Hidden Gems? Why Green Investors Should Look at PFB, Vodafone And Telefonica

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Hidden Gems? Why Green Investors Should Look at PFB, Vodafone And Telefonica

Part 1 of 2

Bill Paul

Looking for alternative energy stocks with undiscovered potential?

Who isn't?

Here are three possibilities (with three more to come next week). You can
decide for yourself whether they are worth further investigation.

First up: PFB
Corporation, which trades on the Toronto Stock Exchange under the symbol PFB.
Calgary-based PFB is an energy
efficiency play. The company makes insulating building products that it
sells under branded names in commercial and residential markets in North America
and Japan.

The company most recently reported third quarter net income of $1.6 million
or 24 cents vs. $1.1 million or 16 cents, and nine months net of $2.5 million or
38 cents compared $1.1 million or 17 cents. Earnings rose significantly despite
lower sales, a reflection of the difficult economy faced by all
construction-related businesses.

What would seem to make PFB a hidden gem is management's demonstrated ability
to control costs (and maintain the regular 6-cent-a-share divided payout) in
tough economic times. With energy efficiency - especially in buildings -
increasingly being recognized as by far the most cost-effective way to start
greening the economy, PFB has hidden potential that might really blossom as the
overall economy improves.

Next up: Vodafone Group Plc, whose ADRs trade on NASDAQ under the symbol VOD,
and Telefonica S.A., whose ADRs trade on the Big Board under the symbol TEF.

Although they're already telecom giants, what gives Vodafone and Telefonica
hidden potential is the role they appear destined to play in Europe's smart grid
build-out.

By 2020 the British government plans to have a smart meter in every home
under a program whose cost is expected to top $11.5 billion. (The rest of Europe
may not be far behind.) This will require enormous amounts of data to be
wirelessly transmitted from those smart meters back to Britain's energy
companies. Vodafone and Telefonica (through its O2 unit) reportedly are
negotiating to be the carriers of all that data, quite possibly through a new
joint-venture firm.

While the payoff for investors won't be immediate, Vodafone and Telefonica
could become huge long-term beneficiaries of the smart grid, which a number of
communications experts now think will become as big as or bigger than the
Internet.

DISCLOSURE: None

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