Although people continue to debate the existence of global warming, good investors should leave the debates aside and focus on reality: demand for alternative energy has risen significantly in recent years, and will likely continue to do so. Clean energy solutions are more practical and cost effective than ever before, and industry is embracing the savings and public relations improvements that clean energy offers.Two companies that stand to gain large amounts of new business as demand for alternative energy increases are the well-known companies General Electric and Dow Chemical (I own both).
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General Electric (GE) is one of the largest companies in the world, and the only remaining original component of the DOW 30 Index. It is a technologically sophisticated company with diverse fields of business, giving it an annual GDP larger than the entire country of Israel. GE is a leader in (among other things) nuclear power generation, wind turbines, hydroelectric power, and components for many sources of alternative energy.GE suffered during the credit crisis of 2008 (especially due to the investment arm GE Capital), and although the stock has come back 100% from its lows it is, in my opinion, still selling well below its true value.
GE Statistics (at time of writing):
Price $18.30 USD
P/E 18.15
Return on Equity 10.11
Dividend Yield 2.19%
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Dow Chemical (DOW) was incorporated in 1897 and now employs over 52,000 people. DOW is already a huge supplier of residential and commercial insulation and weatherization products (including the ubiquitous Styrofoam®), and is always working on new and innovative energy-saving solutions. In 2009, Dow introduced solar shingles. Dow is also currently developing advanced Carbon Dioxide scrubbers for commercial use.Dow stock has tripled since its low in 2009 in anticipation of the return of substantial revenue, giving it a ridiculously expensive-looking P/E ratio of 93. Nevertheless, DOW has incredible revenue generating capabilities, and I believe that in a few years today’s price will look like it was a bargain.
DOW Statistics (at time of writing):
Price $18.30 USD
P/E 93.2
Return on Equity 3.16
Dividend Yield 2.00%
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Disclosure
Do not buy stocks, or take this or any other financial advice without doing your own analysis; including, but not limited to: reviewing business models, financial statements, management style and philosophy, recent developments, market macroeconomic analysis, and chart analysis. If you do not know how to do these things, you shouldn't be buying stocks in the first place. Seek the advice of professionals, as appropriate.
