Peerless’s products are used in a wide variety of industrial applications. Just imagine all the industries which would value liquids or gases that are free from pollutants and impurities. But it is the company’s work in water purification and reducing air pollution that are of particular interest to us. The world-wide shortage of clean, fresh water is approaching crisis proportions, and while the story isn’t getting much press here in the U.S. right now, it won’t be long before it does. The U.S. water infrastructure is not aging well, and home demand for Peerless’s filtration products can only rise. And as awareness of climate change is (finally) spreading to the mainstream, demand for PFMG’s air filtration systems should continue to rise as well.

In short, Peerless is a play on clean water, clean air, and cleaner energy production. It’s on the list of companies that are building a cleaner future, and if Obama wins the election, the future will look especially bright for such companies.

At its present price, PMFG still has a smallish market cap of $352 million, so we can expect significant volatility, but that also means there’s plenty of room for growth. It’s trading at 25 times earnings, which is not out of line for a small growth stock, especially one that is debt-free like PMFG.

Solid green credentials, zero debt, and strong growth. PMFG belongs in our portfolio.

Author holds no position in PMFG at the time of writing.

A Long-Term Approach to Green Stocks

Our model portfolio demonstrates this well. It seems we didn’t time the market very well for its launch, and entered a couple of our picks right before a general precipitous decline in the market as a whole, and banking in particular. In short, we’re barely out of the gates and already in the red. Were we to take a short-term perspective, we’d probably already have closed these positions out. But that’s not our strategy at Renewable Wealth. (Not that short-term trading strategies can’t work - it’s just not our focus here.)

Current Green Stock Picks

Let’s look over the choices we’ve made so far: regional banking, geothermal energy, and timber. Rayonier , our timber pick, is actually showing a small profit at the time of writing. Timber is a “forever” investment in our mind, and this perspective is only bolstered by the growing possibilities for biodiesel and cellulosic ethanol generated from timber. RYN is in our portfolio to stay.

Next we have U.S. Geothermal ( HTM ). We predicted from the outset that this micro-cap company would be volatile, and we were right. Big moves on a daily basis have been the rule, and we’re presently in the red by a good bit. But the reasons we bought into HTM have no changed. In fact, as oil continues to creep up, prospects for alternative energy continue to look better and better. HTM is a long-term hold.

Lastly we have the regional banks. The beat-down of KRE continued, and even accelerated for a while, dragged down by the shake-up at fifth-third bank. But once again, the reasons we bought in the first place have not changed. Lower sub-prime exposure, a huge dividend, and over-all solid financials. We’re holding KRE as well.

There’s always the risk when you buy that a general selloff will happen the next day. It’s the nature of the beast. But we only sell on such events when there’s some indicator that our initial analysis was wrong. So far we’ve seen nothing like that for any of our picks. So we’re hanging tight for now.

By the by, now would be a good time to remind our readers that our model portfolio is just that - a model, and does not constitute individual investment advice.

Hang in there. We know it’s tough right now. But tough times can spark innovation, and our fondest hope is that the boom in green enterprise will continue. We will be adding new picks to the model portfolio soon. Stay tuned!

Author is long RYN, KRE, and HTM at the time of writing

How Does Geothermal Energy Work?

Like many forms of energy production, geothermal energy is really just a fancy way of heating water. Water is pumped down far beneath the earth’s surface, where heat seeping up from the earth’s core is plentiful. This heat can be harnessed to create energy in a variety of different ways, but at its core the concept is always the same: harvest and use the heat energy that’s waiting there beneath the surface.

Of course not all areas are suited to geothermal energy. Much depends on the geological makeup of a particular area. Iceland, for example, is well known to have huge amounts of geothermal capacity — in fact, it now generates all its residential power using geothermal.

As it turns out, the U.S. also has great geothermal resources — mostly concentrated on the West coast. Our next pick, U.S. Geothermal ( HTM ), owns the rights to a good chunk of these resources, and looks to be another excellent long-term addition to our green stock portfolio.

