Investors continue to go green these days. Heck, even George Soros is getting into the act, recently committing $1 billion to clean energy technology. The billionaire's timing is impeccable. Investment in green energy projects totaled $25.9 billion in the third quarter, signaling this year's apparent freeze on green investing is over. If men like Soros are jumping in, does it make sense to consider building your own green portfolio?
Indeed it does. But if you're tired of the same old green energy plays, we look at four alternatives, all with the word "green" in their names. For investors lacking an environmental bent, this could be just the green portfolio you're looking for.
IN PICTURES: Top 10 Green Industries
Green Plains Renewable Energy (Nasdaq:GPRE)
Omaha-based Green Plains is the fourth-largest ethanol producer (480 million gallons per year) in North America. The ethanol it produces is enough to provide an alternative energy source to one million vehicles in America. Its agribusiness segment, which works with grain producers near its facilities, accounts for 20% of its total revenue. More importantly, it provides supply certainty to the ethanol business. In the second quarter, its operating income was $4.1 million on $285 million in revenue, up substantially from a first-quarter operating loss of $7.2 million and $221 million in revenue. The largest of its three operating segments is its marketing division, which helps other ethanol producers sell their product, contributing 52.3% of its total revenue. It has a diversified business model that will benefit from future growth in America's ethanol production. The risk here is that ethanol loses favor as a renewable energy source. File this investment under speculative.
China Green Agriculture (AMEX:CGA)
I love this play on China. Here you have a Chinese-owned company producing and selling fertilizer in 27 of its own provinces. It's focusing on the domestic market leaving the export market to others. If it can stick to its plan and not spread itself too thin, this one could be huge. Its fiscal 2009 revenues grew 55.8% to $35.2 million and net income 86% to $14.5 million. Its guidance for 2010 calls for revenues around $46.8 million and net income of $18.8 million. To make this happen, it plans to open its own retail stores under its Jinong brand, getting even closer to its farmer customers while simultaneously expanding its profit margins. This will increase capital expenditures, but the return on investment should be worth it. In terms of valuation, the stock is up 380% in the past 52 weeks so if you do buy, don't expect this kind of appreciation in 2010.
SL Green Realty (NYSE:SLG)
If you work in Manhattan, there's a good chance you make a living in one of SL Green's office buildings. It is the largest landlord in New York City, renting 23 million square feet to some of the best-known companies in America. Real estate experts in the city suggest Class A office rents could drop by as much as 35%. However, given the construction of new office buildings has hit the skids due to credit shortages, it likely won't be that severe. Funds from operations in SLG's second quarter were $1.20 a share, down 37.5% from a year earlier. Most interesting is its bid for the Aquaduct Raceway casino contract to build and operate along with Hard Rock Entertainment and upstate New York racetrack operator Jeff Gural. It appears to have the edge in the bidding over MGM Mirage (NYSE:MGM) and Penn National Gaming (Nasdaq:PENN). This would make a nice additional revenue stream. Those who bought SLG stock in March got the low-lying fruit, but there's still money to be made long term. After all, this stock traded at $150 as recently as 2007!
Green Mountain Coffee Roasters (Nasdaq:GMCR)
This is as close to a sure thing as there is. Green Mountain is one of the best run companies in America and it continues to dominate the wholesale coffee business through its single-serve Keurig coffee makers and the K-Cup coffee packets that go in the machines. This is no one-hit wonder. Sales in the last 10 years have grown 669% from $65 million to $500 million and earnings before interest and taxes 907% from $3.6 million to $36.5 million. In the process, the company has managed to bring along one of its K-Cup licensees, Diedrich Coffee (Nasdaq:DDRX), whose stock is up 8000% year to date due to its wise decision to get out of retail and focus on producing a winner. Funny, Green Mountain did the same thing a decade ago and look how it turned out!
Bottom Line
These days, most people would agree that green is good. This portfolio confirms it - but you don't need to be an environmentalist to get on board. (Also, check out companies that try to be environmentally green in Five Companies Leading The Green Charge.)
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