It would seem T. Boone Pickens and his Pickens Plan followers are about to receive a flood of new supporters if headlines like these can be generated on a consistent basis.

And yes, it’s confirmed, select residents in Utah who are fortunate to drive Compressed Natural Gas (CNG) vehicles are lining up around the block to pay the equivalent of $0.87 per gallon for automobile fuel.  It sounds almost like theft to me since I’m paying around 4.5 times that price.

Bitter much?  Nah!!!  I’ve got a plan to hedge my losses at the pump.

See, one of the great knacks in becoming a successful investor is the ability to spot new trends before they make the 6 o’clock news or become must have items for the everyday consumer.  This is often referred to as Microtrend Investing, and will be mentioned many times on this blog.

Let’s use history as a guide for just a moment.  What if you owned stock in companies who made televisions in the 1950s?  Microwave manufacturers in the 70s and 80s?  Cell phone chip makers the late 90s?  Chances are, you made quite a profit for very little work.

Which brings me into the present energy crisis.  Recent TV commercials ran by T. Boone Pickens and his like minded colleagues at CNG Now have taken the responsibility to initiate what appears to be a national crusade to end America’s dependence upon foreign oil.

Chesapeake Energy’s CEO & Chairman, Mr. Aubrey McClendon, makes a rather hard sell in the video above, but it doesn’t take significant thought or futuristic extrapolation to conclude that “times are a changin”.

Such strong campaign-like messages will almost certainly make a dent in U.S. national sentiment, and of course, boosting political pressure on the folks in Washington D.C. that depend upon our votes to keep their 495 Beltway political careers chugging along.

Not to mention, we’ve found an argument that combines a way for Americans to save money by lowering fuel prices, playing into the hearts and minds of the national security fanatics, and making the environmentally conscious crowd very happy because CNG is a clean burning fuel.  That is a pretty diverse crowd of supporters to say the least, and when their momentum reaches maximum velocity, it will be very difficult to stop.

Therefore, I believe that CNG vehicles, which have been essentially been sitting idle in the background as a lesser known mode transportation based fuel, is set to take off over the next 5 to 10 years.

Companies that could profit from this growing trend?

1. The natural gas producers. Companies like Chesapeake Energy (NYSE: CHK) would be the most obvious selection.  However, at the time of publishing this article, the energy markets are in complete turmoil and strictly a trader’s market.  My advice would be to buy cautiously if and wait for less volatile markets.
2. The car companies. No way!  Not until the fundamentals improve.  Besides, Honda is the only car company producing a CNG vehicle at this time in the U.S., and they have a backlog until 2010 for their Civic GX.  Some savvy consumers are actually buying the cars in New York and California, only to ship or sell the CNG powered cars to states that are not yet permitted to sell the Civic GX.
3. Companies who sell engine conversion kits to run on compressed natural gas. The only real company in this space I have located is Clean Energy Fuels (Nasdaq: CLNE), who run a full service operation of selling conversion kits, but also providing the necessary infrastructure to service a whole fleet of CNG vehicles.  It’s a fair assumption to say that the majority of our roadway transport vehicles will convert to CNG in the near future.
4. Companies who sell drilling equipment to natural gas companies. As many gold fever stricken miners found during the gold rush, it’s not the individual miner who often gets rich, but the person who sold them picks, shovels, and mining gear.  This is probably one of the safer ways to play the entire energy sector.  National-Oilwell Varco (NYSE: NOV) is one of my favorite companies in this space.

For the inquisitive bookworms out there, an excellent book by Mark Penn entitled Microtrends: The Small Forces Behind Tomorrow’s Big Changes is available for those who require further research in microtrend spotting and investing.

Share

Save

• The Psychology of Bubbles: Using Hindsight to Examine Why We Bought into the Hype
• Firing Up the Fireplace to Reduce the Electric Bill
• Why You Should Avoid the Overhyped, Breaking News Stocks
• What Does Mark To Market Accounting Mean For You and Your Home's Value?

• 5 Ways to Tell the Winners from the Losers When Buying Stocks at the Bottom
• AdultVest: Investing in Porn
• Socially Responsible Investing - Ways Your Money Can Fight Climate Change
• Ford Has Hybrid Electric Cars in Works