Earth Day and the Remarkable Strides so Far
$116 billion in the Stimulus is Rallying Green Stocks
My Picks for One of the Best Stocks for 2009
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All this week around the world, millions of people are holding celebrations related to Wednesday’s Earth Day. Regardless of how (or if) you recognize the day, it’s an example of the dramatic effects collective action can have on our environment. Thirty-nine years ago, when Earth Day was created by Wisconsin Senator Gaylord Nelson, the United States was in dismal environmental shape.
For those alive at the time, who can forget the Cuyahoga River catching fire? It’s a vivid example of the dangers of neglecting our world, and a big reason why polls showed environmental consciousness vaulting from a topic that less than 1% of people considered a serious issue in the mid-1960s to one that has been at or near the top of concerns ever since.
The first Earth Day saw 20 million people gather to call for environmental action. In 2007, the number of people participating in Earth Day globally was reported to top one billion, with more expected this Wednesday.
The strides in the four decades since are impressive: the creation of the Environmental Protection Agency by President Richard Nixon later in 1970, the restriction of lead paint and DDT a few years later, the development of filtering technology for coal plants in 1979, the creation of the Energy Star program in 1992, the expansion of clean emission requirements on vehicles ranging from cars and trucks to construction and farm equipment in 2004, and much more. Researchers at the start of this year estimated we will all live five months longer than we would have without the air quality strides spawned by the first Earth Day.
As a father, I’m gratified that my baby daughter and her sibling--due late this summer--will grow up breathing cleaner air than I did. As someone with more than a decade’s worth of experience writing about individual investing for Forbes and now for the Cabot Green Investor--and investing for myself for longer--I’m excited by the profit potential not only from the companies capitalizing on the current regulations, but also the ones that stand to benefit from the $115.9 billion of U.S. economic stimulus money I calculate is going toward Green projects, from electric vehicle conversion funding to watershed protection projects to modernizing the electrical grid.
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If you think the changes from the efforts of Earth Day are impressive, wait until you see the remarkable changes that will transform our world and our economy in the next few years. Picture next generation highly efficient solar panels that are ideal for diffused light areas that could make solar ubiquitous in the less sunnier northern climes--they are from a company I told my readers about in 2008 and it’s a steal right now.
Envision an American company that is the leading supplier to the Chinese market of both the design and mechanisms of cutting edge wind turbines. My readers made 42% profit on it in just six weeks last summer before we sold ahead of weakness we saw coming in the markets--and no, it’s not GE. I’m watching it to tell subscribers when the time is ripe to jump back in.
Picture companies in industries as diverse as organic coffee, a hot commodity in the trend toward Green lifestyles, to mining lithium, a crucial ingredient in hybrid and electric cars. My readers are sitting on profitable positions in those companies as I write this--although with the market shifting daily, I may have already advised them to sell as you read. Of course, the names of those companies are available only to the readers Cabot Green Investor. But even if you aren’t a Cabot Green Investor subscriber, I’ll give you my pick for a Green stock I think will be one of the top performers in 2009 later in this email.
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But first let me talk a bit about strategy. No doubt, the past year has burned us all, as the global derivatives and credit crisis drove nearly every investing sector sharply down.
(Editor’s Note: The Cabot Green Investor portfolio lost money in 2008 because Editor Brendan Coffey cut losses as the markets started to collapse in September and stayed almost exclusively in cash the remainder of the year--but even so, Cabot Green Investor far outperformed every Green index, mutual fund and the broad markets. Frankly, Brendan hasn’t found a Green-related newsletter, index or fund that came close to outperforming Cabot Green Investor. And with loads of money flooding the sector from the Obama administration’s stimulus, it’s only a matter of time before Green stocks take off. Don’t miss this huge profit opportunity. Get started today.)
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I’ll set aside my newsletter pitch for a moment to tell you what I have learned from my more than a decade of writing about business and investing for Cabot, Forbes, Dow Jones and many other outlets: The biggest mistakes are often made when times are tough--individual investors sell at the market’s bottom and avoid the markets, money managers pile into investments that lag inflation, companies retreat from their strategic plans and cut muscle. The smart ones--those business tycoons, money managers and companies that will grace magazine covers when the next bull market comes--are laying the groundwork for winning now.
And so are we at Cabot Green Investor--already our unique mix of technical analysis and fundamental research is showing we are on the early edge of a market upswing. In the past few weeks we’ve moved from a portfolio almost totally in cash to one that is 30% in Green stocks with a rapidly expanding watch list of stocks we’ll jump into as the market continues to improve.
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We’re currently featuring a stock Cabot Green Investor that I have great expectations for and it’s the top stock pick I promised you: Tetra Tech (TTEK). As the government and corporations look to get more environmentally sound, they’ll be turning to Pasadena, California-based Tetra Tech, an environmental consulting company that does everything from figuring out how to clean up the Port of Los Angeles to where best to site wind turbines in upstate New York.
Essentially, Tetra Tech is the environmental expert people turn to the figure out the nitty gritty of getting eco-projects done. Its architects designed the ultra-Green office building Visionaire in Manhattan while its massive model on global warming is the standard world governments refer to.
The company’s core business is built around safe drinking water--the U.S. Agency for International Development is using the company to create drinking water systems in Afghanistan while its engineers are tackling water and sewer systems for cities including Detroit and Seattle.
Growth is impressive (if not eye-popping) at a compounded annual rate of 28% since 2004, but it is seeing booming interest in its wind business, which promises to add a strong growth element to sales.
In wind, Tetra Tech does everything but build the turbine--it selects optimal sites, handles permitting, coordinates with utilities and more. T. Boone Pickens is one notable client.
Tetra also has some crucial advantages that make it a fine defensive play: with one-third of revenues coming from the federal government, sales are more predictable, while in a credit-crunched market, the company’s management works with exceptionally little debt. In fiscal 2008, in which is generated $1.22 billion in net revenues, it had just $6 million net debt on the books. Net income per share for fiscal 2009 (ending September) is estimated to come in at $1.14 a share on sales of $1.3 billion--and that’s before any stimulus package money has worked its way into the system.
I first alerted Cabot Green Investor subscribers to TTEK in November and we added it to the Cabot Green Investor portfolio in February. TTEK is still trading a fine price right now, but the stock hasn’t made the advancing move we’re expecting. By year’s end, I expect Tetra to reward investors with an eye toward capitalizing on the shift to Green we’re all a part of.
Whether you join in subscribing or not, here’s to a rewarding portfolio and a rewarding life for each of you.
Sincerely,
Brendan Coffey
For Cabot Wealth Advisory
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