Satcon Technology Turns Businesses Green With Energy Envy

The wild swings in oil prices the last decade highlight a possible coming trend in economic and energy news, specifically around the questions of what is most economically feasible for the world going forward. Non-renewable resources are disappearing, and some companies are stepping up with new technology and new ideas to provide job-creating energy solutions through the next century and beyond. One company that is leading the way in providing green power conversion for its customers is Satcon SATC, the Boston-based energy solutions company. Satcon deploys an inverter technology that bridges the gap between traditional power sources and newer, renewable power sources. Without getting too technical, it's the step in the equation that makes transition to, say, solar power feasible in the short and long term. If we're ever to switch over to renewable resources, companies like Satcon are going to be at the forefront of the technology. At first glance, Satcon seems like a crazy way to invest your money. They just today downgraded their earnings guidance, and their EPS is negative. They just trimmed their workforce and issued some new debt. Sounds bad, right? And perhaps as a short-term play, it doesn't make sense. But long term, can anyone deny that the future of energy production is in renewables? Regardless of the political situation in 2012 and beyond, the world is literally running out of oil, coal, natural gas, and other non-renewable resources. At some point in the not-distant future, it will make business-sense (bottom-line sense) to switch one's company over to renewable energy. Imagine a future where car companies power their plants with on-site, renewable energy resources. Right now, a company like Ford F might tie in to the standard electric grid for its energy and utilize backup generators for emergencies. Well, flip that around. Imagine an on-site solar/wind generator, on-site power storage, and a tie-in to the expensive, current grid for emergencies. Satcon might be the one building and designing that solution for (as an example) Ford. Action Items Bullish: Traders who believe that current solar companies will lead the way might want to consider the following trades:

• Satcon SATC is still available at a low price (appx $2 a share at time of posting) and carries immense risk/reward, depending on how the market shakes out in the next decade. Political changes could either promote alternative fuels or push fossil fuels, making the 2012 elections important for solar stock traders.
• Power-One PWER is one of the largest solar inverter stocks out there, trading at a price point 3-4 times higher than SATC. They carry the same risks as SATC in terms of political intervention in the energy marketplace.

Bearish: Traders who believe that solar energy is a long way off, or other companies with newer technologies will emerge may consider taking positions in the following:

• If renewable energy is still a long way off, then solar stocks might be too long of a wait for you, in terms of when they'll blossom for your portfolio. In that case, a traditional oil company like BP BP might be more to your liking.
• Natural gas is another energy source that could fill the gap between old technology (like coal) and renewable resources, particularly if energy company-friendly politicians are elected in 2012. Look at investments like the Natural Gas Fund ETF UNG.

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