Whether you're reeling over the image released this week from the North Pole Environmental Observatory - or pondering a recent revelation that car-ownership has been on a steady decline since, wait for it, 2004 - one good strategy for the long-term is to keep an eye on companies who are investing heavily in clean energy. And for those of you who are really feeling the heat in this economy, it might help to know that some of those companies even managed to turn a profit.
There are many reasons to be wary about clean energy stocks. Prices overall have been driven up thanks to endless speculation about the transition from fossil fuels, not to mention the implicit self-esteem boost that comes with investing in a company with the potential to end the global-energy-crisis. Because they promise returns that are financial, intellectual, and moral in nature - clean energy stocks are often overvalued. This happens for a number of reasons.
For one, it is much less lucrative to limit your investments to socially responsible companies and organizations. Many investors advise playing the market as a whole and simply donating some returns to worthwhile causes. This sidesteps the risks that ultimately come with investing in "hot" sectors, or sharp swings in public opinion (such as in the wake of the BP oil spill). Besides, the rise of hydraulic fracking and initiatives such as "clean-coal" have led to a mini fossil fuel boom in the US, making it even harder for fledgling energy stocks to find a foothold.
With that in mind we decided to run a screen to find relatively stable clean energy stocks that are likely to be around for the long term. We screened a universe of clean energy companies for strong five year growth in sales, as well as high return on equity (ROE). Four companies stood out among our results, with either high sales growth above 15% over the last 5 years, ROE above 15%, or both.
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1. First Solar, Inc. (FSLR, Earnings, Analysts, Financials):Manufactures and sells solar modules using a thin-film semiconductor technology. Market cap at $4.23B, most recent closing price at $48.48. Return on equity is 11.7%, sales growth over the last five years was 46.20%.
2. Green Plains Renewable Energy, Inc. (GPRE, Earnings, Analysts, Financials):Engages in the production, marketing, and distribution of ethanol and related distillers grains in the United States. Market cap at $544.18M, most recent closing price at $18.18. Return on equity is 5.6%, sales growth in the past five years is 170.1%.
3. LDK Solar Co., Ltd. (LDK, Earnings, Analysts, Financials):Engages in the design, development, manufacture, and marketing of photovoltaic (PV) products; and development of power plant projects. Market cap at $259.02M, most recent closing price at $1.67. Return on equity is 488.8%, sales growth over the last 5 years was 10.5%.
4. Verenium Corporation (VRNM, Earnings, Analysts, Financials):Engages in the development and commercialization of enzymes for industrial processes in North America, Europe, South America, and Asia. Market cap at $29.15M, most recent closing price at $2.28. Return on equity is 45.2%, sales growth over the last five years was 4.5%.
(List compiled by James Dennin. Analyst ratings sourced from Zacks Investment Research, all other data sourced from Finviz.)
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Analyze These Ideas: Getting StartedRead descriptions for all companies mentioned Access a performance overview for all stocks in the list Compare analyst ratings for the companies mentioned Compare analyst ratings to annual returns for stocks mentioned Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)
Dig Deeper: Access Company Snapshots, Charts, FilingsFirst Solar, Inc.(FSLR, Chart, Download SEC Filings) Green Plains Renewable Energy, Inc.(GPRE, Chart, Download SEC Filings) LDK Solar Co., Ltd.(LDK, Chart, Download SEC Filings) Verenium Corporation(VRNM, Chart, Download SEC Filings)
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