A Great Time to Get In

U.S. Geothermal has been in the build-out stage for a while now, but production is starting to ramp up. As you might imagine, it’s expensive to get a geothermal plant up and running, so the numbers didn’t look great in years past, but that’s all about to change. HTM owns the rights to a number of excellent geothermal resources which are just about to start bearing fruit. Their Raft River, Idaho facility is now online, and has sold 10 MW out of an estimated 40-110 MW capacity. Another plant in Neal Hot Springs, Oregon is slated to come online within the next few months, delivering 26 MW of capacity. HTM is also in the process of acquiring smaller plants, like their recent purchase of an operating 3.6 MW plant in Nevada just a few weeks ago.

Volcanic Volatility

At $172m in market cap, you can expect HTM to be volatile in the short term. Don’t let that spook you. Use dips as opportunities to add to your position, and plan to hold for the long term. As oil grows more and more dear, times can only get better and better for alternative energy, and geothermal is a proven technology. The future looks bright for this sector.

Author Holds No Position in HTM at the time of writing.

Local Banking is a Socially Responsible Investment

You’re probably wondering how a collection of local and regional banks fits into a portfolio focusing on environmental and socially responsible investing. We consider this investment to be a vote against the big international banks that are the root of many of the oppressive financial problems our country is presently facing.

The subprime mortgage meltdown, for example, is a creation of the international banks, who played on investor greed by bundling up large collections of risky mortgages, securitizing them, and labeling them as ultra-safe, high yield investments, when in fact they were anything but. Because of the volume involved, and the huge profit potential for the banks and brokerage houses selling them, the banks didn’t bother to do their homework to ensure that these loans were in the best interests of the borrowers, the lenders, or the purchasers of the securities.

It’s just the latest in a long line of excesses by big banks and Wall Street stuffed suits that have rocked our economy and damaged our currency, and have burdened the American people with staggering costs. Meanwhile, the instigators can always rely on the Fed to bail them out and transfer the bulk of the losses to the rest of us.

Local is Better - This Goes for Banks as Well

Regional banks tend to be far more conservative about their investments than the big boys. They don’t tend to engage in the sort of financial hocus-pocus that always seems to get the Wall Street hogs into trouble. Case in point: Regional banks largely were not involved with the subprime mess, and most have little if any subprime exposure. Further, what subprime exposure they have is most likely to come from their own direct, face-to-face customers, and local banks are far more likely to have done all the research to ensure their borrowers can actually afford the mortgages they take out. By and large, they never suffered from the illusion that they could “diversify away” their risks from bad loans with massive roll-ups of lousy debt.

Of course that hasn’t stopped local bankers from being hit by a massive sell-off along with the entire banking industry. The shares are down well over 30% from their 5-year highs. It’s unfair, but it creates a nice opportunity for us to get in at a great price.

We could talk at length about all the other excesses of big banks, such as aggressive marketing of expensive debt, exploitation of the poor and uneducated, aggressive collections tactics, deceptive business practices, the funding of corporate abuses, and more, but we’re sure you get the picture. The point is that international banks are a scourge, and buying into local banks is a great way to vote for a better way.

A Huge Yield

Because of the recent beating in share price, KRE currently offers a huge dividend yield of 11.62%. The impressive yield, along with an excellent prospect for capital gains as the share price rationalizes, make KRE an excellent prospect. We are pleased to announce it as our second pick for the Renewable Wealth Model Portfolio.

Why an Investment in Timber is a Green Investment

Timber is the ultimate renewable and sustainable resource. Most modern timber companies focus on cultivated timber, as opposed to harvesting old-growth trees, and accordingly their interests lie in preserving timberland. In our view, the best way to protect forests is to ensure that they have ongoing economic value.

Wood is renewable, 100% biodegradable, and its production and harvest help to sink carbon from the atmosphere back into the earth. Products made of wood are thus greener by nature than most alternatives, like metal or plastic. Furthermore, cellulosic ethanol produced by trees and tree-seed biodiesel both have great prospects to help ween us off of fossil fuels. Cellulosic ethanol in particular makes much more sense than corn ethanol, and if the technology takes off, timberland companies stand to profit handsomely.

