I decided to indulge in some food inflation, so yesterday I went to Arturo’s Pizza on Houston Street in New York City and ordered a $160 large pie pizza.

I’m a believer in pizza diversification. I can’t ever decide on a topping. Do I want onions and bacon? Or green peppers and pepperoni? Or lobster and broccoli? There are too many permutations, and if you make the wrong decision, there’s no turning back, and serious loss is the only possible outcome -- like with a portfolio.

So I ordered all 34 toppings on the menu. At $4 a topping (except for the lobster, which was $15), that seems like some serious food inflation. (I vaguely remember back in the good old days when a topping was no more than $2 per.) Unfortunately, Arturo's couldn’t satisfy me. “We tried,” the waitress told me, “but the pizza won’t be able to cook with all those toppings on it.”

So we negotiated, and we settled on about 28 of the toppings. “I don’t know how your stomach is going to handle it,” she said when she served the tour de force. “It's too much meat.” But hey, doesn’t the fish balance out the red meat? And don’t the vegetables count for something? Can’t I argue that this is simply a balanced meal?

But wait. Should I even be talking about food inflation? That’s so first-week-of-June 2008. I can’t keep track of the “important concepts” of the day. Last month the hot topic was “Are we at war with Iran?” Then it was “Is oil going to $1000?” Then it was “Is the entire banking system going to collapse?”

Last week, the hot topic was wind power. My good friend (at least on Facebook) T. Boone Pickens was on CNBC and in The Wall Street Journal and the New York Times trashing our dependence on foreign oil and touting the benefits of wind power. He might be right, but it's hard to say. I don’t think I ever even heard investors talking about wind power until about three months ago. Suddenly, all of these hot wind power stocks that make no money started shooting up.

My general approach when dealing with “hot topic of the day” type of stocks is to look for back doors. Find stocks that have legitimate cash-generating businesses trading at cheap multiples that happen to be making serious moves in whatever the hot field is.

Here are my two favorite stocks that are back doors on wind power:

Take Aerovironment (AVAV), for instance. This company has been around since 1971, has $120 million in cash and no debt, and generates a ton of cash in its primary business: making unmanned aircraft systems that hang out in the stratosphere for weeks at a time spying on enemies, checking out hurricanes and forest fires, and doing whatever else it is they do up there for the Aerovironment's military and corporate customers.

The company is growing at 25% per year and trades at a fairly cheap (for its growth) 22 P/E. So what does this have to do with wind power? Aerovironment just patented the technology to put micro-wind towers on top of buildings that then power whatever buildings they are on. This way, vast tracts of rural land don’t have to take up so much space with ugly wind towers.

Actually, I don’t necessarily think they are ugly, but let's listen to someone who does (or, at least, did) think that.

T. Boone Pickens, on Bloomberg, back in 2005: “I was in wind energy for a minute. ... I hate it. And when I got to looking at those damn things I said, I don't want to be a part of putting that on the horizon. I think it's homely and I don't like it. We took a loss and got out of it and I'm glad I did.”

I also like Otter Tail (OTTR), the Northwest U.S. utility company that uses its excess cash flows to invest in other businesses (similar to the business model of a tiny, Omaha-based insurance company). One of those businesses is DMI Industries, one of the largest makers of wind towers. It just opened up new plants because it can’t handle all the demand, and it has orders for ugly wind towers reaching into 2012. But regardless of windpower, it also always has its boring utility business, which boasts Bill Gates as its second-largest shareholder as well as a 3% dividend.

The Department of Energy estimates that wind power is going to go from generating 3% of our energy needs to about 30% by the year 2030. That’s a Nostradomus-style prediction, but if the DOE is right, then there’s going to be nonstop business for the above two stocks.

And if it's wrong, it doesn’t matter. Otter Tail's and Aerovironment's wind businesses essentially can be bought for free because their primary businesses are doing so well and cover the entire valuation of the stocks. In my opinion, that’s the way to play the “meme of the day.”

Speaking of which, my pizza was excellent. The inflation and diversification were worth it. Next stop: a sushi roll with 30 different kinds of fish in it.

By the way, I’m not that into the “front door” wind plays such as American Superconductor (AMSC), but I would also consider Trinity Industries (TRN) and Broadwind Energy (BWEN.OB).

Also, some new T. Boone Pickens plays include XTO (XTO) and Halliburton (HAL), and he closed out his position in Exxon (XOM). No more oil!!

And if you are looking for next week's "hot topic of the week," consider the Beijing Olympics and check out Baidu.com (BIDU). Hopefully the pizza is not as expensive in Shanghai as here.

Published July 24, 2008