5 Sustainable Green Ideas for Your Portfolio

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Considering I just wrote an article titled "Why Now is the Time to Buy Coal," you'd probably think I'm one of the last people who'd delve into the subject of green alternatives. On the contrary, I enjoy researching companies that have sustainable and renewable business models -- I'm just hypercritical when it comes to new technologies because many are still years away from being viable -- and by "viable" I mean "profitable."

Since today is Earth Day, I thought it would be worthwhile to take a look at what I consider to be five sustainable green ideas for your portfolio. Remember, these five companies are all having a positive impact on the environment, but they're also sustainable on an operational basis. Perhaps that will explain why you won't find any solar or biofuel producers on my list -- because pricing and profitability in these sectors is more or less a pipe dream right now.

Without further ado, I give you five Earth-friendly ideas for your portfolio:

Zipcar (Nasdaq: ZIP  )
When you think green, a car-service company is probably the last thing on your mind -- but Zipcar is more than just your average car-service provider. The company, and its fleet of approximately 9,000 vehicles, serves as a pay-per-hour car-rental service to the 673,000 members it had as of the end of 2011. And what the company does has multiple environmental and social benefits.

First, according to Zipcar, for every car rented, 15 new vehicles are taken off the roads, reducing carbon emissions and the headaches we get from being stuck in traffic. Second, while Zipcar's fleet is still operating predominantly on gas, it is beginning to see a transition toward hybrid and zero-emission electric vehicles. Last month, the company rolled out a line of electric vehicles in Chicago and already boasts an average in its San Francisco fleet of more than 100 miles per gallon. These zero-emission vehicles also provide a supplemental income boost for Zipcar, which can sell its ZEV credits for a profit. In 2011, the company netted a $3.4 million benefit from those credits.

As the infrastructure for EVs becomes more prominent, it's likely that Zipcar's purchases of EVs and hybrids will rise even further. The company is doing a great job of taking vehicles off our roads and is projected to grow at 50% annually over the next five years. It's a company I'm proud to maintain a CAPScall of outperform on.

Intel (Nasdaq: INTC  )
This is where that "Wait, what?" look comes across your face. Would it surprise you if I said that Intel is the world's largest purchaser of renewable green-energy credits? These credits, known as RECs, act as "green currency" and signaled Intel's proactive commitment to purchase 1.3 billion kilowatt hours per year in renewable energy from sources that include wind, solar, hydroelectric, and biomass. Based on estimates from the Environmental Protection Agency, Intel's purchase is the equivalent of removing 185,000 vehicles from the roads each year.

Intel isn't just purchasing RECs, either -- it has been proactively working to make its factories energy-efficient for years. Within the past seven years, Intel has invested $20 million in approximately 250 energy projects that have saved 500 million kilowatt hours of energy -- enough to power 50,000 homes annually.

But as I said, I demand operational sustainability in addition to green sustainability, and Intel simply doesn't disappoint. Intel's dominance in the microprocessor market as well as its burgeoning growth in providing hardware to the rapidly growing cloud-computing sector earned it my selection as the right stock to power your IRA over the long term.

Westport Innovations (Nasdaq: WPRT  )
If the first two names didn't get you scratching your head, then my choice of Westport certainly will, considering that I just made my case less than two weeks ago for why natural-gas vehicles are years away from being viable. But there's plenty of reason Westport doesn't fit the mold of your typical natural-gas-related stock.

For Westport, a company that converts gasoline-burning engines to run on natural gas, the bounty to be paid on such a conversion is amazingly high right now, and that translates into huge margins. A recent report on CNBC says the average light-truck conversion will run around $9,000, with larger-diesel engines running significantly more. But with the huge disparity in natural-gas prices and gasoline or diesel fuel (in some cases $2 a gallon), the costs from converting can be recouped possibly as quickly as one to two years for business operators. That doesn't even factor in the environmental benefits of burning natural gas as opposed to gasoline, reducing greenhouse gas emissions by 20% to 29%.

Westport is the one lone unprofitable company on this list of five green stocks for your portfolio, but with the company projected to grow by 38% over the next five years, and with high-profile partnerships in place with Ford, General Motors, and Cummins, profitability isn't very far off. Westport is truly a unique company for the green advocate.

