Most of you are reading this column on one of two mediums:
either from your email inbox or a webpage you navigated to. What
you may not realize is that we have the U.S. military to thank
for both of them. Let me explain: In response to the launch 53
years ago this week of Sputnik, the Soviet Union's satellite, the
U.S. government launched a series of initiatives that led to the
formation of NASA. Overlooked at the time was the concurrent
creation of the Defense Advanced Research Projects Agency, or
Darpa. Darpa worked with a few major research universities to
create Arpanet, the first network that successfully figured out a
way to send electronic information packets in a highly
distributed fashion (the better for communications to survive a
nuclear strike.) All of that led, decades later, to the Internet
we know now.
Is the military again cutting the path for revolutionary
technologies to work their way into our everyday lives? The cost
of fuel in Afghanistan-in dollars, effort and most importantly,
lives, makes it seem like another Sputnik moment-when the
military realizes it needs to rethink strategies to better adapt
to a changing world.
The New York Times had a fine article last week (U.S. Military
Orders Less Dependence on Fossil Fuels) detailing the issues the
military faces. In one report cited by the Times, the Army found
that one in every 24 convoys results in a casualty. In the course
of one year, 6,030 full convoys of fuel are needed to supply
troops in the Iraq and Afghanistan wars, according to that Army
report. That is, in cold math, over 251 American casualties a
year that can be expected simply by hauling diesel fuel from one
place to another.
Half of all convoy casualties in both wars result from
transporting fuel (water and other supply convoys had
significantly lower casualty rates, likely for the obvious reason
water trucks are less flammable than fuel trucks). Cut the amount
of fossil fuels needed and you save lives. You also save a
tremendous amount of money. Getting fuel to a forward base in
Afghanistan can cost upwards of $400 per gallon. As a whole, the
U.S. military consumes more fuel than whole countries do in one
year, including double that of Ireland and 20 times that of
Iceland, according to Reuters.
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Recognizing that this is a chink in its armor, the Pentagon is
field-testing a Marine company with solar technologies that may
allow the military to shed much of its fossil fuel needs in the
future. The military is testing low energy lights, such as LED
lights, solar charging panels that fold up into boxes and
portable solar chargers for computers and other equipment.
The Marines aren't the only ones exploring renewable energy. The
U.S. Navy is particularly keen on independent energy generation
for its island bases. Among its many projects is a growing
program to generate some of a base's energy from wave power. This
is done with a very large buoy positioned near their port, within
which the undulation of the waves moves interior parts that work
a generator, sending electricity to where it's needed by
The Air Force is pushing to certify its jets to run on a 50/50
blend of biofuels and jet fuel. Last month, it test-flew its
massive C-17 Globemaster transport plane on a mix of fossil-based
aviation fuel and bio-fuel based aviation fuel successfully.
Depending on where they are in the world, biofuels based on
various plants can be grown and refined locally-even in the
desert, where certain saltwater plants have been shown to be
excellent candidates for aviation biofuel.
And what's exciting is that these technologies, while still very
young, aren't experimental things being honed in
laboratories-they are the basis for exciting new companies right
now. I told Cabot Green Investor subscribers about wave-power
technology two years ago: It's being pioneered by Ocean Power
)-a New Jersey company that has supplied power buoys to the U.S.
Naval base in Oahu, Hawaii, and is developing a buoy energy farm
for the state of Victoria in Australia, among other projects.
Biofuel companies are lining up to offer their stock in IPOs.
Among them are PetroAlgae, a Florida company that harvests
microalgae to produce biofuels and Gevo, a Colorado firm that
makes biobutenol, a blendstock that helps traditional fuels reach
clean air standards. Two biofuel-related companies, Codexis (
) and Amyris (
), have just recently come to market.
All of those companies mentioned above I believe are worth
watching for future investment. Right now, the recent IPOs need
some time for the market to establish their value and develop
some history for more accurate price forecasting with technical
analysis, so I suggest watching and not investing. Ocean Power
Technologies shows some promise, but is being weighed down by
funding uncertainty over its Australia power project.
But that doesn't mean there aren't opportunities to invest in
strong Green stocks right now. As editor of Cabot Green
Investor, I've been watching the market closely, and just last
week the Green sector experienced a convergence of technical
factors that are giving a very strong buy signal-one we have seen
only twice in the last three years, and neither of those was
strong as we are witnessing now. In those prior occurrences, we
saw a four-week 40% rally in Green and then, in the much weaker
signal of the two, a still-welcome 10% two-week rally. What gives
me more encouragement this bull move has stronger-and longer-legs
under it is the fact the broad market is rallying too, which adds
momentum to the excitement Green stocks are now enjoying.
My stock pick for this Cabot Wealth Advisory is Amtech Systems (
), a leader in a particular niche in the solar cell production
process. Specifically, it makes the equipment necessary for cell
diffusion, the process by which phosphorous oxychloride is
diffused on solar wafers (allowing the solar conversion mechanism
to be laid on top). The Arizona-based company also competes in
the subsequent two steps of the solar cell manufacturing process:
etching and adding antireflective layers through plasma-enhanced
chemical vapor deposition (PECVD for short).
In its most recently reported quarter, ended June 30, sales
rocketed up 250% to $43 million while net income was 42-cents a
share. For the full year, sales are expected to more than
double to $112 million and likely even higher: The company just
announced that it booked a record $187 million in orders for
fiscal 2010 (which, because of how revenue is recognized, likely
doesn't equate to what full year 2010 sales will be. Full year
results will be announced on November 22.)
What I particularly like about Amtech is that it's an established
company, having started in 1983 to focus on semiconductor
fabrication equipment, growing with key acquisitions over the
years. I also like that, while it makes its equipment in the U.S.
and the Netherlands, 85% of its customers are top-tier Asian
solar makers including Yingli Green Energy (
). That's important because industry dynamics favor larger
manufacturers, who are expected to consolidate and grab market
share from lower tier solar makers.
Cabot Green Investor recommended ASYS in its September issue,
when shares traded at 15. They are now at 19 and looked primed to
surge higher, although orderly pullbacks are to be expected in
Click here to learn more
about Amtech Systems and other leading Green stocks featured in
Cabot Green Investor.
All the best,
For Cabot Wealth Advisory