I don't know about you, but I'm starting to forget what life was like before the Internet.
In fact, I can't even remember the last time I called a restaurant instead of just logging onto OpenTable
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 foresaw how profoundly the Internet would change our world have been able to make an absolute fortune from it.
Take those who understood the potential of e-commerce, for example. Most people scoffed at the idea of buying retail goods "online," but I think it's safe to say that early investors in eBay and Amazon.com are sitting pretty right about now.
Needless to say, the Internet revolution turned out to be an unprecedented source of wealth. 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 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. Not to mention, he was an early backer of Google, Amazon, and Netscape.
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 |
$8.78 |
|
Solarfun Power |
$37.64 |
$2.30 |
$7.27 |
|
Akeena Solar |
$15.00 |
$0.61 |
$1.41 |
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, and another Chinese company taking the lead on forays into new clean-coal and nuclear power technologies.
We're also recommending that investors 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, like Quanta Services
Granted, many of 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.
Better yet, they were handpicked using Motley Fool co-founder David Gardner's Rule Breakers criteria:
- 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.
Only time will tell whether this will lead us to gains 10 times greater than those generated by the Internet. Until then, we're always on the lookout for the next millionaire-maker megatrend, and the next great growth stock.
If you'd like full access to all of our research and recommendations, including our top alternative-energy picks, we invite you to take a free 30-day guest pass to Rule Breakers.
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, and he owns shares of Google -- which along with Suntech Power and OpenTable are Motley Fool Rule Breakers picks. eBay, Amazon.com, and Charles Schwab are Stock Advisor recommendations. And yes, even the Fool's disclosure policy sneered at that pun about "recommending every solar stock under the sun."
