It takes a lot to get me excited about new technologies.
Partly thats because of my training in economic history. For every revolutionary invention that works, there are hundreds that dont. Flying machines are a good case in point
But its also because in todays bet-it-all stock market environment, its too easy to get sucked into story stocks that have nothing behind them but hype.
That natural skepticism gives me the ability to spot the real winners at the right time.
For example, early last year I identified an opportunity in the semiconductor sector for my Alpha Stock Alert.
A small article in an obscure technology journal caught my attention. It identified big consumers that were switching to this companys product, for seemingly mundane reasons.
Some told me I was crazy to pick such a dog stock. Since then Alpha Stock Alert subscribers have taken hefty profits several times on the pick, which is still going strong.
That technology had reached a tipping point one that took it from potential to actuality. In the language of economic historians, it went from merely having been invented to being innovated into profitable real-world uses.
Now Im convinced that the time is come to jump in with both feet on another set of technologies that have been around for a long time but whose time in the sun has finally come.
For most of human history, the sun has provided our energy at least, indirectly. Now its cheaper to go straight to the source.
All fossil fuels represent stored solar energy. Ancient plants used sunlight to photosynthesize. Those plants or the animals that ate them died and were buried under the earths surface, where immense pressure over millions of years converted them into oil or coal.
Converting this stored solar energy back into a usable form is expensive, wasteful and damaging to the planet. It requires billions of dollars to extract, process and convert into usable energy and to mitigate its damage to the environment.
Human beings have known how to copy plants ability to turn sunlight into energy for more than a century. The first photovoltaic (PV) cell was invented by Charles Fritts in 1883. But three things have prevented the widespread adoption of solar energy:
The average cost of solar energy in North America fell below that of coal in 2013. It fell below natural gas in 2015:
At the same time, politicians and regulators have reluctantly accepted that the external costs of fossil fuel-generated electricity have to be included in the calculation. When the costs of pollution, climate change and human health are factored in, the long-term cost of coal and nuclear power vastly exceeds that of solar.
It will become cheaper than utility-scale natural gas later in this decade:
The history of solar power illustrates a critical factor that many investors overlook. Technologies arent neutral. Whether they are deployed or not depends as much on politics and power as it does on science and rationality.
Thats why I have become increasingly bullish on the solar power sector. Although the current crop of politicians in Washington has tried to turn back the clock in favor of coal, the raw economics mean that simply isnt going to happen.
Instead, I predict that our political class is going to accept the fact that solar energy is both cheaper to produce and better for everyone. The fabricated obstacles that have stood in its way are likely to subside over the next decade.
We humans have finally caught up with the potential of our own inventions. To take advantage of that, I recommend the exchange-traded fund (ETF) Invesco Solar ETF (NYSE: TAN). Its holdings cover the range of subsectors involved in solar production, including manufacturing, storage and distribution.
After trading sideways along with the broader market for most of the last three years, TAN has broken out this year. Its up over 65% year to date.
So put on your sunglasses, open the blinds and let the profits shine in.
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