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 got a stock quote from a newspaper? Went to the library to track down a fact? Called a travel agent to book a flight?

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 been able to making a fortune by buying shares of pioneering Internet companies ranging from Cisco (Nasdaq: CSCO  ) to priceline.com (Nasdaq: PCLN  ) .

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 and Intuit.

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 2009 lows have been handsomely rewarded, long-term shareholders have been crushed.

Stock

2007/2008 High

2009 Low

Current Price

Trina Solar (NYSE: TSL  )

$35.43

$3.27

$23.84

GT Solar International (Nasdaq: SOLR  )

$14.07

$3.32

$5.27

Energy Conversion Devices (Nasdaq: ENER  )

$79.38

$10.15

$8.36

Ascent Solar Technologies (Nasdaq: ASTI  )

$26.75

$2.25

$4.39

China Sunergy (Nasdaq: CSUN  )

$17.07

$1.38

$4.06

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

Granted, much of this poor performance is because of 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 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 (you can get the name of the ETF absolutely free by accepting a 30-day Rule Breakers guest pass below).

Granted, nearly all solar stocks are still selling well below their 2007/2008 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 and 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 doesn't own shares of any of the companies mentioned -- but he does look forward to a world powered by sunshine. priceline.com is a Motley Fool 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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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.

  • Report this Comment On March 14, 2010, at 12:37 AM, predfern wrote:

    Solar energy costs 10 times more than nuclear and that is not going to change because the sun goes down every night. The best solar concentrator reactor has a capacity factor of 20% and electricity costs 20 cents/kwh compared to nuclear which has a capacity factor of 90% and electricity costs 1.72 cents/kwh. The capacity factor is the amount of electricity generated by a power plant in a year divided by the amount if would generate if it ran at peak capacity all the time. Low capacity factors are the bane of alternative energies. Solar will never be economically viable.

  • Report this Comment On March 14, 2010, at 6:40 AM, sabertoothtiger wrote:

    Do you have a reference for the cost of nuclear? Does it include the massive cost of starting up a new plant, and the cost of solving the problem of what to do with all the super-toxic waste? I already pay about 20 cents per kwh, and I think electricity is WORTH that much. So for my money and my values, solar is far superior to nuclear (don't want to pass the waste problem on to future generations).

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