable competitive advantages gained through business momentum, patent protection, visionary leadership, or inept competitors.
• Great management with financial backing from smart investors and corporations.

... With better returns
This approach has already led David and team to excellent high-growth companies like Intuitive Surgical, and it has allowed us to find stocks that, on average, are returning 11.5 percentage points more than a like amount invested in the S&P 500.  

Only time will tell whether it will lead us to gains 10 times greater than those generated by the Internet, but we're always on the lookout for the next millionaire-maker megatrend and the next great growth stock.

Now you can get full access to all of our research and recommendations, including our top two picks for new money, by accepting a free 30-day guest pass to Rule Breakers. All you have to do is click here. There is no obligation to subscribe.

This article was first published March 24, 2008. It has been updated.

Fool contributor Austin Edwards looks forward to a world powered by sunshine. He owns shares of Google and Intuitive Surgical, which are Motley Fool Rule Breakers recommendations. SunTech Power is also a Rule Breakers recommendation. Amazon.com and eBay are Stock Advisor recommendations. And yes, even the Fool's disclosure policy sneered at that pun about "recommending every solar stock under the sun."