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Five analysts and top management from fifteen sector firms examine the energy sector in this special 70-page Energy issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info461.htm.

TWST: Are the stocks reasonably priced today?

Mr. McAtee: I would have to say that’s the most difficult part of following this group. I would argue that, relative to where they were six months or a year and a half ago, the stock prices are a heck of a lot cheaper now than they were. And I will say that I believe almost every company I follow is a lot closer to commercialization than they were six months or a year and a half ago. So if you look at where the stocks were and where they are now, they certainly look a lot cheaper. I think what makes it difficult is that you still have companies that are, by and large, two or three years away from being cash flow positive, and probably still have one more round of financing that they need to get done before they become profitable. Plus, you’re looking at a NASDAQ now that’s 50% to 60% lower than where it was in that time frame. So on a relative basis, compared to the market, they’re probably not any cheaper than they were.

TWST: Let’s say we have an investor who wants to have exposure to the group. Where does that investor start?

Mr. McAtee: We need to go back and look at the criteria that I laid out. First, I would look at Millennium Cell (Nasdaq:MCEL). Second, if you want to own a fuel cell manufacturer right now, FuelCell Energy (Nasdaq:FCEL) makes the most sense. Again, go back to those criteria. FCEL uses a molten carbonate fuel cell, which means you can put natural gas directly into the fuel cell and get electricity from it. Importantly, you don’t have to worry about stripping the hydrogen out first. In other words, FCEL’s technology addresses the hydrogen issue. However, this type of fuel cell operates at very high temperatures, which means that the technology is most suitable for stationary applications. You can see already, with the first two stocks I’ve mentioned, that I’ve put a great deal of emphasis on where you get the fuel to run on. FuelCell’s technology solves that. Another thing I like about FuelCell is that the company is addressing a market that I believe is going to be one of the first to adopt fuel cells. They build fuel cells that can service a small office or an army base or even a thousand homes. They’ve got a unit that fits on something the size of a substation for 1,000 homes. Therefore, conceptually, I don’t think that you need to have a huge education process to get people to accept FuelCell’s product. In addition, there is no noise or other issues. I believe that this is a product that can be commercial sooner than, clearly, the transportation market. The transportation market, in my opinion, is going to be the last to adopt fuel cells. So FuelCell Energy is focusing on a market that I think is going to be an earlier adopter of this technology. In addition, FuelCell has made sure that their manufacturing capacity has kept up with their developments in the lab. They have built their manufacturing facility up along with their lab, so I think they’re in a position to meet the demand as it comes online

1) Outlook for Energy Stocks - In an in-depth (9,000 words) Analyst Interview, Arthur L. Smith, Chairman and CEO, Christopher W. Sheehan, Senior Vice President, Robert E. Gillon, Vice President and John B. Parry, Vice President, all at John S. Herold, Inc., examine the outlook for the sector and share specific stock recommendations.

2) Distributed Power Technology - In an in-depth (4,900 words) Analyst Interview, W. Neal McAtee, Managing Director at Morgan Keegan & Company, Inc., examines the outlook for the sector and shares specific stock recommendations.

3) CEO interviews (average 2,500 words). Top management of fifteen sector firms examine the outlook for their firm and the sector.