Investment Opportunities in the U.S.By Energy Sector
By Charles Kennedy
The two popular energy sectors within the U.S. are natural gas and renewables, and whereas natural gas has experienced huge growth in recent years becoming the dominant source of energy in the US, renewables have grown only marginally, generating a very small portion of energy consumed in the US.
The U.S. is now producing so much natural gas that the idea of exporting is being seriously considered. Cheniere Energy is currently the only company that has been granted the government’s approval to export natural gas, and has already signed 20-year contracts with Chevron and Total.
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The large debt-to-equity ratio that it holds (4.25) may seem alarming, and dissuade some investors, but the steady business and significant political barriers to entry make it a fairly solid investment for the future. Whilst it is not in profit at the moment it has real potential and provides a good one to watch for the future.
Renewable energy, whilst being an incredibly popular subject, is actually expanding at a very slow rate. Do not be put off by the lack of transmission infrastructure and decisive energy policy, there are still investment opportunities out there, and the low rate of growth in recent history means that there is lots of room for expansion in the future.
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SunPower is one such opportunity. It boasts a revenue growth rate of 23.9% over five years, and expects earnings of $0.66 per share in 2014 making it one of the better solar investments out there.
Duke Energy (DUK), also deserves some consideration. A major utility which operates more than 3,200MW of hydroelectric capacity, 1,000MW of wind energy, and a flourishing smart grid, Duke Energy offers a stable, progressive option to invest in the future of the US energy production.