Can Greed Turn To Green?

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	Friday, May 23, 2008 Whitelist Us         Green is in… But Why? Part 2 By Charles Delvalle In last week’s article, I talked about how becoming ‘green’ was turning into this great big fad. Yet, popularity aside, the economics of becoming green don’t really make sense. For example, a CNN.com study found that the price premium you pay for a hybrid over a gas guzzler wouldn’t be made up by cheaper gas prices for up to five years. And that’s after including government incentives. Some of you wrote in and pointed out that economics weren’t everything. That becoming green is more of a social responsibility. It’s something you do to make sure your kids have a nice, clean Earth to live on when they grow older. And I couldn’t agree more. But the responsibility side isn’t what I’m trying to show everyone. What I’m trying to point out is that the economics of becoming green, for the most part, don’t yet make sense. Sure, companies can plant a lot of trees on land they’ve purchased. Sure, they can pay just a little bit more to switch to more renewable packaging materials, etc… But the things that would make the greatest impact – fuel saving technologies, advanced water conversion techniques, and more renewable solutions – come at a cost to the company. Nine times out of ten, the company won’t want to kill their margins for the sake of going green, unless of course they are trying to improve their image (Google, here’s looking at you, kid). And there’s nothing wrong with having a good public image. But that doesn’t mean that the economics of the solution make any more sense. With that said, I believe that over time this will change dramatically. And once that change happens, there will be a lot more money to be made. Let me explain… The Three-Wheeled Car I Need Right Now The other day I was going through one of my favorite websites, www.autobloggreen.com. While on the site, I ran across a very interesting ride. It’s by a company you’ve probably never heard of, Venture Vehicles. It’s a three wheeled vehicle, which is basically a roll cage on wheels (meanings it’s pretty safe). When you go to make a turn, the vehicle actually tilts 45 degrees in the direction you’re turning. You can see a video of the venture one in action here. INTERNAL ENDORSEMENT Wall Street Lies EXPOSED! They've led you to believe that investors who want outsized gains must take on ridiculous risks. Click here to learn how a Small One-Time Investment Could Grow Until It's Larger Than All of Your Other Investments Combined. That’s not the best part, though. This three-wheeled, electric-only vehicle, goes 0-60 in seven seconds, can reach top speeds of over 75 MPH (making it highway capable), and can travel up to 120 miles, all on battery. When you get home, just plug it in and it’ll be fully charged in six hours (on a 120v plug, if you use a 240v, it’ll be much faster). And if you want to go further, you can get their hybrid version which goes over 350 miles on about four gallons of gas (That’s a phenomenal 90MPG!) and can reach top speeds of over 100MPH. Now, this vehicle won’t be in production until next year. Which is sad because I want one today. Why? The economics are starting to make sense. You see the car I drive right now is a six cylinder. It gets great fuel economy on the highway. But in the city, where I do most of my driving, the fuel economy is horrendous. At current gas prices, I’ll spend about $280 this month filling up. That Venture Vehicle I showed you earlier will cost between $20,000 to $25,000. If I put ten percent down and get a decent interest rate on a five year loan, I’ll pay something like $320 - $350 every month. This is only a little more expensive than it costs to buy gas – today. But next year, gas might be $5 a gallon. At that point, it’ll cost me $340 to fill up my tank. Instead of filling up my tank and polluting the air, I could own one of these cars and pay a little more on electricity every month to recharge it. Sounds like a pretty good deal. Now, here’s the thing – cars like these are set to flood the market in the next year or two. For example, Tesla Motors (a Silicon Valley startup) will release their $98,000+ all-electric roadster sometime this year. That doesn’t include a host of other manufacturers like Aptera Motors and Fisker Automotive. As gas prices keep rising, these electric vehicles will become more and more popular. And the big tipping point is affordability. If consumers can obviously save money buying one of these, they’ll do it. This goes for the entire industry. Solar panels won’t be accepted en masse unless the economics of it makes sense. Sure, adoption is growing. But it won’t be mainstream until everyone can afford it. The same goes for wind power. This brings me to ethanol – another alternative that doesn’t make economic sense. In this case, ethanol makes no real sense at all. The argument is that its carbon neutral. But most people end up paying more to fill up with E85 (85% ethanol). And to make matters worse, they get worse gas mileage. So what sense does it make to fill up with ethanol? I wouldn’t do it. And many people don’t. And in the end, it’s not an efficient fuel. You can be sure that ethanol won’t gain mass adoption until cellulosic ethanol becomes mainstream (which promises better efficiency and cheaper prices). With so many solutions not making any economic sense, why is adoption skyrocketing? You can thank the government and their incentives. In 2006 alone, the government spent seven billion on ethanol subsidies. The government gives anywhere between $500 to $3,000 worth of tax credits to those who buy hybrids. And states are ramping up incentives for clean energy production (like California’s $3.3 billion solar initiative). You see, if it weren’t for government incentives adoption would drastically drop. When you combine these government incentives with the whole culture change that’s going on, you have a recipe for amazing growth. With that said, next week I’m going to talk more about why the greening of society is inevitable and about the type of amazing opportunities this massive trend should present (think bubble). Until next time, Charles P.S. I just started up a new blog and would love for you to check it out.  