A Hard Look At Hard Assets

Times are flush in the Canadian province of Saskatchewan. Dare we call it a boom? “That’s the way we’ve been describing it,” says Maynard Sonntag, Saskatchewan’s Minister of Industry & Resources. “Absolutely.”

Sonntag ticks off the stats. Saskatchewan, which provides the world with a quarter of its uranium and sells the U.S. more oil than Kuwait, is one of two Canadian provinces to increase its gross domestic product for four years straight. Since 2002 spending on uranium exploration has jumped tenfold to $280 million annually. “We have more jobs than we have population,” he says.

The recent performance of non-U.S. resources stocks such as energy, construction materials and precious metals reflects the go-go days in the resource-rich north. An index compiled by FactSet Research Systems, for example, shows that shares of nonenergy mineral companies outside the U.S. have gained an aggregate 66% over the last year.

Buyers beware. We looked at non-U.S. natural resources companies with U.S.-listed shares and market values over $10 billion. Of the 80 that qualified, 30 carried multiples of book value, earnings and sales all in excess of five-year averages. Only four stocks passed a simple value screen of price-to-sales below their five-year average.

Full story at Forbes.com

S.E.E. Change? S.E.E. Change Go Slow

As interest in all things green has surged, business groups in Washington have jumped cheerfully in. But as one association’s initiative illustrates, these high-profile efforts aren’t without risks.

In September, 2005, chief executives from Dow Chemical, Sun Microsystems, Xerox and three others joined then Senate Majority Leader Bill Frist at an event near the White House to tout a new initiative called S.E.E. Change.

Sponsored by the Business Roundtable, an advocacy group representing 150 bosses of big companies, the initiative set out to burnish business “as a force for good” in matters of society and environment. Along with the event, the Roundtable took out full-page ads in several big newspapers and won widespread press coverage, including an item on Forbes.com.

In Pictures: A Gallery Of Green Spin
The progress so far? S.E.E. Change (which stands for Society, Environment and Economy) has added 10 new members to a founding roster of 18 companies who committed to showcasing and tracking their sustainability efforts. Not an insignificant increase, but a long way from the S.E.E. objective of getting all 150 Business Roundtable companies on board.

“It’s an aspirational goal,” says Marian Hopkins, director of public policy for the Business Roundtable. “[S.E.E. Change participants] can be great advocates to other member companies.”

Full story at Forbes.com

It’s Not Easy Being Green

These days, Wall Street recoils from pure-play fuel cell companies. Several in the table below have seen their share price cut in half over the past year. Two trade below a buck.

But Washington remains bullish on fuel cells.

“We’ve seen an uptick in the interest level,” says William Mitchell, vice president of marketing at Nuvera Fuel Cells of Cambridge, Mass.

Mitchell and other fuel cell industry reps recently hosted a meeting to pitch their wares to federal government purchasing managers. More than 80 showed up. “That was sort of groundbreaking,” he says. “It shows they really think there’s some valuable products coming out.”

Tuesday, Nuvera was up on Capitol Hill to show off its products to Congress at an event sponsored by the U.S. Fuel Cell Council, a trade group. Presenting companies, among them giants like United Technologies and Chevron, had sales booths set up in a congressional caucus room, while rides in fuel-cell powered cars were ongoing down the street.

Full story at Forbes.com

Beltway Bet: FuelCell Energy

WASHINGTON, D.C. -Seven years ago, with California sweating through rolling electricity blackouts, the stock market worked up an appetite for outfits selling new ways of generating power. Shares of FuelCell Energy, a company in that business, spiked to a split-adjusted $54. Their recent price? $7, down 52% from a 52-week high.
Matters of energy and environment have hardly dropped out of the headlines, but the market’s enthusiasm for eco-stocks tends these days more to biofuels and solar power. SunPower, in the latter business, trades just 5% off a 52-week high of $48 and at a relatively rich 13 times its revenues.
For investors looking at long-term energy plays, don’t rule out FuelCell Energy. The federal government certainly hasn’t.

Full story at Forbes.com

Memo To Enviros: Go Easy

WASHINGTON, D.C. – Five years ago, Roger Ballentine opened a lobbying and consulting shop, Green Strategies, to counsel companies on setting environmental agendas and dealing with eco-policy in Washington. At the time, he says, that corner of business was relatively quiet.

Things have picked up. “It’s just absolutely booming,” says Ballentine.

Full story at Forbes.com

Pushing Bankers On Climate Change

WASHINGTON, D.C. – There’s no shortage of scary stats on the world’s energy needs, particularly for poorer folk. Some 1.6 billion people have no access at all to modern energy services, and 2.5 billion still rely on burning wood and the like for cooking and heating. Developing countries, reckons the International Energy Agency, will need $10 trillion worth of energy investment from here to 2030.

