The Mighty Wind

I've made my oil investment.

Ethanol is a bunch of hooey. Nobody has convinced me that the energy used to grow, harvest, and convert corn into fuel is or will be economical without governmental handouts.

But the wind. Yes, the neverending wind. The mighty wind. And the panoply of original Quixote references, made by journalists (or headline writers) who've never read Cervantes. Speaking of, here's Claudia H. Deutsch in today's New York Times:

Investors Are Tilting Towards Windmills
...
"When you get the president talking about renewable energy, it has to be turning up the dial at G.E.," said Deane M. Dray, an analyst at Goldman Sachs who has an outperform rating on General Electric shares.

Certainly, it is getting attention from Energy Financial Services. The unit recently bought a wind farm in Germany and is installing new turbines there at a rapid pace. It has invested in solar energy farms in California and is in the end stage of negotiations for a large solar project in Europe. Indeed, renewable energy projects already account for $1 billion of the unit's $11 billion portfolio and are its fastest-growing niche. "The renewables space has really heated up, and I hope it will account for 20 or 30 percent of our investments in five years," J. Alex Urquhart, the unit's president, said.

Today, alternative energy financing is barely a footnote in G.E.'s revenue stream. But the G.E. machine is gearing up for change. On Jan. 30 — a day before the president bemoaned the nation's "addiction to oil" — Mr. Urquhart carved out a separate group to focus solely on renewable energy projects. Lorraine Bolsinger, who runs G.E.'s Ecomagination program, says she has begun to "run the financial projects through our scorecard process" to see which ones she should include in her group of G.E.'s "green" products.

The pace is quickening in G.E.'s industrial camp, too. Energy equipment and related services, which accounted for about $42 billion of G.E.'s $149.7 billion in revenue last year, is G.E.'s largest industrial business. Alternative energy products like wind generators accounted for less than $6.3 billion of last year's sales.

Four years ago, G.E. bought Enron's wind-turbine unit, and it is now a $2 billion business, heading rapidly toward $4 billion. In five years, G.E. expects that alternative energy products will account for more than a quarter of energy equipment revenue.

Institutional investors are backing this strategy as well:

G.E. is not alone in backing renewables, of course. In November, Goldman Sachs committed to investing $1 billion in renewable energy, and it is already "well on its way" to achieving that, according to Lucas van Praag, a Goldman spokesman.

J. P. Morgan Chase , too, has said it will invest more than $250 million in wind-energy projects. And venture capitalists have for some time been investing in smaller renewable energy projects and technologies.

Cramer had an alternative stock suggestion back on January 20th. Here's the Mad Money recap:

Chasing Windmills
General Electric (GE:NYSE) , the parent company of CNBC, which airs "Mad Money," reported earnings Friday. While Cramer wouldn't say whether the conglomerate is a buy or a sell, he did say that its performance could indicate which sectors warranted a closer look.

Wind power was one of the most exciting things happening at GE in the latest quarter, he said. So for a wind power play, Cramer suggested taking a look at Zoltek (ZOLT:Nasdaq) , a stock recommended to him by Will Gabrielski, co-author of TheStreet.com Stocks Under $10 newsletter.

Zoltek is not strictly speaking a wind power company, but it makes carbon fibers used to reinforce windmill blades, Cramer said. It supplies its products to Spanish and Danish wind power companies, and it doesn't really have any competition, he added.

If Zoltek were the best play on wind power on earth and everyone thought so, the stock would be expensive, Cramer said, but right now no one knows about it and it's near its 52-week low.

There is some risk here because the company issues warrants, which Cramer said is not the best way to raise money. But it's a well-positioned wind power play.

So while he was excited about Zoltek, he cautioned viewers to use limit orders if they want to buy it because it is such a small stock.

Zoltek (ZOLT) is trading at around $14.70 right now, up 4% for the day, and up about 40% since Cramer's mention. Talk about the wind blowing this stock up. ZOLT is not profitable, with a large and growing negative free cash flow. But who cares about that--this is a momentum play based on windmill write-ups in the Times, an off-note portion of the State of the Union delivered by our former-oil-man President, and attention by James J. Cramer.

As you would expect, Morningstar has not rated ZOLT.

GE gets 4 stars and a fair value of $38 from Morningstar. GE currently trades at around $33.35, with a 2.72% yield, near its 52-week low. It's a classic mega-cap multinational that seems to be trading right now at a bit of a discount.

ZOLT could jolt one's portfolio. I personally wouldn't even consider ZOLT as a speculative play until it pulls back considerably. GE looks like the staid, safe investment it is. If the Times article is correct, GE is a long-term alternative energy play that is priced right, right now.