A new trend has emerged in alternative-energy stocks, Cramer said. Wind-power and solar companies are holding their own even in the face of declining oil prices.
That’s not usually the case. As our favored form of energy drops in cost, the alternatives lose their standing in the eyes of Wall Street. But strong quarterly results – Trinity Industries up 7% and MasTec up 19% on solid earnings – are taking investors by surprise. These businesses, wind and solar specifically, are starting to make money hand over fist.
Back on May 28, Cramer created the Mad Money Windex, a basket of wind-power stocks he planned to use to gauge the sector. He added Quanta Services to the group on July 15. The index faltered a bit at the beginning, but bullish signs like Owens Corning’s better-than-expected quarter and increased guidance seem to indicate this group is moving higher. And look at Trinity: What was mainly a railcar business that dabbled in wind saw its wind-tower backlog double this quarter, to $1.5 billion from $800 million. Wind accounted for 10% of revenues compared to 6% in the same quarter a year ago. Clearly, wind power is a becoming a booming business in its own right.
When it comes to solar power, no one tops Cramer fave First Solar. The company reported a 47% earnings upside surprise on Wednesday and better-than-expected full-year guidance. And First Solar, whose main business is in Germany and the rest of Europe, is finally making moves into California, where it has three pilot projects going. The key for this company is that instead of using expensive polysilicon, First Solar uses cadmium telluride. It’s a difference between paying $2.50 a watt to manufacture for the former, but only $1.42 a watt for the latter.
There is a catch to these alternative-energy plays, though. The investment tax credit for wind and solar power was delayed by Congress for the eighth time thanks to Republican filibustering. The delay could cost the wind-power industry $11 billion, and First Solar has said no tax credit means the company can’t go forward with some of its U.S. projects. Cramer said these credits are, eventually, expected to pass. And in the very least, there’s a one-year extension planned for when the credit’s set to expire in September.
“I think the case for investing in wind is being made,” Cramer said. “And I still think that solar has legs. It’s Green Day every day from now on in Cramerica.”
Jim's charitable trust owns Trinity Industries and Quanta Services.
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