Investing: Alternative energy stocks are still dim

• Finding a good alternative energy stock isn't easy
• Some alternative-energy companies are startups with little in the way of earnings
• Best way to make money on alternative energy? Look at companies that help you use less of it

Given the recent procession of storms, hurricanes, tornadoes and other natural disasters, you're probably thinking about taking practical steps to protect yourself and your family, such as sacrificing a goat to the local god of weather phenomena.

A more practical (and goat-friendly) solution, however, would be to find an alternative energy source to get you past those occasional weeks without basic human necessities, such as power, running water and the Internet.

If you're thinking that way, other people might be, too — and that's one argument for alternative energy stocks. Another is that the Obama administration is friendly toward alternative energy. Even so, finding a good alternative energy stock isn't easy.

One would have thought that the stocks of companies that invest in solar, wind or geothermal energy would have soared in the wake of President Obama's re-election. One would have been wrong.

Consider PowerShares WilderHill Clean Energy ETF (PBW), which has a fairly broad portfolio of alternative energy stocks. Since the Nov. 6 election, the fund is down 12%.

What happened? Part of the problem, of course, is that the market in general has dropped since the election. The Standard & Poor's 500-stock index has fallen about 5%. Also, alternative energy stocks tend to lag when the price of oil falls, and oil has fallen from $88.71 a barrel Nov. 6 to $85.51 a barrel Thursday.

Another problem is that some alternative-energy companies are start-ups with little, if anything, in the way of earnings. FuelCell Energy (FCEL), for example, makes and distributes fuel cells, a cleaner way to turn fuel into energy. The company lost about $46 million last year.

And most alternative-energy sub-sectors have had headwinds, says David Schoenwald, manager of the New Alternatives fund (NALFX). Solar energy stocks, for example, have had problems with a U.S.-China trade dispute — as have stocks of companies that produce wind turbines. "There's overproduction everywhere," Schoenwald says. Thanks to the credit crunch, financing wind plants has been difficult, he says.

Utilities that are friendly to alternative energy have lagged, in part, because of fears that Congress will raise taxes on dividends, a key attraction of utility stocks.

Finally, many of the companies that produce wind, solar or other types of alternative energy are small parts of larger companies. These smaller companies don't contribute enough earnings to the parent to make a huge difference. For example, BP is one of the largest producers of wind energy, with more than 1,000 turbines in the U.S., but the majority of its earnings comes from oil.

And even though the president is friendly toward alternative energy, there's little chance that Congress will pass laws banning coal and creating vast new solar and wind plants. "All the big stuff is off the table," says Tom Konrad, editor of AltEnergyStocks.com.

So what will Obama do? "Pretty much what he's been doing the past three years," Konrad says. In short, doing what he can through rulemaking. One area of alternative energy that should benefit: energy conservation.

Schoenwald likes three large-company stocks:

��� Owens Corning (OC), which makes fiberglass insulation. The stock could also benefit from an increase in new home building.

• Johnson Controls (JCI), which works on energy-saving projects for buildings, and also makes energy-efficient batteries.

• Schneider Electric, a European competitor to Johnson Controls, has a similar business, but with less exposure to the auto industry, Schoenwald says. Shares aren't sold on U.S. exchanges.

Konrad likes Ameresco, a Framingham, Mass.-based company that specializes in making buildings, such as hospitals and schools, energy efficient. "It's a cheap stock that will get a large direct benefit from Obama," Konrad says. His favorite energy exchange traded fund, PowerShares Cleantech (PZD) has a slug of energy-conservation stocks as well.

We can hope that someday scientists will discover a way to power a house by petting your cat or snoring. Until then, however, the best way to make money on alternative energy is by looking at companies that help you use less of it.