A Rock-Solid Foundation for your Green Investment Portfolio

Timber as an asset class has outperformed the stock market for as long as records have been kept. Rayonier in particular has a long record of steady profits, and wise buying and selling decisions for its timberland holdings. It presently offers a nice dividend yield of over 4.5%

A Temporary Slowdown

Most timber companies are forecasting slower earnings in 2008, primarily due to the housing slump. RYN is no exception. That’s good news for investors - it gives us a great opportunity to get in at a good price. Rayonier closed at $43.63 today - down from its 52-week high of $49.55.

The beautiful thing about the timber business it that in slow years like 2008, companies like Rayonier can simply slow down their harvest of trees. This may cut down on current cash revenues, but the trees will continue to grow in the meantime, and will be worth even more when demand picks up again, as it inevitably will (China, in particular, is in desperate need of lumber, and its demand will only continue to grow). No matter what else is going on in the economy, when you own timber, your asset base just continues to grow every year.

Don’t expect any fireworks from Rayonier now or in the future. But do expect steady double-digit growth for many years to come.

Stay Tuned For More

Over the next few days we will be adding more picks to form a solid platform for our green investment model portfolio.

Until Next time!

Mismanagement and the Need for Reforestation Products

Sadly, misguided use of rare assets like old-growth forests has resulted in great damage to our forests world-wide. Further, overuse of genetically modified seed stock by tree cultivators has led to forest populations which are vulnerable to blights like the northern pine beetle, which is presently causing a crisis in Canada’s timberlands. The good news is that the crisis has created an excellent green investment opportunity.

The Opportunity: Reforestation Products Investments

A group of companies is dedicated to helping to reverse the damage cause by deforestation, as well as supplying reforestation products such as seeds and seedlings to timber companies that focus on harvesting robust cultivated trees. The market for reforestation products is absolutely exploding in Canada, due to the pine beetle crisis, and in China, due to decades of poorly managed deforestation. There are a number of Canadian companies which are set to profit significantly from these conditions. The most exciting investment prospect we’ve seen so far is Pacific Regeneration Technologies (”PRT”).

The Reforestation Business

PRT operates a large network of tree nurseries throughout Canada and the Northern United States. Their primary reforestation product is high-quality tree seedlings ideal for reforestation projects. They focus on native plant restoration, rebuilding robust and diverse plant populations. They work closely with their customers to study the local ecosystems where projects take place, in order to recreate lost forest lands as faithfully as possible. This results in stronger populations more capable of surviving the threat of invasive species like the Northern pine beetle.

Huge Dividends From for Reforestation Products

The company trades on the Toronto stock exchange under the symbol PRT.UN. The business is well established, highly profitable, and pays excellent dividends. At the time of writing, its dividend yield is a staggering 12.43%. The dividend alone would make this company an excellent investment. However, given the projected growth for the sector, and PRT’s dominant position, we can expect strong capital appreciation as well.

There can be few business more beneficial the the environment than reforestation products. Further, the financial prospects for this business look promising indeed. Altogether, that makes PRT an exciting prospect for your green investment portfolio.

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.

This is perhaps best illustrated with an example. Let’s say I mentioned an oil company as an investment prospect. Most would dismiss this company as a green investment off-hand. What if, however, I told you that the company had discovered a new technique for extracting oil that did less environmental harm than traditional drilling? Would that make you reconsider? What if I also told you that the oil this technique produces burns cleaner than the highest commonly known grade of oil? Could that potentially change your mind? What if I then added that this technique has the potential to give the U.S. complete energy independence?

Idealism vs. Pragmatism in Green Investing

The dilemma is easy to see. On the one hand, the production of oil can hardly be called an eco-friendly business. On the other hand, weaning the world off of oil entirely in the immediate future simply is not realistic, and this company at least reduces the harm done by oil production. And no one can seriously debate the desirability of U.S. energy independence.

