Earth Day is tomorrow, and that means it's time to find companies that will be good for your portfolio and good for the planet.
My criteria are pretty simple:
- The business must have a positive impact on the earth in some way shape or form.
- There has to be potential for the company to transform the energy industry for the better.
- I'm not interested in a great story today; I want tangible results and profits (hopefully) from my stocks.
SunPower (Nasdaq: SPWRA)
Why not start with a solar stock, right? Solar energy may be one of the most misunderstood sectors of the market right now, but the facts tell us that the cost of solar energy is nearly the same as the grid and is already below peak gas generation. That means less coal, less natural gas, and, if electric car sales pick up, less oil being burned.
Why no Chinese solar stocks, you ask? I've seen enough news specials on China's dumping leftover chemicals into rivers and streams to take them off my list this Earth Day. That's not an indictment of any company, just a precaution. Arizona-based First Solar (Nasdaq: FSLR) was left off the list because the cadmium telluride the company uses in its panels isn't exactly something you would want to find seeping into your water.
As for tangible results and value, I like SunPower's 8.7 trailing P/E ratio and 6.6 forward P/E ratio that even a value investor could get excited about.
Valence Technology (Nasdaq: VLNC)
A123 Systems (Nasdaq: AONE) and Ener1 (Nasdaq: HEV) may catch most of the headlines in the automotive battery market, but Valence Technology is the closest to being profitable. Valence focuses on commercial vehicle manufacturers like Smith Electric, which sells delivery trucks to customers like Frito-Lay and Staples.
I'll give an honorable mention to A123 Systems and Ener1 for having a potentially transformative effect on electric vehicles and the electrical grid, but they need to prove they can make money before this Fool will give an Earth Day thumbs-up.
AeroVironment (Nasdaq: AVAV)
In any industry, the infrastructure is often just as important as what consumers touch and feel on a regular basis. Automobiles needed the interstate system, cell phones needed wireless towers, and electric vehicles will need a charging infrastructure. That's where AeroVironment comes in.
AeroVironment's emerging business is electric car chargers that provide drivers public charging stations. NRG Energy (NYSE: NRG) recently announced that 70 "Freedom" stations will be installed in the Dallas/Fort Worth area with integrated payment plans. Taking gas-guzzling vehicles off the road in favor of electric vehicles is exactly what Earth Day is for.
AeroVironment will have to fight off big names like General Electric in the space, but there's enough room for more than one in this emerging market.
Google (Nasdaq: GOOG)
This may seem like an odd pick, but Google's investment arm, google.org, has made investments in some of the most intriguing energy companies around. The company owns stakes in eSolar and BrightSource Energy, two companies making solar thermal power plants. There are also investments in plug-in electric vehicle technology and geothermal companies trying to make a positive impact on our energy future.
As for investments that will have a financial impact more quickly, Google is investing $168 million along with $300 million from NRG Solar to help build the 392-MW Ivanpah solar thermal project built by BrightSource.
Google is making a splash in wind as well, playing a big part in the Atlantic Wind Connection project to provide infrastructure for offshore wind.
You may not think of Google as an energy company, but it's on the cutting edge of our energy future. And they may play a role in your energy future sooner than you think.
Hug a tree
If investing with the environment in mind isn't something you normally do, take a little time tomorrow to think about how the companies you own impact our world. Owning stocks that have a positive impact can lead to nice returns and help you feel good about owning them.
We can help you keep tabs on your companies with My Watchlist, our free, personalized stock-tracking service.
- Add SunPower to My Watchlist.
- Add Valence Technology to My Watchlist.
- Add AeroVironment to My Watchlist.
- Add Google to My Watchlist.
