Profit From The Future Of Energy
You might remember I spent a number of years working in the alternative energy industry as an investment banker. I helped raise money for companies trying to change the world. I introduced CEOs with great ideas to money managers wanting to back cutting edge technology.
I researched technologies that many experts had never even heard of before. I spent a great deal of time learning about and discussing different strategies to change our power infrastructure.
Industry experts, academics, and some of the leading CEOs in the field were the ones I debated with.
Being exposed to great thinkers taught me a good deal about the industry and new technology. But most importantly, it shaped my views on the future. For better or worse, I find myself biased towards alternative energy.
You’d be shocked by the pollution and damage from fossil fuels… it isn’t pretty.
Eventually in our lifetimes, we’ll see a new energy infrastructure based on hydrogen. It’ll be more environmentally friendly and economically responsible.
As we speak, hydrogen is being used in a number of applications… including as a power source for vehicles. Did you know hydrogen can be used in some of today’s truck engines with only slight modification?
It’s an exciting thought to use hydrogen as a power source.
Just wait till fuel cells become widespread. Right now, fuel cells are a miracle of energy production. Unfortunately, they’re hugely inefficient, expensive, and extremely fragile. It’ll be years before you can buy one. However, once their use becomes widespread, the impact on our economy and our energy resources will be astounding.
But there is one big problem.
How will we make all of the hydrogen we need? It’s not like you can drill for it, or pull it right out of thin air. If we have millions and millions of vehicles relying on hydrogen for power, where’s it going to come from?
Today, we make hydrogen from natural gas and oil.
Ironic, isn’t it? By trying to get away from fossil fuels, we end up relying on oil and gas more and more. So much for eliminating the influence of the Middle East!
There is one solution. I believe it’s the only way to generate the quantities of hydrogen we need… nuclear energy.
Many people around the globe consider nuclear the next “Green” energy supply. Now I know you might think nuclear energy is a four letter word. Who can forget Three-Mile Island and Chernobyl?
Putting those fears aside, the future of alternative energy is hydrogen, and the only way to produce it in quantity is with nuclear power.
The nuclear energy industry is starting to gain momentum once again. With oil prices as high as they are, in a short time, investors will focus on other energy sources. And, nuclear energy will be at the top of this list.
So how do we make money from this trend?
You can buy shares of some of the power producers who own nuclear energy facilities… but their earnings are limited. Too much regulation and price control.
The nuclear facility builders might be a way to go. But your best option would be General Electric (GE). A great company no doubt, but not exactly a pure play on the story.
I think the best way to get into the industry is with a mining and milling company.
The one I have in mind is Denison Mines (DNN). Right now the stock trades for less than $1.40 a share. Just a few years back, the stock traded for over $20. The company owns a number of mining sites, one of which is actively extracting uranium.
Here’s the other thing I like about Dennison… they own their mill. The ore they extract must be milled. Milling concentrates the uranium and then it can be sold to end users at the power plants.
By controlling the mill, they control the supply released onto the market. Uranium prices are down from the $100 a pound they were trading at just two years ago. But they’ve recovered to a reasonable level of $50 a pound. This gives Denison plenty of room to make a nice profit.
Denison also recently completed a major offering that raised just over $94 million Canadian to support the company moving forward. All signs are pointing to this stock moving higher. Consider picking up a few shares of Denison if you want to profit from the future of alternative energy.
Category: Commodities
