Bank of America/Merrill Lynch Hot On Alt Energy Stocks, Sees "50 Year Shift"

Bank of America/Merrill Lynch analysts are seeing sunshine on the horizon for alternative energy stocks in 2010 and beyond as the energy sector embarks on what the firm is calling a "50-year shift."

The alternative energy movement underperformed in 2008 as the recession tightened spending on development. Bank of America sees the global market cap of $220 billion as having significant upside through the addition of new companies.

The analysts stated that "we expect moderate outperformance this year with better prospects in 2011-12," after what they called a respectable rebound in 2009.

Despite the Copenhagen conference going off like a faulty bottle rocket, the political support globally has improved for green energy. The U.S. however still has yet to levy any serious legislation regarding alternative energy.

"The clean energy debate in the U.S. may move from an environmental emphasis to focus more on global economic competitiveness in green products," the analysts said.

Bank of America is warning investors to stay away from wind energy stocks as it views the overall estimates as to optimistic for 2010. The analysts are looking for 8 percent growth, about half of the consensus growth projection.

The bank is also forecasting a broadening of the cleantech sector, where solar and wind companies dominate the market cap. Smart grid revenues are being projected to increase in the next year, bolstered by D.O.E. grants last fall, but the analysts suggest patience as this could be a longer-term trend.

The analysts are suggesting investments in 2010 to include buying European stocks such as EDP Renovaveis and SMA Solar, to stay long on Chinese solar stocks like Trina Solar Ltd. (NYSE: TSL) and Suntech Power (NYSE: STP), and investing in smart grid names like EnerNOC Inc. (NASDAQ: ENOC) and Itron Inc. (NASDAQ: ITRI).

You May Also Be Interested In

• VICI Properties closes $1.75B senior unsecured notes offering
• Silence Therapeutics closes $201M public offering of ADSs
• MicroVision prices $17 million public offering at $2.50 per unit