STATE OF PLAY: How Blue Earth Inc. (BBLU) is Unearthing Alpha

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STATE OF PLAY: How Blue Earth Inc. (BBLU) is Unearthing Alpha

Looking for the best Alpha low valuation, high growth company in the current EE market?

One company to consider:  Blue Earth, Inc., OTCQB (BBLU).  The company focuses on renewable energy and energy efficiency services. With final projected revenue growth of approximately $11 million for 2012, and expected revenue of $100 million—along with anticipated EBITDA of $10 million—in 2013, we’re betting Blue Earth is the best deal in the sector.

How is Blue Earth providing a solid home for Alpha? The company has been aggressively acquiring other firms and technologies in the EE and RE  markets over the last calendar year (2011 to 2012). When not approaching the market from an acquisitive position, the firm forms key joint partnerships; the latest of which is its agreement with Hareon Solar Technology Co., Ltd., to jointly develop a 497 kilowatt solar PV project on the island of Oahu in Hawaii.

Hareon Solar Technology is one of the largest solar PV companies in the world, with six subsidiaries that specialize in high-end R&D, production and marketing of solar modules, wafers, silicon sticks and cells. The company also directly operates and invests in solar plants throughout the globe.

Among BBLU’s other investments is Castrovilla, Inc. (CI).  CI is fast becoming a statewide and regional supplier of utility scale EE market solutions through the customization of turnkey, vertically-integrated small commercial services to small businesses and local utilities.

Yet another Alpha source BBLU has tapped into is Xnergy.  Xnergy designs and implements energy saving projects—including identifying energy supplies and risk management—across the public and private sectors.  The firm was rated the “#1 Alternative Energy Provider” by the San Diego Business Journal.  Xnergy leverages its expertise in building and implementing cutting-edge offerings in fuel cells, solar and geothermal efficiencies.

These and other investments made by Blue Earth have been further enhanced by the November 2012 passage of Proposition 39 in California.  

With a population of approximately 37+ million people (as of the last U.S. census 2010) the state of California is the frontier of U.S. energy efficiency.  In the 2012 election, California voters passed Proposition 39 which closes an out-of-state corporate tax loophole, potentially leading to an increase of $1 billion dollars a year.  Of this increase in revenue, in the next five years, $550 million per year will be dedicated to increasing the state’s energy efficiency in retrofit, alternative energy project in public schools, colleges, universities and other public facilities.  The dedicated revenue of $550 million can also be applied to financial and technical assistance for EE retrofits, job training and workforce development programs.

Johnny R. Thomas, President and Chief Executive Officer of Blue Earth, Inc. was recently quoted in one of the firm’s latest press releases, saying: “Closing the loophole means our industry should see a $500 million increase in energy efficiency and alternative energy funding at the state level for the next five years…Blue Earth as a comprehensive energy solutions provider for small commercial businesses and utilities in California, is in a great position due to its successful track record, to pursue developing and implementing energy efficiency and alternative energy programs for the newly created fund.”

Adding to potential revenue for the company is the fact that it will be mandated that any new EE projects be coordinated in conjunction with the California Public Utilities Commission and the California Energy Commission, as Proposition 39 will create a nine-member oversight board responsible for annual reviews and audits. These reviews and audits further enhance Blue Earth’s position in the market, as the firm specializes specifically in such revenue generating services.  

With a market cap of $19.67 million and 19,471, 836 shares outstanding—as of December 10, 2012—it is not surprising that the firm is one of the yet to be discovered EE companies.  Which brings us to the ETF market itself.

For investors looking for Alpha in EE the three top ETF’s around right now are PowerShares Clean Energy (PBW), which tracks and index of U.S. companies focused on clean energy and conservation, Van Eck Global Alternative Energy Fund (GEX), which tracks its index of global alternative energy companies and PowerShares Global Clean Energy Portfolio (PBD), which tracks global companies in the clean energy and conservation sector.  It should be noted that PowerShares’ PBW has the longest track record and has the most liquidity.

For Alpha seekers, who are not as risk adverse, the best bet remains in individual stock purchases, but for a balanced approach that still has plenty of upswing EE ETFs deliver.  No matter the play, the advantage: Blue Earth, Inc.


DISCLAIMER: Past performance is not a guarantee or a reliable indicator of future results. This article contains the current opinions of the author and such opinions are subject to change without notice. This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. Neither the writer or distributor of this article have any positions in any of the companies named.