Top Green Stock Picks for 2012

The stock market has not performed well in 2011 and green stocks are no exception. If the US can maintain its current trajectory and Europe can avoid slipping into recession, 2012 may prove to be a better year for the alternative energy and cleantech sector. The overall environment was not the only drag on stocks in 2011, the Chinese flooded the market with cheap solar panels, bringing the price down and taking some solar companies with it.

Canaccord Genuity has its “Best Ideas” list for the CleanTech sector in 2012 and they are focused on companies which are adopting trends for technologies that optimize energy creation and consumption.

Some of their top picks for 2012 include Itron, Inc. (NASDAQ: ITRI) and Acuity Brands, Inc. (NYSE: AYI). Another one of their top picks is a Canadian company by the name of RuggedCom.

Itron, Inc. (NASDAQ: ITRI) was maintained as Buy: “…we remain decidedly contrarian as shares continue to trough, yet the multi-year Smart Grid product cycle continues to unfold through mid-decade. We favor the company’s strong market share and FCF generation capabilities (10%+ FCF yield), ongoing restructuring efforts, share buyback and active M&A program against current investor concerns about ’12 & ’13 EPS power and European exposure. We find recently reinstalled CEO LeRoy Nosbaum acting with an appropriate degree of urgency to catalyze value creation at the current share price.”

Acuity Brands, Inc. (NYSE: AYI) was maintained as Buy: “We believe that LEDs will help accelerate Acuity’s traditional sales over time while growing to become accretive to the business model. As such, we see the potential for $3.50 to $4.00 in earnings power per share in 2013/2014 as the secular trend starts to manifest. We remain aggressive buyers on pullbacks from the fits and starts in the non-residential construction markets, and we view 2012 as the right time to build a meaningful position in the shares.”

RuggedCom is a Canadian company which trades as “RCM” in Toronto and Canaccord Genuity noted, “We find management execution impressive, as RuggedCom continues to generate above-market growth with industry-leading profitability. The core industrial switch/router business continues on its growth trajectory, while the achievement of profitability within the wireless business is a notable milestone… we find risk/reward attractive here.”

For more information go to the Canaccord Genuity site.

© 2012, Richard Matthews. All rights reserved.

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Investing in Water

Five years ago Jeff Saut suggested that the next war will be fought over water, not oil. As the ongoing contamination of the ocean in the Gulf of Mexico proves, water is a valuable and fragile resource. From an investors point of view, water is a solid growth area with high barriers of entry.

Itron (ITRI) is fast becoming a leader in next-generation smart grid metering of water, electricity, and any other kinds of utilities. A very similar company is Badger Meter (BMI). A large cap name worthy of attention in Europe is French public utility Veolia Environmental (VE). This is a well priced international company.

Calgon Carbon (NYSE: CCC) is a maker of water and air purifying systems, it has two main lines of growth: activated carbon and ultra violet light equipment, which are used to treat water. Both of these business lines are supported by government regulation, specifically mandates from the Environmental Protection Agency.

Calgon’s growth should continue through 2010 and 2011. They will have significant pricing power, they are not really depending on economic growth or funding and the valuations are still relatively low. The stock has traded between $10.93 and $18.35 during the past year.

On June 2, 2010, Calgon Carbon Corp., announced a contract from the U.S. Army for air filtration machinery valued at least $1.9 million. The contract, is worth up to $5.1 million over three years, and covers general-purpose air filtration machinery. Calgon shares rose 33 cents, or 2.3 percent, to $14.43 during afternoon trading.

Water related ETFs worth looking at include the Powershares Water Resources (PHO) and the Claymore S&P Global Water Index ETF (CGW).

Although water should prove to be a great investment, as with many big-picture investments, timing them is always the hardest part. Averting a war over water is a matter of stewardship, efficiency and forward looking companies that provide technologies to manage the coming water crisis.
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