How Have the Kip Green 25 Done?
We unveiled the inaugural Kiplinger Green 25 list in the October issue of our magazine. These are stocks of 25 companies that we think will benefit from growing interest in climate change and energy efficiency as a new stock- investing theme.
Exactly three months have elapsed since we created and priced the list on August 17. How have members of the Green 25 fared?
Surprisingly well, given the volatile stock market. Collectively, shares in the Kiplinger Green 25 returned an average of 13% through the morning of November 16. This beat the 3% return of Standard & Poor's 500-stock index by ten percentage points.
But if you look into that 12.5% overall return, you find an enormous dispersion of results. The champion was Suntech Power Holdings (STP), up a staggering 100%. Solar stocks are obviously hot: SunPower (SPWR) soared 81% and MEMC Electronic Materials (WFR), which fabricates the key material for solar cells, shot up 32%.
The laggard was Trinity Industries (TRN), down 18%. Trinity makes the railcars used to transport ethanol, the corn-based fuel substitute for gasoline. Ethanol prices have been volatile, and ethanol profit margins have been squeezed by rising corn prices and excess capacity in the industry.
A number of readers wrote to us asking why no pure-play ethanol producers made our list of 25. We're glad we excluded companies such as Aventine Renewable Energy, VeraSun Energy and Pacific Ethanol: stocks of all three have collapsed and are down 50% or more over the past 12 months.
We also had excellent results from builders of power plants: Shaw Group (SGR), up 39%; McDermott International (MDR), up 32%; and Switzerland's ABB (ABB), up 27%. For that matter, our power generators also shined: FPL Group (FPL) and Exelon (EXC) both returned 12% to 13%, and waste-to-energy generator Covanta (CVA) rose 21%.
After Trinity, the next worst performer was American International Group (AIG), the insurance giant, which sank 15%. AIG's woes have little to do with its "green" business of insuring businesses against environmental claims. The stock has been dragged down by the insurer's exposure to the great American housing morass.