Toyota (TM NYSE)

 
"When talking about hydrogen fuel cells and alternative energy, one technology comes to mind immediately: the hybrid automobile. And one name stands out - Toyota. Its Prius has been a smash hit. Toyota's hybrids have a leg-up on other makes (notably the Honda Civic hybrid) due to their superior technology. The stock sells less than 10 times this year's estimated earnings. They should be able to maintain 12 percent growth for a number of years as the hybrid revolution rolls on. Add the growth rate to the 2 percent dividend - and get a bit of multiple expansion - and I think we can earn 18 percent to 20 percent a year on this conservative, low-risk stock over the next couple of years. Buy under $77 for a double over the next four years.''

Ballard Power (BLDP NASDAQ)

"Of the over 185 fuel-cell powered vehicles in fleet demonstrations, 8 percent will be powered by Ballard fuel cells. That's a leader, plain and simple. Ballard is not expected to generate significant product revenues or be profitable for several years yet. Over the last 5 years, Ballard has put $639 million into research, so at their current market cap, we are paying under 1 times their R&D investment. With the new energy bill making fuel cell motors for cars and other vehicles a top priority - and both Ford and Ballard saying the first cars are only 5 years away - this stock is very timely and dirt cheap. Buy up to $6 for a $12 target in 2006 - and much higher levels after that.

Plug Power (PLUG NASDAQ)

"Plug Power targets the office backup and residential markets with its GenCore systems. They are also working on a residential system, a continuous power product with combined heat and power capability for remote small commercial and remote residential applications. They recently announced what will be their showcase installation to the Florida Department of Environmental Protection. Plug Power was chosen in part because it is durable enough to endure extreme weather conditions like hurricanes, which is exactly when the grid power is most likely to go out. PLUG has a $530 million total market cap and is another small-cap company facing a big, big opportunity. They are an obvious beneficiary of the new energy bill. Buy under $7.50, looking for a target of $15 by the end of 2006.

Fuel Cell Energy (FCEL NASDAQ)

"Fuel Cell focuses on stationary fuel cell power. The fuel cell generates electricity twice as efficiently without combustion, and therefore without pollution. The only by-products are heat, which can be used, carbon dioxide and water. It's also quiet. Starwood Hotels has already committed to the system. They already have a system in their Manhattan hotel, and I'm looking forward to a stay at Starwood's Sheraton San Diego Hotel and Marina. Fuel Cell Energy invested $77 million in R&D over the last 10 years. It's a 'small-cap' stock facing a huge opportunity. They'll lose about $1.60 a share this year, a bit less than the last couple of years. I expect the stock to double over the next year as the implications of the new energy bill sink in. Buy FCEL under $11 for a move to $22 in 2006."