One of the most important natural resources we have is
water; it is crucial to our survival. However, there has been a lot of
fear that we are running out of clean water sources as the global
population continues to grow. For investors, this has created a clear
opportunity to invest in companies that collect, clean and distribute
water. The largest water utility company in the U.S. is Aqua America
(NYSE:
WTR),
which supplies water to nearly three million people. Another company in
the industry, on the purification side, is ITT Industries (NYSE:
ITT), which produces water purification systems that help to make water drinkable.
To
see the power of water, one needs look no further than China's massive
Three Gorges Dam project. While this $25 billion structure on the
Yangtze River will be the largest hydroelectric power station in the
world, it's sure not the only one. Hydropower involves a lot of
technology, a lot of infrastructure and a lot of power-hungry customers.
Every one of those areas holds potential opportunities for investors.
On the power side, two publically traded producers include PG&E
Corp. (NYSE:
PCG), which has one of the world's largest hydro operations and Idacorp (NYSE:
IDA), which has 17 hydro projects. (For related reading, see
Water: The Ultimate Commodity.)
Windmill farms are sprouting up around the world. Australia,
Europe and the United States are all investing in wind as a leading
source of
renewable energy.
The business of wind not only includes the generation and sale of
power, but also the design and construction of wind turbines. Few
countries rely on wind for more than a tiny fraction of their power
generation needs, but many countries are interested in the possibility.
If
this is of interest to you, look for wind farm companies that sell
wind-generated energy or companies that produce the windmill technology.
There are few
pure play stocks that deal in wind in the U.S., which will likely change over time, but companies like
General Electric (NYSE:
GE) have a presence in this market.
Solar energy is powering homes, buildings and a variety of
other items from lights to radios. As the cost of fossil fuels continues
to rise and their availability continues to decline, the future looks
bright for solar energy.
If you think the sun is just starting to rise on this industry, the
companies to look at are those that produce solar energy panels, which
will benefit if homeowners and businesses adopt solar technology. Two of
the leading producers of solar panals are Evergreen Solar (Nasdaq:
ESLR) and Sunpower Corp. (Nasdaq:
SPWR),
which develop, manufacture and sell panels and components and will
directly benefit from the increased adoption of solar power.
The U.S. government hopes that hydrogen powered cars will be
commonplace by 2020. If this technology works, there are millions of
cars - and millions of consumers - waiting for it.
If you think
this type of energy is the wave of the future, there are a few companies
that operate in the space and are developing fuel cell technology. For
example, some of the largest producers include Ballard Power Systems
(Nasdaq:
BLDP),
which produces cells that can be used in many products, from cars to
power plants. Another example is Fuel Cell Energy (Nasdaq:
FCEL), which focuses on providing power options to commercial and industrial facilities. (For related reading, check out
Getting A Grip On The Cost Of Gas.)
Just about every aspect of efficiency is good for the
environment. Energy efficient construction and appliances reduce home
energy use and energy efficient cars reduce our dependence on oil. From
efficient lighting to creating the paperless office, innovative
companies are developing products that maximize the benefit we get from
the resources that we use. Efficiency is the watchword of the day and it
represents developing field that will create the technologies that we
will use tomorrow. (For more insight, see
For Companies, Green Is The New Black.)
This
area is a little more difficult to invest in as there are no real pure
play companies dealing strictly in efficiency. However, there are some
companies that have done a great
job at leveraging efficiency such as General Electric with its Ecomagination business unit.
Recycling has become a standard practice for many people in
recent decades. The stuff that was formerly thrown away and trucked off
to the landfill is now turned into useful products. Most people are
aware that household products such as paper, metal and glass are
reprocessed and reused, but few stop to consider the business behind
these endeavors. Of course, these aren't the only items that are reused;
waste oil, vegetable oil, batteries, cell phones, computers and even
parts from cars can have a second life. Recycling these items involves a
business enterprise humming along in the background. (To learn more,
see
Less Trash For More Cash.)
In
terms of your portfolio, waste management companies with a large base
of recycling facilities may be of interest including companies such as
Allied Waste Industries (NYSE:
RSG) and Waste Management (NYSE:
WMI).
Reduction is the key term here. From reducing green house
gas emissions on industrial power plants to minimizing the emissions
that come out of the tailpipe of your car, the pollution control
industry is on the rise. Every time legislation mandates an improvement
in the amount of some harmful chemical that can be released into the
environment, the pollution control industry responds.
If this is something you are concerned about, look for companies that
develop pollution control technologies such as Fuel-Tech (Nasdaq:
FTEK) and Versar (AMEX:
VSR).
Organic farms eschew the use of pesticides, engage in
sustainable farming practices and sell products that are often healthier
to eat than the stuff composed of three-syllable words that you can't
pronounce and a shelf-life measured in decades. They also engage in
animal management practices that avoid the use of hormones and
antibiotics, keeping those chemicals out of the food chain and out of
the ground and water surrounding the farms. It's good food - and good
business.
With U.S. organic food sales reaching $17 billion in
2006, there is a huge market for organic food producers and grocery
stores. Some of the biggest organic food companies include Whole Foods
Markets (Nasdaq:
WFMI), United Natural Foods (Nasdaq:
UNFI) and NBTY (NYSE:
NTY) among others.
For many companies, the urge to go green is a relatively
recent phenomenon. Like change everywhere, some firms adapt and some
don't. Investment managers in the "green" space have begun to categorize
firms by the place they hold along the "green" spectrum. Take oil
companies for example. One would be hard pressed to think of these firms
as green, and for the most part, they aren't. But if you take a closer
look at their business models, it is easy to see that some are greener
than others. Choosing the firms with the best environmental records and
practices is another way of "going green." (To learn more, read
Can Business Evolve In A Green World? and
Change The World One Investment At A Time.)
If a "green" investment catches your eye, there are plenty of ways to find a place for it in your portfolio. Mutual funds, exchange-traded funds, stocks, bonds and even money market funds that focus on the environment are all available.
Editor's Note:
Please note that the companies mentioned in this slideshow are examples
to help you begin your research, not investment recommendations.
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