Keep Things in Perspective When Considering What is Truly “Green” Investing

Some might still reject investment in such a company out of principle. This is fine — we all have finite funds to invest, and there’s nothing wrong with choosing to focus your investments on more genuinely renewable ventures. Just try to understand the perspective of those who take a more pragmatic approach, and understand that they are part of the solution as well. Moving the world toward a new paradigm of green energy and social justice is a vast and complex problem, and ultimately will have to be an incremental process.

I mention this because we will be covering both types of green investing here: the more idealistic plays on truly renewable sources like wind and solar, and what I would call “compromise” plays, like the example above. Naturally we are well aware of corporate green-washing efforts, and we’ll make every effort to expose them for what they are. But we may consider investments in companies that are not perfectly green (no business is, after all), but which we feel move us in the right direction. Some ideas, like nuclear energy plays, will be highly controversial. We hope these will produce lively debates, but never forget that we’re all on the same side, here.

Be Open Minded With Regard to Socially Responsible Investing

In short, green investing to us is investing in businesses that move us toward a more sustainable global economy. Whether the steps involved are baby steps or giant leaps, all deserve consideration, because ultimately we need all the help we can get. Whether you lean toward the more idealistic or the more pragmatic philosophy of green investing, your ideas are important, and we hope you will join the conversation.

How did Home Depot End Up on My Investment Blacklist?

As I mentioned, I have not made it my mission to actively ferret our corporate wrong-doing, so I can’t comment on Home Depot’s environmental record as a whole. But often a single action can reveal a company’s overall attitude toward the environment, its customers, and humanity in general.

This afternoon I was shopping at my local Home Depot’s garden section, mainly because it was late afternoon and it was the only nursery in town that was still open. I discovered on a pallet in the back a collection of dried up or wilted plants. One of them was actually a very nice flowering quince, which I could use for my garden. The leaves and fruit were all dried out and dead, but the stems were still green, and the plant was perfectly viable.

A Policy of Deliberate Waste

I asked the floor worker what the deal was with the plants, and she said they were “marked down,” which meant that they would be receiving a refund for them from the grower. “so the grower takes them back, then?” I asked.

“No,” she said, “we just throw them in the dumpster.”

“I see. Well let me just take this one off your hands, then.” I replied.

“We’re not allowed to do that, sir.”

As it turns out, the corporation does not even allow them to sell the plants at a discount. It’s their policy to require that they be tossed into the dumpster. They insist on wasting perfectly viable plants, the plastic pots they come in, the wooden pallets they are shipped on, the energy required to ship them, the landfill space to take them, and all the energy and water required to grow them in the first place. This is despite the fact that disposing of them actually costs the company money, and frankly I’d be doing them a favor by taking some of them off their hands. However, the floor-worker said she’d be fired if she allowed me to take one of the dumpster-bound plants.

Using Rent-A-Cops to Help Ensure that Nothing is Salvaged

Naturally after this conversation I wondered if there were a bunch of viable plants in the Home Depot dumpster that I could use to help get my garden going. So I drove around behind the store to have a look. There I discovered that the dumpster was locked up in chains. To add insult to injury, a morbidly obese security guard came up and hassled me for being there as well, even though this was in a public strip-mall, the company does not own the property, and there were no signs posted against trespassing.

The security guard, wheezing from her 30-yard walk, attempted to interrogate me about what I was up to. When I told her I was a lawyer, was well aware of my rights, had every right to be there, and was under no obligation to tell her anything at all, she mentioned something about monitoring me on a security camera and waddled away.

Malfeasance vs. Nonfeasance

It’s a standard policy in American law that malfeasance, or active wrong-doing, is worse than nonfeasance, or the simple failure to do what’s right. This makes intuitive sense to most people - failing to save a drowning man when you are able is bad, but not as bad as holding his head down.

Much of the staggering amount of waste and environmental damage generated by corporations every year can be attributed to nonfeasance. Apathy, sloth, cost-cutting measures, etc. As bad as that is, however, active malfeasance like the deliberate waste created by this policy of Home Depot’s is much worse. Apparently it was so important to the company that these plants end up in the dumpster, rather than my garden, that they were prepared to lose money in order to make it happen. I left the premises, disgusted, never to return, and sold all of my shares in Home Depot the following morning.

