Two Investments to Add to Your “Green” Portfolio
by Louise Harris, Investment U Research
Green investing can be tricky.
That was evidenced after oil prices dropped last year and alternative energy companies saw their profits fall just as quickly.
Naturally, investor enthusiasm followed, as green ETFs like Claymore/Mac Global Solar Energy Index (NYSE: TAN) and Market Vectors Solar Energy (NYSE: KWT) have tumbled 45% over the past 12 months.
Similarly, the broad alternative energy portfolio PowerShares WilderHill Clean Energy (NYSE: PBW), has declined by an average of 13.5% annually for the last three years.
But despite those woes, the alternative energy sector still has a few things going for it…
- Popularity: The more scientists talk about climate change and how to prevent greenhouse emissions, the more popular alternative energies become. This is especially true in Europe, which just passed legislation mandating renewable energy. In fact, Frost & Sullivan analysts believe the move has increased demand for renewable heating technologies within Europe, including biomass boilers and solar thermal systems.
- Lower Costs: As green tech companies continue exploring their field, they keep finding innovative ways to cut costs on their existing products.
In all, the alternative energy market Scooped revenues of $7.14 billion in 2008 and is projected to reach $13.15 billion in 2015.
Chalk that up in part to the World Bank funding projects within emerging nations, such as a hydropower project in China, solar ventures in various African nations, and wind projects in South America.
Meanwhile, over in Mochau, Germany, Israeli startup BrightView has partnered with Signet Solar Inc. to work on another solar project.
Harnessing the Power of the Ocean for Energy
While we don’t expect alternative energy companies to pop right away, the movement is still taking on momentum.
Take a look at ANSYS Inc. (Nasdaq: ANSS), a global innovator of simulation software and technologies. It recently joined forces with Green Ocean Energy Ltd. to transform the energy from ocean waves into electricity.
Most companies relying on hydropower utilize energy from rivers and lakes. But Green Ocean Energy has plans to change all of that with the Ocean Treader and Wave Treader.
Designed to bob on the surface of the ocean, both devices draw power to their onboard generators through floating arms that harness the energy of the North Atlantic.
And because it depends on a precise balance between structural strength and weight restrictions, ANSYS stepped in to provide hydrodynamic and structural analysis tools that keep the machines sturdy enough to withstand harsh elements, yet light enough to keep production costs low.
I don’t expect Wall Street to wake up to ANSYS’ potential right away, but it will eventually, just like it will recognize the larger green tech movement’s full potential.
Already this year, New Alternatives (MUTF: NALFX) – a fund with a portfolio of energy efficient companies – is ranked in the top 15% of Morningstar’s World Stock category.
If you share the same values and long-term scope for the energy sector, than get in now and hold on for the long haul. This is one sector that should gain in strength and profit potential over time.
Good investing,
Louise Harris
Editor’s Note: For in-depth information on the crucial energy and infrastructure sectors – plus the companies that are leading the way with today’s innovations and changes, check out David Fessler’s “Hot Stacked” column. Featured in The Oxford Club’s Communiqué newsletter, David tracks all the latest developments and trends, alerting investors to the best recommendations. Go here to read more.
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