Waste Management (NYSE: WM  )
There's no need to scratch your head here, either. Rather than thinking about Waste Management as an operator of landfills, which are among the primary sources of methane in the world, think of Waste Management as leading the charge in turning waste into energy. Remember, Waste Management didn't create the trash, but it is revolutionizing how the trash gets dealt with.

Waste Management is using trash to make sustainable treasure in countless ways. First, the company has upgraded some of its landfills to catch the methane released by the trash and transform it into usable energy for households. Second, Waste Management has electronics-recycling agreements with some of the world's largest electronics producers, including Sony. Waste Management is also using its technology to convert trash directly into usable energy that's capable of powering more than 1 million households. It's the company's goal to double this figure to 2 million households by 2020 while, at the same time, improving the fuel efficiency of its fleet of trucks by 15%.

The company's highly sustainable business model (let's face it, there's always going to be trash) and huge recycling operations are what earned it a spot back in March as a great dividend stock you could buy right now. Consider this trash company a renewable-resource lover's treasure.

Hain Celestial (Nasdaq: HAIN  )
We all need to eat, so what better way to round out this list of Earth-friendly companies than with an all-natural and organic food supplier, Hain Celestial?

Aside from the obvious benefits to your body of putting in all-natural products and leaving out man-made preservatives, Hain Celestial is translating its loves for the "all-natural" over to its operations. The company has been aggressively transforming its production facilities into green, sustainable operations that are minimizing energy usage and maximizing recycling potential. Another key component to Hain's green platform is using biodegradable packaging that's safe for the environment.

But when push comes to shove, Hain can also deliver for you in the earnings column. In the fourth quarter, Hain's sales climbed 32%, while income jumped 35%. Whereas input costs and slow growth are eating into its competitors' bottom lines, Hain's all-natural product line is catering to a growing health-conscious audience and boosting sales far faster than Wall Street had predicted.

Foolish roundup
Believe it or not, "green" and "profitable" can go hand in hand, as these five companies are making serious strides to make the Earth a better place for our future generations. What socially responsible companies do you have on your radar? Share them in the comments section below, and consider adding these five stocks to your free and personalized Watchlist.

If you'd like our analysts take on three companies that could help you retire rich, then today is your lucky day! Get access to our latest special report for free!

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of Zipcar, Intel, Westport Innovations, Ford and Waste Management. Motley Fool newsletter services have recommended buying shares of Zipcar, Intel, Westport Innovations, Cummins, General Motors, Ford and Waste Management, as well as creating a covered strangle position in Waste Management and a synthetic long position in Ford. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 that's emissions-free.

Read/Post Comments (13) | Recommend This Article (16)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 22, 2012, at 12:46 PM, dbtuner wrote:

    2 days can't go by without MF pumping ZIP. What a horrible investment.

    ZIP doesn't take cars off the road; it takes car out of parking lots. Mass transit takes cars off the road.

  • Report this Comment On April 22, 2012, at 2:08 PM, zpoet wrote:

    ^^^ I agree @dbtuner, TMF is simply pumping Westport and Zipcar into oblivion, nothing more than the old classic "pump and dump" website here, with the occasional good advice (if you pay)

  • Report this Comment On April 22, 2012, at 4:20 PM, Teacherman1 wrote:

    Good post Sean

    I finally broke down and bought a few shares of WPRT on Friday, since it took a big dip, and will look for opportunities to add over time.

    Will need to look closer at ZIP, but I was concerned that it was mostly a "fad" and wouldn't last. I know it is big in Austin, but wasn't sure where else, outside of California there would be enough interest to sustain it.

    Having been a member of the Loan Committee at a Houston bank, that helped WM a very long time ago, when it was just getting started, I always thought they were a good company, just wasn't sure how much more growth they had left in them

  • Report this Comment On April 22, 2012, at 6:28 PM, lanceim59 wrote:

    I also agree. ZIP is one of the worst stocks of all time. I'd rather give my money away than invest in such a terrible company!

  • Report this Comment On April 22, 2012, at 7:29 PM, InvestWhatWorks wrote:

    "Renewable green-energy credits?" This is the first time I've heard those words in that particular order. I know nothing about it other than the brief explanation you gave. Doing a very quick Google search: it seems that these credits can be sold and traded and the user who holds the credit can claim to have purchase green energy. Would I be wrong to assume that this is the new "Carbon Credit" nonsense or is this different?

