Natural gas is at a 10-year low, and it’s hard to believe it can go much lower. Its competitors should benefit if natural gas increases in price. As the price rises, demand will increase for the alternatives. And, as the price of electricity rises, the margins should rise on the production of electricity from coal and solar. Slate blog on that idea.
- Some stocks are MEMC Electronic Materials Inc. (WFR) and the ETF Guggenheim Solar (TAN). Hedge fund manager Daniel Loeb has a position in WFR. I’m also interested in Waterfurnace, a geothermal play which trades in Canada as WFI.TO and on the Pink Sheets as WFIFF.PK. However, solar stocks have been so pounded lately, that I suspect they represent a better deal at this point.
- Coal-burning utilities suffer when natural gas and electricity prices drop, and likewise would benefit if they rise. GenOn Energy, Inc. (GEN) is cheap, near a 52-week low, has been profitable (barely) despite the difficult pricing environment, and has some efficient coal-burning plants.
- Wilbur Ross, an expert in turnarounds and special situations has taken a large position in EXCO Resources Inc. (XCO), a natural gas producer.