Green Stocks are Hot

There’s no mistaking it — green stocks are hot. One of the side benefits of high oil prices is that alternative energy sources are looking more economical by the day. Investors are taking note, and green energy has been on a tear in the markets. We believe the boom in green stocks is just beginning, however. Ultimately, the days are numbered for unsustainable businesses, and there are great profit opportunities for those who get in early on the first wave of new businesses that will take their place.

Green Stocks to Watch

Renewable energy is not the only category of green stock out there, of course, but it’s the one with the most potential at present. Energy policy is on the news daily, and mainstream America is finally starting to wake up to the need for new energy sources, not just to curb global warming, but to move toward energy independence, and ultimately, peace.

Hot Green Stock Sector: Solar

When you get right down to it, all energy on Earth is solar. Oil and coal come from fossils of plants and animals. The energy stored in plant matter comes from the sun. Animals who eat plants therefore get their energy from the sun as well, albeit indirectly. Wind power comes from weather patterns that are powered ultimately by the sun. The list goes on and on. The potential of solar power is practically infinite. So doesn’t it make more sense to harvest it directly? Solar energy is infinitely renewable, and clean growing in profitability, making solar companies some of the best green stocks in the world.

Solar technology is in the early stages of a renaissance, with rapid advances making its production faster, cheaper, and more efficient every day. These green stocks are booming. For example, First Solar (NASDAQ:FSLR) soared 470% in 2007. Don’t fret that you’ve missed the boat, however. There are many more opportunities to come in this sector.

Hot Green Stock Sector: Geothermal

The earth absorbs the majority of the energy the sun emits into the atmosphere in the form of heat. This heat, combined with heat radiating from the earth’s core, can be used for a wide variety of purposes, including generating electricity, heating your home, or producing hot water. Iceland now gets the bulk of its energy from its rich geothermal resources. As it turns out, America has excellent geothermal resources as well, mostly in the West. The industry is still nascent here, but it has big potential. One rock-solid Green stock in this space is Ormat (NYSE:ORA). They have a solid financial foundation, and supply equipment and technology to many prominent geothermal producers.

There are a number of smaller players in this space as well. Many of these small cap green stocks offer big growth potential. Stay tuned for more.

Hot Green Stock Sector: Biofuel

Biofuel is a broad term which includes fuel generated from any cultivated biological source. It includes biodiesel, ethanol, biomass, and others. Ethanol, particularly corn ethanol, has dominated the news in recent years. We are skeptical of the long term potential for corn ethanol, due to its poor energy yield. Other forms of ethanol, such as cellolosic ethanol from trees, sugar cane, and switch grass, are much more promising. Sugar cane ethanol in particular has been instrumental in helping Brazil reach energy independence.

One way to get into the biofuel sector is to invest in reforestation products . Companies like PRT Reforestation (TSE:PRT.UN) produce tree seedlings for reforestation projects and timber companies. They are some of the best green stocks on the market today. The trees can be harvested to produce cellulosic ethanol, and their seeds may be used to produce seed oils which can be made into biodiesel. The reforestation business is booming, and there’s no end in sight.

The Future is Bright for Green Stocks

The future looks very promising for green stocks. The world is slowly but surely waking up to the need for a new way of doing business. Companies are learning that green business is good business. Take advantage of your foresight and invest now, and you should see great dividends in the years to come. Your heirs, and your planet, will thank you.