Should your Portfolio have Greentech Stocks?
Kevin is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Renewable energy sources will have to replace traditional and non-renewable sources more and more if urbanization and current American lifestyles are to continue, no less the improvement of lifestyles (i.e. increased energy consumption) in emerging countries.
The wise investor sets aside personal leanings and emotional factors to objectively assess any yield potential from any given form of stock or even a whole sector. Whether or not you’re the “drill, baby, drill” type or the clean renewable energy believer, the simple fact is that the thousands of years continued survival of humanity can’t rely on things like oil (world peak oil being passed in 2006 according to the IEA) or natural gas (fracked flammable tap water, anyone?) that will eventually run out.
Ameresco (NYSE: AMRC) is, according to its SEC filing, “a provider of energy efficiency solutions… services include upgrades to a facility's energy infrastructure and the construction and operation of small-scale renewable energy plants… one of the few large, independent energy efficiency service providers.” AMRC had four offices in three states in 2001 and has expanded to 62 offices in 34 states and five Canadian provinces by year-end 2011. AMRC grew revenue and profits even during the recent recession. My fellow Fool, Seth Jayson, noted that AMRC had GAAP EPS of $0.11 for Q2 that were 42% lower than the prior-year quarter's $0.19 per share. Yet, the next quarter’s EPS estimate is $0.37. Now may be a good time to get into this stock.
Codexis, Inc. (NASDAQ: CDXS) is another stock for a biofuels and biochemicals maker. It is in talks with Royal Dutch Shell for a plan to sell its biofuels enzymes to other companies outside of Brazil. My fellow Fool Maxxwell A.R. Chatsko has written extensively about the technology and profit drivers for CDXS. This is a multi-ticker overview type of article so I’ll keep things short. CDXS will be affected by the agreement with Royal Dutch Shell and many investors are waiting to see the outcome of the talks. CDXS is close to having a product that can lead the Cellulase Enzyme market, so keep an eye on it as the month of August will be telling for CDXS.
Amyris, Inc. (NASDAQ: AMRS) uses an industrial synthetic biology platform to convert plant-sourced sugars into a variety of hydrocarbon molecules. AMRS admittedly doesn’t have the same overwhelmingly positive investor sentiment as other stocks mentioned here, but I can’t pick all ringers, can I? AMRS has seen a drop in valuation recently due to contractions in revenue and losses. This situation may be changed because of a recent successful demonstration flight using the advanced renewable jet fuel produced from Brazilian sugarcane that really created a stir and received plenty of attention. The potential of this new profit-generating product should have a major impact on the (admittedly) bleak short-term outlook for AMRS. It will stay in the gutter if things continue as such, but with a low valuation this stock can really make you some profit if this new fuel is a winner. Get into AMRS before everyone else if this new jet fuel gets a market foothold.
A renewable energy source that is gaining global popularity is municipal solid waste (MSW) energy production. In short, MSW uses waste (i.e. garbage) that is burned to create energy and heat. According to the Energy Information Administration (EIA), renewable energy made up almost 13% of the electricity generated in the US in 2011. Covanta Holding Corp (NYSE: CVA) is a developer, owner and operator of infrastructure for the conversion of energy-from-waste, waste disposal and renewable energy production businesses in the United States that also has positive investor sentiment at this point. CVA recently won awards for three of its waste-to-energy plants. An article at the Fool in April noted that CVA is “restoring shareholder value and securing the company's future by raising dividends, buying back shares and restructuring debt.”
It should be noted that the overall competitiveness of the alternative energy (AE) industry is hard to ascertain at this point. Energy is big money and large players aren’t opposed to influencing public opinion. Trying to find an honest assessment of the AE industry can be daunting due to the vested interests on both sides (traditional and renewable) of the debate. Predictions for the rise and fall of both types of energy producers are plentiful making the assessment quite difficult. It may be a matter of deciding as an investor whether or not you believe that oil, gas and coal can last indefinitely or that the future is in renewable energy. This investor finds it hard to believe (logically) that finite resources will serve a growing population indefinitely thus making AE a good long-term play. Invest wisely, invest boldly and make money, capitalism wants you to.
thedeswolf has no positions in the stocks mentioned above. The Motley Fool owns shares of Covanta Holding. Motley Fool newsletter services recommend Ameresco Class A. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.