A Danger to Shareholders

Any company that is actually willing to lose money in order to maintain such a senseless policy is not only an environmental liability, it’s also a questionable investment. It’s true that Home Depot has excellent standing in the markets at present, but the tide is turning on these types of policies. The market is starting to wake up to the need for more responsible business practices, and consumers are at last beginning to factor them into their shopping decisions. If the trend continues (and let’s all hope and pray that it does), shareholders of more short-sighted companies had best keep a close eye on them, or they may be in for a nasty surprise down the line.

Welcome to the blacklist, Home Depot. In one petty action, you have lost my substantial business, my investment capital, and my respect.

I discovered this ad for FightGlobalWarming.com on the Wash. As you might imagine, opinions on it have been mixed, but I like it, for reasons which are just as unsettling as the ad itself. I firmly believe that the baby boomer generation must face up to its staggering selfishness, which has saddled its children (read: us) with one terrible burden after another, including:

• A bankrupt government because of the outrageous fiscal excesses on their watch.
• An ever accelerating rise of corporatism which is steadily chipping away at our personal rights and liberties and moving us closer and closer to what Ron Paul called a “soft form of fascism.”
• A bankrupt social security system, which will result eventually in massive new taxes we will have to pay in order to support the retirements of the very greedy, selfish people who bankrupted it in the first place.
• A rapidly failing currency which will result in terrible hardship for the poor and middle class.
• And worst of all, the destruction of our environment

I suspect the only way to get the “Me Generation” to face up to the consequences of its actions is a slap in the face like this one (with many more to follow). The editors of the Wash had a somewhat different perspective, offering the following criticism for the ad:

One more thing I’d like to point out that troubles me about this ad: the use of a Caucasian blonde girl. I find this inappropriate; she’s not the one that will be affected by global warming first, it will be the children in developing countries with no food or water.

I understand and admire their desire to keep the message positive. And they are certainly correct that Third World countries will be the first to suffer (aren’t they always?). However, you have to consider your audience. The simple truth is that the Baby Boomers are used to tuning out images of suffering brown children every day. Images of starving kids from “over there” didn’t get us to take action on our atrocious agricultural trade policies, or stop buying sweatshop-made Nikes. Why should we expect such images to work now? When the victim is a cute little blonde haired blue eyed girl, however, Americans are far more apt to pay attention, right or wrong.

I am put in mind of the final argument scene in A Time to Kill:

This is a story about a little girl walking home from the grocery store one sunny afternoon. I want you to picture this little girl. Suddenly a truck races up. Two men jump out and grab her. They drag her into a nearby field and they tie her up and they rip her clothes from her body. Now they climb on. First one, then the other, raping her, shattering everything innocent and pure with a vicious thrust in a fog of drunken breath and sweat. And when they’re done, after they’ve killed her tiny womb, murdered any chance for her to have children, to have life beyond her own, they decide to use her for target practice. They start throwing full beer cans at her. They throw them so hard that it tears the flesh all the way to her bones. Then they urinate on her . . . [Then] they pick her up, throw her in the back of the truck and drive out to Foggy Creek Bridge. Pitch her over the edge. And she drops some thirty feet down to the creek bottom below. Can you see her? Her raped, beaten, broken body soaked in their urine, soaked in their semen, soaked in her blood, left to die. Can you see her? I want you to picture that little girl. Now imagine she’s white.

It’s an unfortunate fact of human nature that it’s easy to ignore suffering when it’s faced by other people, far from our eyes, different from us. And while we may hope to change this in the future, ignoring the fact of it in the present gets us nowhere. The message is too urgent to wait for us to realize at last that we’re all in this together. If being faced with the fact that your cute, blonde granddaughter will suffer terribly because of your selfishness is what it takes for you to wake up, then so be it.

I encourage you to read the Wash, though. It’s a great resource.