Renewable energy stocks can be small and expensive. So we looked for some wind stocks that weren't.
Wind has grown into a $14 billion industry, and the United States has become the second largest purchaser of wind turbines in the world.
And yet it all might be in jeopardy. Low natural gas prices have squeezed the profitability of wind energy initiatives just at the time when wind energy was getting close to achieving price parity without subsidies.
Now that those subsidies are getting close to expiring, few analysts expect the Republican house will get around to renewing them. On one hand, many of the states with the best conditions for wind-based power generation are in Republican strong-holds like Texas, South Dakota, and Kansas. On the other, Republican congressional obstructionism in an election year and the powerful fossil fuel lobby make renewal of renewables legislation unlikely.
That's very disconcerting to renewable energy advocates who see now as the time to push ahead. The polar vortex caused gas prices to fluctuate in January, providing a cautionary reminder of what happens when utilities rely too much on fossil fuels.
Unfortunately for investors, renewable energy stocks can be quite risky. As noted above, many rely on unpredictable subsidies that need to be signed off on by Congress. And some of them, like AeroVironment, Inc. (AVAV), trade at ridiculously high multiples (AeroVironment's P/E is more than 180).
And yet at the same time they offer great growth potential and ethical rewards that cash-cow oil and gas stocks just can't provide.
We decided to build a list of wind-energy stocks – our Windex – that didn't pose as much risk as some of the other plays in the industry.
We looked for companies that had leverage in wind power generation that also had leverage in other markets. These were all stocks with a market-cap above $2 billion and a P/E ratio below 25.
Not exactly cheap, but certainly renewable-energy cheap.
Click on the interactive chart to view data over time.
Anything else you would add to our Windex? Let us know what you think in the comments.
1. Brookfield Asset Management Inc. (BAM, Earnings, Analysts, Financials): Is a publicly owned asset management holding company with approximately $50 billion in assets under management. Market cap at $26.28B, most recent closing price at $40.68.
Brookfield Asset Management owns about $20 billion worth of renewable energy assets including wind-mills and dams.
The plastic and fabrication company is also a leading producer of wind-turbines.
3. Trinity Industries Inc. (TRN, Earnings, Analysts, Financials): Provides products and services to the industrial, energy, transportation, and construction sectors primarily in the United States, Canada, Mexico, the United Kingdom, Singapore, and Sweden. Market cap at $5.25B, most recent closing price at $69.01.
The railroad company is also a leading producer of structural wind towers.
GE is the largest provider of wind-towers to the United States; and a major player in Europe as well.
(List compiled by James Dennin. Monthly returns sourced from Zacks Investment Research, all other data sourced from Finivz.)
Analyze These Ideas: Getting Started
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Dig Deeper: Access Company Snapshots, Charts, Filings
- Brookfield Asset Management Inc.(BAM, Chart, Download SEC Filings)
- Owens Corning(OC, Chart, Download SEC Filings)
- Trinity Industries Inc.(TRN, Chart, Download SEC Filings)
- General Electric Company(GE, Chart, Download SEC Filings)
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