Alternative Energy Stocks on their Way Back up as the Euro Strengthens and Oil Prices Increase.

A recent event that happened was the following. The Chairman of the Federal Reserve said that the markets were “unusually uncertain”, which basically means he has no idea what is going to happen. The markets promptly fell on Monday and closed in the red. On Tuesday and Wednesday, however, buyers stepped up and stocks rose.

If the Chairman cannot say where stocks are going, then who can? It is important that you choose sectors that are showing strength and get into them at the right time. At the moment, the alternative energy sector is fairly strong. It is far from a guaranteed profit opportunity, but there are quite a few stocks in the sector which are rising and look set to increase in the mid-term.

Alternative energy stocks have been hit hard. Whilst alternative energy products such as windmills and solar panels can provide perpetual power, just a couple of months ago such stocks were running on fumes. However, these stocks have shown some real signs of life.

There are 3 main reasons that can lower this sector: the drop in the price of oil, the financial difficulties experienced by many countries, in particularly European countries, and the broad selloff in equities.
However, with the price of oil gradually increasing, and the Euro-debt debacle being worked through, the market has been signaling to investors to start accumulating these stocks again.

Two alternative energy stocks, Claymore/MAC’s Global Solar Energy ETF, and PowerShares Global Wind Energy ETF have performed horribly in the last few quarters. However, the trend seems to have stabilized.

There are a large number of small cap alternative energy companies. This means that they are fledgling companies and thus are very exposed to economic cycles. Such companies typically rely heavily on government subsidies. With governments in Europe really struggling for cash, the political will to push for alternative energy subsidies has fallen over the last few months. Nonetheless, the situation in Europe is without doubt improving, the Euro is strengthening, and the continent’s services and manufacturing industries are growing. All of this points to the fact that the economy in Europe has stabilized, and alternative energy stocks have responded to this improvement in the situation.

Many alternative energy stocks have begun heating up lately, and the leaders in this sector are solar stocks. Even as the long-term prospects for the majority of these companies are excellent, there are bound to be some failures too. The heavy reliance on government subsidies is very risky, but despite this there are some very strong alternative energy companies on the market, and some worthwhile profit opportunities.

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The information supplied in this article is not to be considered as medical advice and is for educational purposes only.