Miners can be environmentally destructive. So we found 6 raw materials stocks focused on the environment.
Raw materials, the sector which pulls stuff out of the ground and turns it into something that consumers or manufacturers need, often comes with great environmental costs.
Many of these firms produce or mine things like coal and oil - which generate destructive greenhouse gases when consumed. And mining firms - whether they mine gold or steel - often use large amounts of energy in the process of extraction and refinement, while also completely re-shaping the natural landscape to unearth new sources.
However, not all polluters are created equal. Some have turned to green alternatives when it comes to their methods. These kinds of green investments can have a compounding effect on a company's bottom line. They can lower the risk of fines, place a company ahead of new regulations, lower opportunity costs, and generate good will. With that in mind we decided to build a list of green(er) investments among raw materials stocks.
Before we present the list, it needs to be said that there are still many ways to invest in companies that don't pollute at all. However, there are also ways for you to get a slice of the pie while also encouraging and supporting firms that seem to consider the environment in their operations.
Today's screen was tricky to develop because it involved a lot of intangibles. For instance, companies with astronomical revenues can easily donate some of their profits to green causes. If you're a particularly egregious polluter this process is called "green washing."
I didn't want to include stocks that are simply philanthropic. Most companies give away money to some degree. I wanted to find firms that are making investments that benefit the environment and the company alike.
So I began with a universe of raw materials stocks, filtered to exclude micro-caps. Then, using data from our partner CSRHub, and a bevy of press releases and environmental reportings sourced from company websites, I found six raw materials stocks that have made significant investments in improving their efficiency and their environmental impact.
Unfortunately some of the companies with very interesting green investments also had poor environmental scores on CSRHub. This could mean that they were late to the "let's make our company green" party. But it also means that they might have projects in the pipeline which haven't yet affected earnings, or been priced into the stock.
Click on the interactive chart below to view yearly returns over time.
&amp;amp;amp;amp;amp;amp;amp;lt;p&amp;amp;amp;amp;amp;amp;amp;gt;Your browser does not support iframes.&amp;amp;amp;amp;amp;amp;amp;lt;/p&amp;amp;amp;amp;amp;amp;amp;gt;
Do you see investing opportunities in these raw materials stocks that are investing in the environment? Use the list below to begin your analysis.
1. Cloud Peak Energy Inc. (CLD, Earnings, Analysts, Financials): Engages in coal mining operations in the Powder River Basin of the United States. Market cap at $1.06B, most recent closing price at $17.69.
Green Investments: Cloud Peak Energy focuses exclusively on low-sulphur coal, as opposed to its competitors. Sulphur dioxide is the worst greenhouse gas, and has the most stringent government regulations, since it causes acid rain. Any new caps on sulphur emissions, a real possibility, could benefit Cloud Peak since it is probably already compliant with them, and already has an excellent balance sheet. It's environmental rating on CSRHub is a robust 71, compared to an industry average of 52.
2. Nacco Industries Inc. (NC, Earnings, Analysts, Financials): Engages in lift trucks, small appliances, specialty retail, and mining businesses primarily in the Americas, Europe, and the Asia-Pacific. Market cap at $492.01M, most recent closing price at $61.44.
Green Investments: Nacco, once the North American Coal Company, has been a large supporter of land reclamation. This has earned them many awards from environmental groups like the Nature Conservancy. On CSRHub the company has an environmental rating of 75, mostly for the company's policies regarding climate change.
3. Statoil ASA (STO, Earnings, Analysts, Financials): Engages in the exploration, production, transportation, refining, and marketing of petroleum and petroleum-derived products. Market cap at $75.72B, most recent closing price at $23.87.
Green Investments: Statoil has a major interest in Carbon Dioxide infusion. When fossil fuels are burned they release Carbon Dioxide into the air, which traps heat and raises temperatures in the atmosphere. One way to prevent this from happening is by harvesting it and injecting it into the ground, or beneath sea-beds.However this is very costly, and not all of Statoil's projects have paid off. The company also takes credit for constructing the world's first off-shore, large capacity wind turbine.
4. AK Steel Holding Corporation (AKS, Earnings, Analysts, Financials): Produces flat-rolled carbon, stainless, and electrical steels, and tubular products primarily in the United States and internationally. Market cap at $1.08M, most recent closing price at $7.91.
Green Investments: AK Steel is a member of the US Government's Climate Vision Program which has exceeded emission reduction targets set by the Kyoto protocol. It also has invested heavily in co-generation technologies that use waste heat to generate electricity.
5. Solazyme, Inc. (SZYM, Earnings, Analysts, Financials): Engages in the production of renewable oil. Market cap at $724.47M, most recent closing price at $10.73.
Green Investment: Solazyme is a company involved in the biofuel sector that makes oil out of algae. They recently shifted their focus from producing algae on open ponds to a fermentation that extracts oil and can be done inside. Solazyme has a sky-high valuation and no profit margin, so careful investors might want to wait to see how the new strategy will pay off.
6. Nucor Corporation (NUE, Earnings, Analysts, Financials): Engages in the manufacture and sale of steel and steel products in North America and internationally. Market cap at $16.89B, most recent closing price at $52.79.
Green Investment: Nucor uses mini-mills for its production, which are less costly and more efficient than the major integrated mills used by many of their peers. It has also made many significant investments to use recycling to control costs by purchasing steel processing firms, auto-stripping plants, and other sources of scrap metal. It is one of the largest users of scrap metal in the country, making it an important example of how recycling can be profitable.
(List compiled by James Dennin. Yearly returns sourced from Zacks Invesment Research. All other data sourced from Finviz, except where indicated.)
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, FilingsCloud Peak Energy Inc.(CLD, Chart, Download SEC Filings) Nacco Industries Inc.(NC, Chart, Download SEC Filings) Statoil ASA(STO, Chart, Download SEC Filings) AK Steel Holding Corporation(AKS, Chart, Download SEC Filings) Solazyme, Inc.(SZYM, Chart, Download SEC Filings) Nucor Corporation(NUE, Chart, Download SEC Filings)
© Kapitall, Inc. All rights reserved. Kapitall Wire is a division of Kapitall, Inc. Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.
Kapitall Wire offers free cutting edge investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by Kapitall Inc., and its affiliate companies.
Open a free account today get access to virtual cash portfolios, cutting-edge tools, stock market insights, and a live brokerage platform through our affiliated company, Kapitall Generation, LLC.
Securities products and services are offered by Kapitall Generation, LLC - a FINRA/SIPC member.