Green Investing Question
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Sustainable Investing is Socially Responsible Investing
How do I find good buys in green investing stocks?
Denny, St. Louis
Great question about green investing! I can certainly understand your interest in investing in "green" stocks and that's a terrific thing. It’s a noteworthy statement that more and more people want to participate in socially responsible investing and move away from investing in companies that practice unsustainable methods or produce destructive materials that harm people and the environment.
However, with individual stock investing, green stocks do not have their own industry group, but are sprinkled in amongst non-green or non-sustainable oriented companies in industries like energy, transportation, agriculture, construction, etc. So you have to go another route in first identifying which companies are green investments and then secondly, determining if they are a "good buy" substantiated by good fundamentals and technicals (a positively trending price).
The good news is that as our culture absorbs socially responsible practices, that continues to fuel increased company earnings which in turn, creates healthy stock prices and attractive stock picks.
I found an awesome website called sustainablebusiness.com that has a Green Stock Watch by category. And even more interestingly, a list of what they call the World's Top Sustainable Business Stocks or the SB20 for the last three years.
The site also clearly states that the stocks are chosen based on innovations and financials, but that they may not be in a buying position today. I'm so glad they said that!
As you investigate socially responsible stocks, don't just assume the fundamentals are the same as when the recommendation was made. If you're looking for socially responsible companies poised for growth, check the fundamentals against the
"Best Stocks to Invest In"
Which brings me to my second point, because even if the financials are sound you should always check the
company stock's price chart
to look for
All traders and investors should use some kind of technical indicator to see if the stock is trending upward. Indicators like
and a few others are easy to understand and use for quickly determining trend. I would not advise purchasing a stock that is trending downward. Generally, look for a stock that's price is trending upward, wait for it to pullback and then look for a renewed upward movement with some higher volume as in the following "green" stock chart examples.
Take a look at ORA. It's currently listed on the Green Stock Watch, which appears to be making its way above the 50-day EMA after approximately four months with some decent volume.
You can easily keep a portfolio watch list of green companies and buy into the ones that are doing well.
There are also mutual funds and exchange-traded funds (ETFs) that focus on socially responsible investing and you can find some info on that on the same website.
So the general answer is yes. You can find green stocks that are a good buy. You just have to understand a bit about what to look for in a green stock investment, but it is well worth your while.
Best of luck with your socially responsible investing!
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