Recession Opportunities: Green Investing
May 13, 2009 - Farnoosh Torabi - MainStreet.com
those with some money to invest, and an appetite for
a little risk, it's easy being green.
The green industry, which not long ago was “getting
hugged to death" by investors (at least according
to one financial analyst), is very much in growth
mode, despite an overall volatile investment atmosphere
in 2009. The country’s millionaires recently agreed,
in a new Fidelity survey, that “green tech,” along
with health care and infrastructure, are the few sectors
they’d like to invest in over the next year to prop
up their beaten-down portfolios.
True, the astronomical returns have, for many green-related
stocks and funds, subsided. First Solar (Stock Quote:
FSLR), a poster child for the potential of green stocks,
jumped almost 800%, from $28 per share to $250 per
share between 2007 and 2008. Since then it’s made
it way south to $200 per share.
That might be a little pricey for some, but with
the Obama administration actively pushing for alternative
energy sources and green initiatives, there are some
investment opportunities for folks who want to do
right by Mother Earth.
What Makes an Investment Green?
A “green” investment carries many shades. It may describe
a company that tries to help lower toxic emissions
into the atmosphere or reduce demand for natural resources.
Think Toyota (Stock Quote: TM) with its hybrid vehicles
or Honda (Stock Quote: HMC) and its new hydrogen fueled
cars, which minimize the demand for oil.
In other cases, “green” means improving the quality
of life, by “simplifying and encouraging folks to
somehow have a smaller footprint,” says Andrew Bengle,
senior research analyst with KLD Research & Analytics.
A restaurant that uses only locally raised crops is
an example of that, since it doesn’t need to use large
gas-guzzling trucks to transfer ingredients across
state lines. Green may also mean promoting a healthier
lifestyle by manufacturing, selling or using all natural
and organic ingredients like grocery chain Whole Foods
(Stock Quote: WFMI) does.
Of course, no investments come without risk and green
stocks are still considered speculative, as most companies
in this niche are relatively young and small. Depending
on your capacity for risk and what particular aspect
of the green movement you like, you can choose to
play in a variety of directions within the sector,
from individual stocks to mutual funds and exchange-traded
funds. The funds and stocks mentioned below are by
no means recommendations. But if you’re in the market
for green investments, these picks might help as you
conduct your own research:
Green Mutual Funds
Green mutual funds are designed for the risk-averse
investor who is convinced green is good, but may not
want to allocate much to an individual stock. Instead,
with these funds you can invest in a broad range of
stocks, usually 30 to 40, for one price. The stocks
chosen for a particular fund usually cater to a particular
segment of the sector or a certain risk-strategy.
Winslow Green Growth Fund (Stock Quote: WGGFX)
Investment type: A no-load mutual fund whose portfolio
is a mixed bag of high-growth “smaller, riskier companies,”
according to Morningstar, a fund ratings agency.
What they do that's green: “Green" to Winslow
means promoting healthier lives, plain and simple.
Some of the highest-growth players in the fund include
Green Mountain Coffee (Stock Quote: GMCR), Chipotle
Mexican Grill (Stock Quote: CMG) and Fuel-Tech (Stock
Numbers at a glance: The fund hit its peak
in October 2007 at $28 per share. Since 2008 the fund’s
been on the decline and is now trading around $10