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Renewable Energy: Peeping into a Green Future

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Sep. 14 2015, Updated 1:06 p.m. ET

Forecasting renewables

Particularly in developing countries—where population growth is higher—as income increases, people are more prone to shift to better energy alternatives. For example, they’ll switch from fuelwood to charcoal, kerosene, and liquefied petroleum gas. Therefore, you can successfully increase renewable energy use if you first establish favorable policies.

Let’s see where other green companies see themselves in the near future.

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Tesla Motors

Named as an homage to Nikola Tesla, an electric vehicle behemoth, Tesla Motors (TSLA) sees robust sales volumes in 2016 and 2017. Tesla recorded the first quarterly profit since its inception in 2013. It strongly depends on sales of its Model S and yet-to-launch Model X vehicles.

A leading analog-integrated circuit maker, Linear Technologies (LLTC) protects the environment by manufacturing new-generation, energy-efficient, power-conserving systems. Tesla and Linear are both major components of the First Trust Clean Edge Green Energy Index Fund (QCLN) ETF. Tesla accounts for 9.58% of the fund and Linear for 7.74%.

SunEdison (SUNE) and Solar City (SCTY) are also formed a significant portion of QCLN. Combined, they form ~14% of the fund. QCLN has been underperforming this year, offering about -14% returns. The SPDR S&P 500 (SPY) gained 3.3% in the same period.

Often, building a renewable energy power plant is a capital-intensive task. So credit facilities and lucrative financing options can drive the sector’s growth. Moreover, there’s still an uncertain regulatory environment in most parts of the world, which is holding back renewable energy growth. Once there’s persistent clarity, amicable policies, and a surge in investor awareness, the sector will likely flourish.

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