For those worried about global warming, the nightmare is that those trillions will get spent on low efficiency, high pollution technology.

“The investment that takes place in the next ten to 20 years could lock in very high greenhouse gas emissions for the next half-century,” notes the British government’s recently released Stern Review Report on the Economics of Climate Change, “or move the world onto a more sustainable path.”

Pushing for the latter scenario is the International Finance Corporation, the private sector development arm of the World Bank Group. One the IFC’s prime targets at the moment: commercial banks, particularly those in developing economies such as China, India and Central Europe.

Full story at Forbes.com

The DOE Wants You To Make Money

WASHINGTON, D.C. – Taxpayers are getting their money’s worth out of Robert Rosner, astrophysicist and director of the Department of Energy’s Argonne National Laboratory in Illinois. Rosner tells us his workweek usually winds up closer to 80 hours than to 40.

“When I go home,” says Rosner, 59, “I don’t stop working.”

What keeps Rosner so busy? Plenty. Running Argonne, the country’s oldest national laboratory and a hub of research on topics like nuclear reactor technology, means dealing with Washington bureaucrats, safety concerns, a budget of $475 million and a staff of 2,900, including 750 PhDs.

But Rosner is also devoting a good deal of time to developing Argonne’s ties with the private sector. Although the lab’s Web site touts existing partnerships with companies like Baxter International, Caterpillar and 3M, Rosner describes the national labs as a “severely under-recognized gem” of American research and development. He wants more recognition, meaning more partnerships.

Full story at Forbes.com

Generating Hydrogen, Battling Earmarks

WASHINGTON, D.C. – It’s been a busy week on Capitol Hill for those interested in hydrogen as an energy source.

On Thursday, the U.S. Fuel Cell Council, an industry group, holds its annual Congressional expo, complete with a caucus room full of company exhibits and rides in hydrogen-powered vehicles.

The Senate Committee on Energy and Natural Resources heard testimony on Monday from Chevron and General Motors execs on the implementation of the hydrogen and fuel cell provision of last year’s Energy Policy Act.

“We still need major technological advances to ensure hydrogen can be affordable, safe, cleanly produced and readily distributed,” said Sen. Lamar Alexander, R-Tenn., at the Monday hearing.

Just across the river in Alexandria, Va., H2Gen Innovations’ 40 employees are advancing all those goals. The company’s tale illustrates both the promise of the hydrogen economy and the hazards involved when the feds turn to the private sector for research and development.

Full story at Forbes.com

In The Eye Of The Global Warming Storm

WASHINGTON, D.C. – Asked to name his most formative Washington experience, Thomas Kuhn comes back with a quick reply: the Clean Air Act. Kuhn, the chief executive of the Edison Electric Institute, the electric utilities trade group, remembers the tumult that accompanied the passage of that 1990 law.

“Some of the toughest battles in Washington are the environmental battles,” says Kuhn.

And judging by some of the rhetoric flying around Washington this week, more of such battles loom. “Global warming, I believe, is the number one environmental challenge,” Sen. Dianne Feinstein, D-Calif., told a crowd of several hundred who gathered on Wednesday for the United States Energy Association’s and Johnson Controls’ annual Energy Efficiency Forum. “We have to choose our energy future,” added colleague Sen. Hillary Rodham Clinton, D-N.Y. “We can’t just stumble along and expect everything to work out.”

Full story at Forbes.com

Power Player

Not much has changed since the reformers went after stock analysts in the aftermath of the tech bust. Brokerage firm analysts are still, for the most part, bullish; it’s hard to make a living telling people what not to buy. And their employers still make much of their revenue doing investment banking for companies the analysts are expected to evaluate. Still, the best of the breed certainly earn their keep by making accurate forecasts of earnings. Sanjay Shrestha is one of these.

Shrestha fits the sell-side archetype. He rates 15 of the 18 stocks he covers a “buy” or a “strong buy,” and many of those are companies for which his employer, First Albany Capital, either makes a market or does investment banking. That hasn’t stopped him from making extremely accurate predictions about earnings. For two years he has won a spot in our Best Analysts rankings, based on data maintained by StarMine about individual forecasts.

The 32-year-old Shrestha is quick with a laugh and holds forth freely on topics such as the implications of the polysilicon shortage, the history of 20th-century energy infrastructure or the political turmoil that has recently shaken Nepal, the land of his birth. He has hopes for a return to peace in Kathmandu and is grateful for the opportunities he’s had in America. On an undergraduate scholarship to the College of St. Rose in Albany, he switched from his prior interest in science to finance and turned that background into a Wall Street career. In 2000 he took a job at First Albany covering companies that are developing new energy technologies. Two years later he added the engineering and construction services sector.

Full story at Forbes.com (reg. required)