The Next Millionaire-Maker Megatrend

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

Think about it. When's the last time you called a travel agent instead of logging onto a discount travel site like Expedia? Went to the library to track down a fact instead of just using a search engine? Bought music or movies from a store, instead of from iTunes?

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 Soviet Union's launch of Sputnik has come to dominate our lives.

Even more incredibly ...
Investors who understood how profoundly the Internet would change our world have made an absolute fortune by buying shares of pioneering companies like Apple (Nasdaq: AAPL  ) and Google (Nasdaq: GOOG  ) .

That's why I was so intrigued 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 -- meaning venture capitalist Ray Lane has found something he thinks could be 10 times as big as the Internet. And he would know.

After all, he's a partner at the famed venture capital firm Kleiner Perkins Caufield & Byers -- an early investor in dozens of millionaire-maker Internet companies, including Sun Microsystems (Nasdaq: JAVA  ) , Google, and Intuit (Nasdaq: INTU  ) .

And he's not the only one who's taking notice
Fidelity Magellan manager Harry Lange has outlined several reasons why his fund began focusing more on "cleantech" in general, and on solar energy in particular.

  • Technological advancements 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.  

The next great bull market?
All of these factors certainly contributed to Wall Street's love affair with solar energy back in 2007. But then 2008 hit, and the market began selling off steadily, before heading into an all-out tailspin.

The solar sector was particularly hard-hit, and while those who snapped up shares at the March lows have been handsomely rewarded, long-term shareholders have been crushed.

Stock

2007/2008 High

2009 Low

Current Price

LDK Solar

$68.90

$4.27

$7.43

Solarfun Power

$37.64

$2.30

$8.62

Akeena Solar

$15.00

$0.61

$1.33

Data from Yahoo! Finance. All prices dividend- and split-adjusted.

Granted, much of this poor performance can be blamed on general market turmoil, massive hedge fund sell-offs, cheaper oil and gas, tightening credit, and ever-present recession fears. But it reminds us that just because you recognize a developing megatrend, you're not 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.

Just look at the Internet
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.

That's why at Motley Fool Rule Breakers, we've been 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 Suntech Power -- a proven leader in the solar industry. We're also recommending another Chinese company that is taking the lead in forays into new clean-coal and nuclear power technologies.

And we're encouraging investors to take advantage of major discounts on an alternative-energy exchange-traded fund that gives you exposure to a wide range of companies involved in cleantech, including Applied Materials (Nasdaq: AMAT  ) , Yingli Green Energy (NYSE: YGE  ) , and A123 Systems (Nasdaq: AONE  ) .

Granted, these stocks are still selling well below their 2007 highs. But as the economy recovers and the Obama administration begins to make good on its promise of massive investments in green energy, these stocks present a compelling profit opportunity.

10 times bigger than the Internet?
Only time will tell -- but at Rule Breakers, we're always on the lookout for the next millionaire-maker megatrend, and the next great growth stock.

If you'd like to sample our research and get all of our recommendations, including our top alternative-energy picks, we invite you to take a free 30-day guest pass.

There is no risk, nor any obligation to subscribe. Stick with us if you like what you see, and pay nothing if you don't. To learn more, simply click here.

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

Austin Edwards looks forward to a world powered by sunshine. He owns shares of Apple and Google -- which along with Suntech Power are Rule Breakers picks. Apple is a Stock Advisor recommendation. And yes, even the Fool's disclosure policy sneered at that pun about "recommending every solar stock under the sun."


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