Could energy penny stocks be the next big bubble? Over the last 15 years we have seen bubbles occur in two different segments of penny stocks: biotechnology penny stocks and internet penny stocks. The biotech bubble occurred when they were mapping out the human genome. The internet bubble in penny stocks occurred during the great internet bubble that came crashing down. Energy penny stocks might be in-line to do the very same thing.
It is always hard to tell if a bubble is going to come along. There is nothing that will predict it with any certainty. A number of different factors need to come together to form the perfect storm. You would need a strong demand for energy not just in the states but most likely around the world.
Every estimate that you read that addresses oil consumption over the next 10 – 50 years shows that oil consumption will continue to climb. As demand for oil climbs so will the price of oil. It is a standard supply and demand formula. As demand climbs so does price. Price climbs even higher is there is perceived to be a shortage of oil. Notice what I said. There doesn’t have to be a shortage of oil there merely has to be a perceived shortage of oil. That was in part what led gas prices to soar to $5 per gallon (at least in my area) a couple of years ago. There isn’t any more oil today than there was a couple of years ago but the prices are lower. This is in great part determined by perception.
A second thing that could propel energy penny stocks is the move to cleaner energy. When you have pipeline ruptures like what recently occurred in the Gulf of Mexico then there comes a public outcry to pursue energy sources that are more environmentally friendly. This is what will help propel alternative energy penny stocks and green penny stocks.
Solar energy and wind energy are already in use in many countries. So one of the natural sectors to look toward would be wind energy penny stocks and solar energy penny stocks. These could be in line for a large increase should the price of oil begin to rocket upwards again. With the new cap and trade bill they are already trying to make the use of coal generated electricity much more expensive. Don’t fool yourselves the cost of any bill that Congress passes will just be passed on to consumers.
If you go back to look at the charts of green energy penny stocks back when oil was on the run that peaked out in August of 2008 you will see that they moved up dramatically with the price of oil. JA Solar (JASO) ran to over $26 per share before falling back to under $2. Today it has settled in around $7 per share. Even extremely small companies like Sky Harvest Wind climbed to about $2 although today it only sets at about 15 cents per share. Even the geothermal energy penny stocks were not left out. U.S Geothermal (HTM) challenged $5 per share before is settled into its current price near $1.15 per share. In most of these instances the energy penny stocks increased between 500% and 1000%. You can imagine what would happen if the price of oil once again began to climb upwards again but did not pull back. The explosion in alternative energy penny stocks could be massive. Keep this in mind for your future trading ideas and keep an eye on the price of oil
