You Should Add Some Green to Your Portfolio

What does the conscious-consumer movement mean for the market, and how can you make it work for you?

Feb 26, 2014 at 1:08PM

You may think that the green movement is only for patchouli-scented hippies who have all the time in the world to read ingredient labels while doing yoga. However, you'd be wrong. There's a lot of money behind sustainable initiatives, and that amount is growing.

A recent study revealed that in 2012, the niche market of conscious consumption began to shift into a globally recognized movement. The study looked at the "16 most prevalent green standards across 10 commodities sectors" and recorded the expansion in both the development and use of voluntary standards during the past decade.

The study, published by an alliance of international organizations, stated that 2012 saw certified or verified production across those 16 standards reach an estimated trade value of $31.6 billion. The green market grew at a rate that was 20 times that of its conventional counterparts. This market is clearly booming; are you positioned to benefit from it?

Green: not just for hippies any more
Companies like Chipotle Mexican Grill (NYSE:CMG) and The Hain Celestial Group (NASDAQ:HAIN) have been enjoying their rides on this bandwagon for some time now. More and more people see the importance in putting their money where their morals are -- and your portfolio can benefit from it.

Chiptle Resizer

Chipotle has benefited greatly from embracing the green market, and it shows. The burrito superstar has watched its stock price grow to the tune of about 66% since it announced its increased commitment to locally grown produce. Chipotle upped its locavore dedication by promising to serve 15 million pounds of locally produced produce in 2013, up from the 10 million that it committed to in 2012.

Of course, the Mexican grill's growth isn't attributed to just its conscious supply chain choices; the company's growth and earnings help a lot too. These factors combine to make for a solid green buy.

What the Hain?
Hain Celestial is a powerhouse in the natural product sector, boasting high-profile green brands such as Celestial Seasonings, Jason, and Alba Botanica. The health industry giant saw strong growth during its fiscal second quarter as it posted sales of $534.9 million, which is up 17.5% from last year. Net US sales increased 16.9% year-over-year to just over $327 million.


Hain is looking forward to embrace the growing green economy even more in the future. The company expects its sales to increase 22%-24% in fiscal 2014. It makes sense if you consider Hain's historical devotion to natural products.

What's an investor to do?
Investors have a chance to jump on this trend. Hain's price to sales ratio (ttm) is 2.26; as such, it is outperforming its industry, which has an average price to sales ratio of 1.58. So what's with the 0.68 premium? Well, Hain has the potential to grow significantly in its United Kingdom and Rest of World markets. Looking at it's infrastructure development by analyzing it's long-lived assets (primarily net property, plants and equipment) give us a glimpse into how Hain is prioritizing its expansion efforts. For instance, in the UK its long-lived assets grew about 84% from June to December of last year. This increase may be indicative of the company focusing on building out its regional infrastructure in order to meet increasing demand. Hain's sales confirm the UK's interest in its brands, as it saw a 68% increase year-over-year. .

Hain also acquired two new "lifestyle brands" in 2013, as it is looking to push into the realm of super-premium products. It looks like this company is making a few big pushes into new markets and brands. This growth could mean a growing share price too, something that potential investors should consider.

Chipotle looks like it is intent on diversifying its product line as well, with the addition of its ShopHouse  concept and its backing of Pizzeria Locale. Putting its new endeavors aside, Chipotle is looking to open 180-195 more restaurants this year and, on top of that, has been recommended by the Fool for some time now.

Don't discount the hippies -- they have market power that's growing and bankable.

Get into the market now
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Leah Niu owns shares of Chipotle Mexican Grill. The Motley Fool recommends Chipotle Mexican Grill and Hain Celestial. The Motley Fool owns shares of Chipotle Mexican Grill and Hain Celestial. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.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.

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