Just go to http://stockcharlie.blogspot.com/.  I’ll be giving you my unrestricted opinion on economic developments and the effect politics can have on the markets.  Make sure to comment and let me know what you think! P.S.  To let me know what you thought of today's article, send an e-mail to: feedback@investorsdailyedge.com. [Ed. Note: Just last week, readers of IDE’s Global Profits Hotline were able to capture 35 percent in just one day on a Toyota put.  And that doesn’t include the other gains we’ve made this year of 98 percent and 88 percent.  To find out how you can take part in these gains, click here ] Market Watch Ride or Slide: Cheniere Energy Partners (CQP) By Charles Delvalle There’s a lot of talk lately about oil and gas. Naturally, I’ got an e-mail from Wayne M. asking… OK, I am not a micro-investor; Nano sounds closer. Where is Cheniere likely to go?  I look at this position like a pile of chips on the poker table. As long as they keep sending the dividends I am no worse.  Long term I need that dividend income for my retirement hedge against inflation. I did see the comment from "Barrons."  I would like to know your opinion of Cheniere and its industry segment? I love your blog.  It is top-of-the-list of a group of blogs I read daily and is the one I like the most. Wayne.  Dear Wayne, I love MLPs because they typically pay out great dividends. In this case, Cheniere (CQP) is paying a 16% dividend. That’s not nearly enough for me to love them. First of all, they aren’t making any money yet. Their future revenues will come from a 100% interest in the Sabine Pass gas terminal, which is 99% complete. I call this risky because if construction is delayed or they get a hiccup during operation, their earnings will be affected immediately and you’ll see the stock take a hit. If earnings take a big hit and it affects their cash flow, then it’ll be hard for them to scrounge up enough money to continue paying that 16% dividend. If they stop paying the dividend, the stock will fall faster than Fat Albert skydiving without a parachute. To make matters worse, they barely have any cash (what they do have is restricted to pay off bonds), they have over two billion in debt, and their dividend history stretches only five quarters. Typically, we look for eight quarters of steady or increasing dividend payments. Listen, if you’re looking at this as a gamble, then that’s exactly what you’ve gotten yourself into. This certainly wasn’t the safest income investment to get into. As a gamble, this company should begin performing well once they have their gas terminal up and running. But for growth to continue, they will need to start acquiring or building more terminals and pipelines. As an income investment, this company isn’t conservative enough. This is certainly no ride. But as a gamble, why not ride it? If they don’t begin appreciating after their gas terminal starts operation, then let it slide. P.S. Want to see me cover a stock?  Send an e-mail to feedback@investorsdailyedge.com INTERNAL ENDORSEMENT Stock Market Shocker: How a Bunch of 5th Graders Made Fools of the Trading Elite…! 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To unsubscribe, Click here To change your email address, Click here To cancel or for any other subscription issues, write us at: Investor's Daily Edge 245 NE 4th Ave, Suite 201 Delray Beach, Fl 33483 Phone: (800) 681-4759	The Market Minute It’s confirmed… The Dow Jones had a hard time moving above its 200-day moving average earlier this week. And when it finally did, the market sold off hard. Now the Dow Jones looks likely to continue trending down, possibly moving under the January lows. Look for a slight bounce before getting into any shorts.     In The Markets   Last Change YTD Dow 12,625.62 24.43 -4.82% Nasdaq 2,464.58 16.31 -7.08% S&P 500 1,394.35 3.64 -5.04% Gold 920.60 11.20 10.48% Silver 17.96 0.02 21.60% Oil 130.55 2.62 36.02% Nat Gas 11.68 0.04 56.15%   Newsworthy During the last decade, Toyota has sold more than 1.46 million hybrids world-wide, including more than one million Prius hybrids. Honda has sold about 262,000 hybrids to date and discontinued sales of two models, the Insight and Accord, because of poor sales. But Honda now has an ambitious goal to sell 500,000 hybrids per year sometime after 2010, though that would still fall short of Toyota's target of selling one million hybrids annually by the turn of the decade. Honda says it will boost sales by introducing a full line-up of hybrid vehicles, including a sport hybrid based on the CR-Z, a redesigned Civic Hybrid and a hybrid version of the already fuel-sipping Fit subcompact. The key element of its new green strategy is to make hybrid vehicles more affordable. "It is important to move hybrid vehicles from the current image-oriented stage to the new stage of full-scale penetration" of the market, said Mr. Fukui, who added that hybrid cars should have a price no more than $2,000 above that of a comparable gas engine vehicle. --wsj.com     Meet the Team MaryEllen Tribby - Publisher Jedd Canty - Business Director Rick Pendergraft - Managing Editor Jon Herring - Editor Nicole Reynolds - Marketing Analysts / Editorial Contributors Michael Masterson Charles Delvalle Andrew M. Gordon Dr. Russell Mcdougal D.D.S.

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