  • Report this Comment On April 22, 2012, at 10:08 PM, TruffelPig wrote:

    This article is a joke because of the first 3 entries. WPRT isn't a "green company" - they still burn fossil fuels. ZIP is green? Lol. Because of their claims? INTC? Lol. Why not GOOG? At least they invest in solar and wind energy. HAIN and WM are ok suggestions though. 2 our of 5 - ;P

    SZYM is green in contrast. FCEL is green. BWEN is green. There are many green companies who are developing renewable energy technologies. How about NRG - at least they invest in renewable a lot.

  • Report this Comment On April 22, 2012, at 10:57 PM, skypilot2005 wrote:

    I own a chain saw and numerous mining companies.

  • Report this Comment On April 23, 2012, at 10:37 AM, FutureMonkey wrote:

    Hard to accuse TMF of pump/dump scheme. See, in order to successfully execute a pump/dump scheme you have to (1) target a thinnly traded company, usually a penny stock on pink sheets, (2) own a large amount of the stock, and (3) push a large enough group of investors into purchasing that company at a inflated prices.

    None of that applies to this article. All 5 of these companies are recommended because of thorough evaluation of the business and the market. You might disagree with their conclusions, but try not to insult them by accusing them of engaging in an illegal activity.

    The full investment thesis for any of these 5 company cannot be explored in a short article. The conceit of the article was simply to pull 5 companies from TMF newsletter recs that have environmental credentials along with a profitable business model and if interested you can read kind of said so at the very beginning.


  • Report this Comment On April 23, 2012, at 10:49 AM, DogfacedPuffer wrote:

    If ZIP takes off, what would prevent any of the national rental car chains from offering hourly or subscription-based services? The established companies already have vehicle fleets in virtually every city as well as relationships with manufacturers. I have a hard time seeing a moat around ZIP.

  • Report this Comment On April 23, 2012, at 11:38 AM, dbtuner wrote:

    Exactly DogFaced

    Hertz has announced that all 350,000 of their cars will be car share ready by July 2013. Avis has 10,000 ready now which is more than ZIP, and will have 30,000 by September 2012.

    ZIP has no approved patents in this area and just 2 pending which infringe on IDSY existing patents. IDSY is now backed by Avis. If you like car sharing, buy IDSY.

  • Report this Comment On April 23, 2012, at 11:42 AM, FutureMonkey wrote:

    Forgot the 4th step to a pump/dump scheme...gotta dump the stock. Not historical pattern of any of the TMF founders or employees.

    I do agree that these are not the greenist companies one could choose to invest in, but they aren't the dirtiest polluters on Earth Day either. SZYM is an interesting company worth a look at for investors seeking sustainability on both environmental and business fronts.

    Of them WM is the only one of the five I personally own shares of. ZIP is doing very well outside of California (indeed other than SF, it isn't gaining traction). Large urban centers and college campuses are their big market, especially Boston where their model is highly profitable. I like their business and business model but I haven't pulled the trigger at these prices. WPRT looks great but again I haven't actually purchased any. Skipped INTC because of unpredictablility and personal lack of understanding of what affects their operations and their ability to control their destiny. Hain - new one for me, need to read more.

    In the end, I'll probably end up with shares in 2 of 5 (WM, WPRT), follow 2 more on CAPS (ZIP, HAIN) and feel no sense of loss for "missing" INTC over the next 5-8 years.


  • Report this Comment On April 23, 2012, at 12:38 PM, DJDynamicNC wrote:

    I've picked up ZIP recently and I am content with my purchase. I am willing to pick up Hertz or Avis as well; car-sharing is the future, one way or the other, and ZIP is leading the way but nothing says competitors won't figure it out for themselves.

    That said, so far ZIP has proven it can manage a car-sharing network profitably.

    I'm looking to pick up INTC as well, and after reading this article, WM is looking attractive.

  • Report this Comment On April 24, 2012, at 4:10 PM, lkchelan wrote:

    WPRT was highly touted by you as being a hot buy. Since your recomendation I have watched my position sink like a rock. down a quick 30% It makes me feel somewhat like a Fool.

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