Hello Rogue Investors,

I hope you are following my advice. Here are some highlights based on recommendations in my past two newsletters:

• Canwest Petroleum (CWPC). Recommended on August 10, 2005 at a price of $1.17 per share. The stock recently closed at a share price of $2.42 for a total two-month price appreciation of 106%.
• UEX (UEXCF). Recommended on September 15, 2005 at a price of $3.05 per share. The stock recently closed at a share price of $3.90 per share for a 25-day appreciation of 28%.

Where do we go from here?

Expect some volatility as energy prices bounce around, but I still think the trend will be upward. Here is something I recently read from the International Energy Agency supporting this possibility. The International Energy Agency said demand for crude would rise to 1.75 million barrels per day by next year (2006), "due to a rebound from the largely temporary impact of Hurricanes Katrina and Rita and a recovery in Chinese demand."

Based on this article, energy demand could grow by almost 2 million barrels per day next year, not a small amount when you consider that supplies are already tight.

Another oil stock that I have been watching is Cheetah Oil and Gas (COGL). Cheetah has 8.3 million acres under lease in New Guinea, an area rich in oil but still largely undeveloped. Currently, Cheetah is pursuing an aggressive drilling program that could prove substantial oil and gas reserves. Independent estimates indicate that some of the properties Cheetah has under lease could have several billion barrels of oil. However, unlike the oil sands in Canada, oil deposits in New Guinea are free flowing and therefore the cost to extract oil is less, approaching $3 per barrel compared to $10 to $15 per barrel for the oil sands.

Again, stocks like Cheetah and Canwest are speculative at this point, since a large amount of drilling must be completed to substantiate possible reserves. Neither company is currently making any money, so invest at your own risk. However, if their reserves are proven, the upside could be large.

This month I want to focus on a new topic: alternative energy plays. If high prices in the energy sector continue, alternative energy companies should do very well. My favorite areas for investment in this area are solar, liquid fuels and hybrid car batteries. Here are some companies that look interesting:

Daystar (DSTI). Daystar makes solar panels, but its technology is different than other players in this industry. While most solar panel makers are facing supply problems because they use silicon-based solar converters and there is currently a shortage of silicon, Daystar makes its own solar panels. This gives the company a competitive advantage, especially in the current environment. Daystar is a long-term play. The company currently is very small (market cap of about $60 million) and losing money, but over the next three to five years, it could do well. With natural gas in such short supply, many states, including California, are giving tax credits to homeowners willing to install solar power systems in their homes. Since the 1970s, solar power has come a long way and the new solar systems are highly efficient and cost competitive with natural gas prices at current levels. California's goal is to have over one million homes powered by solar in the next five years. Due to its small size and unproven potential, this is a speculative stock and should only be considered by individuals with a high tolerance for risk.

Rentech (RTK). Rentech is a small company, but it owns a patent on a process that is used to convert coal to liquid fuels, including gasoline. For countries like China and the U.S., where coal is plentiful but oil is in short supply, this process is one way to manufacture gasoline and other liquid fuels without oil. Typically, Rentech offers its technology through a joint venture agreement with a larger company with more financial resources. For example, in China, Rentech is partnered with Headwaters (HW), a billionaire dollar company that also is becoming a dominant player in alternative fuels. Although still a speculative play due to its small size and limited revenue, Rentech has attracted the attention of larger companies like Headwaters, indicating the company's technology has value. Due to its size and unproven potential, Rentech is a speculative stock and should only be considered by individuals with a high tolerance for risk. Headwaters is another stock that can be considered an alternative fuels play, but they are much bigger than Rentech and own businesses in many markets, not just alternative fuels. For individuals wanting exposure to alternative fuels with a large company, Headwaters is another choice.

Energy Conversion Devices (ENER). Energy Conversion Devices has interests in many alternative energy projects including solar power, but its most promising technology is car batteries for hybrid cars. Under a joint venture with Chevron, Energy Conversion Devices owns a 50% interest in Cobasys, a company it spun off to focus on the manufacture of hybrid car batteries. The car batteries used in hybrid cars (called nickel hydride) are hard to manufacture, and very few companies are licensed to manufacture these batteries. Also, because Energy Conversion Devices owns a patent on the technology, even if other companies manufacture the batteries they must pay a royalty fee for every battery made. Hybrid cars are in such demand that Cobasys cannot make the batteries fast enough. This is a good problem to have. However, while promising, this company is still getting its act together and the stock is volatile. Energy Conversion Devices is likely a good long-term play, but not for investors with a limited tolerance for risk.

In summary, the alternative energy market is exciting and promising, but the players are still getting their act together. Therefore, except as speculative plays, I cannot recommend these companies as true investments until they demonstrate their business models on a consistent basis.

Happy investing, or in this case happy speculating,

Bryan Rundell