A portfolio containing renewable-energy stocks is a great part of any modern investor’s financial plan, due to the fact that there is so much upward potential. These make excellent long term growth investment vehicles, and the money put into them by you, the investor, serves to further the cause of implementing the alternative energy power sources that we need in the 21st century and beyond.
In 2014, global investments in renewable energy increased by 17% to $270.2 billion in 2014 . Renewable energy accounted globally for 48% of new generating capacity installed , and the share of renewables in global electricity generation increased to 9.1%. The increase in renewables sends strong signals of opportunities to the world leaders and governments, who are negotiating towards a new, universal agreement on climate change.
Two Asian nations are especially to be highlighted, while Japan invested $35.7 billion in green renewable energy systems and resources, China is taking a clear lead at $83.3 billion, an increase of 33% from last year. Also impressive is an increase of more than 36% (to $131 bill.) in investments in developing countries.
Although the huge collapse in oil prices last year was a daunting challenge and lowered investor confidence in alternative energy stocks, oil and renewables do not compete for the same funds. The current weakness in clean technologies and solar energy stocks is providing an attractive entry point
The global renewable energy market has in fact a worth of $615 billion in 2015. Employment in the alternative energy industry increased by more than one million green jobs in the last year. The solar energy sector is adding jobs 10 times faster than the rest of the industry.
This figures bespeaks an enormous return on investment in renewable energy stocks.
Indeed, if you were to invest in a start-up alternative energy company, you might find yourself having invested in the next Microsoft in terms of return on investment. People are fed up with the rising costs of energy, while this alone is not sufficient understanding of the need for developing alternative energy sources, it is a factor which can act as a market maker.
Investments in alternative energy companies makes a lot of financial sense.
However, these facts do not mean that you don’t first want to do some careful research into green and clean energy stocks, perhaps with the help of a financial planner. “A few alternative-energy companies are going after the right markets but that doesn’t mean you should go buy every name in the sector. Investors need to be cautious about chasing the stocks,” says Sanjay Shrestha, who is an analyst at First Albany Capital.
If you are an investor, then you know that the problem in this sector is that nearly every single one of the major players in the alternative energy for profit game are start-ups or in the very early stages of growth. This means for you that they have relatively minuscule (even if rapidly growing) sales, and no expected profitability in the near term or history of earnings for you to be able to research. This can lead to some bubbling, as with what happened to the dot-com industry at the turn of the 21st century. Bubbling in the stock market is not a good thing for investors.
In the News 2015: Warren Buffet is betting big on wind energy in Nebraska and Bill Gates to doubles his investment in renewable energy projects. TerraPower (Bill Gates’ start-up company on nuclear power) invented a type of nuclear reactor (so-called Travelling Wave Reactor or TWR) which uses spent nuclear fuel to produce energy.
The real money is likely going to be made in companies that outperform market expectations. Analysts at the German Deutsche Bank AG said on May 1 that the battery announcement by Tesla Motors on the new solar-powered home battery storage unit is among catalysts that could drive the stock higher.
Analysts and financial planners can play a crucial role in helping you get it right with alternative energy investing. “We don’t play around in the tiny cap stocks that have technology and not much revenue—the ‘hope’ stocks. We invest in companies with clear cash-generation plans in place,” are the words of Ben walker, who is a senior portfolio manager at the Gartmore Global Utilities fund out of London.
Still, the outlook is very positive overall—and healthy. “It is good to see that the number of renewable energy funds and the amount of money flowing into these funds is increasing,” according to chief executive of UK alternative electricity supplier Good Energy, Juliet Davenport. “The renewable generation market is at an important stage in its development; it needs the continued support of the consumer, investor and government to ensure that it reaches its potential and really starts to make a difference to climate change.”
If you are lucky enough to pick the Microsoft, Apple or Google in renewable energy, you definitely will make lots of money.
Have a look at “GLOBAL TRENDS IN RENEWABLE ENERGY INVESTMENT 2015” by Bloomberg New Energy Finance / Frankfurt School of Finance & Management.