Tapping The Earth With Ormat

Ormat Technologies NYSE: ORA is in a perfect situation as alternative energies begin to take flight. Just like the red hot solar stocks, Ormat is a play on the growing demand for alternative energy. What makes them unique is that they use geothermal power and other eco-friendly sources to generate revenue. In case you aren't familiar with the geothermal process, it is basically capturing the heat given off from the earth and turning it into electricity. The great part about this process is that it emits little or no emissions.

Not only this, but they operate in countries all over the world, so you certainly don't have to worry about any kind of "slowdown" here in The States...



Geothermal is not the only part of Ormat though, what I really think could be huge is the Recovered Energy Generation potential. What Ormat has done, is made it possible to take the heat that is waisted on a typical power plant, and harnessing it back into energy. That's right what a simple concept that should be adapted by power plants all around the world that are just literally blowing off steam...

Ormat Technologies is a small company that just became public in 2005, so it still has plenty of upside potential. They even have rather unique dividend policy, in which they are aiming to pay at least 20% of their annual profits through quarterly dividends. Which is just another potential huge reason to own this company, as it continues to earn more money in the future.
Now, it does have a sky high P/e ratio of 83, so it is by no means inexpensive, but there are a lot of people out there that see how explosive this company could become with climate change and pollution coming to the front lines. Ormat Technologies Inc. reported 3rd quarter 2007 earnings of $0.41 per share on 11/6/2007. This beat the $0.31 consensus of the 7 analysts covering the company.

As a fair warning, this is a small company with a high p/e ratio which can be the recipe for disaster. While I think that Ormat is a great long term investment, as always the best idea is to not buy all at once. I would buy a little bit here, and then wait until after the fed meeting to see if you can get in at a lower price. As I write this Ormat Technologies is trading at $50.11...