Progressive Investor Sample Article
News Highlights; Market Commentary; Stock Updates & New Profiles; BYD Company Profile
Issue 69: March 2010
Selected Stock Updates: Corporate Pioneers
Please see our Stock Rating Update at the end of each newsletter for updates on stocks throughout the month. And please see Issue 67 for other recent stock profiles and updates.
Large Cap Corporate Pioneers
Siemens (NYSE: SI; SIE.DE)
Market Cap: $75B
52 Week Range: $47.53-103.08
This conglomerate is a major player in solar, wind, geothermal, smart grid demand response and energy management services, electric vehicle charging infrastructure and water. And it's a global leader in building transmission lines.
The company could be one of the world's top three turbine manufacturers by 2012 and is rapidly expanding its production network, establishing a rotor blade production plant in Iowa, a nacelle plant in Kansas and a rotor blades and nacelle plant in Shanghai. It also has plans for India.
In October, Siemens announced 565 MW in wind orders in North America and an order for 500 offshore wind turbines.
In solar, Siemens is focused on turnkey solutions for large-scale PV plants and custom concentrating solar (CSP) solutions and components. They acquired Israel-based Solel Solar Systems, which makes solar receivers for solar thermal plants. The acquisition gives Siemens the ability to produce all the components for such plants.
Siemens is also getting into the energy consulting business in a partnership with Denmark's DONG Energy, offering help on energy consumption, renewable energy, and carbon emissions.
FPL Group (NYSE: FPL)
Juno Beach, FL
Market Cap: $19B
52 Week Range: $41.48-60.61
With FPL, investors get the benefit of a stable utility stock with a 3.7% yield, while energy production provides double digit growth. The stock is a low risk cornerstone for income and growth portfolios, although green investors may not want the exposure to nuclear.
NextEra Energy Resources, its energy unit, is the largest wind energy producer in the U.S. NextEra owns 48 wind farms in 15 states producing 4100 MW, expected to double in the next four years.
Completed in 2009, the 25 MW DeSoto Next Generation Solar Energy Center is the largest solar PV plant in the U.S. FPL is building two more plants in Florida, for a total of 110 MW. The world's first hybrid solar plant, the Martin Next Generation Solar Energy Center, will generate 75 MW of solar starting in 2010 and a 10 MW plant at NASA's Kennedy Space Center adds another 10 MW.
FPL's $200 million "Energy Smart Miami" program, in partnership with General Electric, Cisco Systems and Silver Springs Networks, will install over a million smart meters in just about every Miami-Dade County home and business, creating an automated grid in the next two years. FPL plans to expand the network to its entire 4.5 million customer base, and integrate solar plants at several universities and government sites into the network, along with 300 plug-in hybrids and 50 charging stations.
Apple, Inc. (Nasdaq: APPL)
Market Cap: $182B
52 Week Range: $82.33-215.59
About a year ago, we recommended Apple when the stock traded at $92, now it's at $200. The stock is high, but deserves an update.
This outstandingly creative company, known for its iPods, iPhones, Mac computers, and its new iPad, is considering a move into residential energy management. They filed a patent for a home energy management system which includes their signature touch screen tablet interface to manage electricity flow to appliances and electronics. Considering Apple's history in developing transformative devices, the tablet interface would probably also offer entertainment options.
The company reported another record-breaking quarter, beating revenue and EPS forecasts by 6%. Revenues grew 32% y/y to $15.7 billion. Its tremendous growth potential is far from being priced in according to analysts, as they view the iPad as only the first growth catalyst for 2010. iTunes is expected to be updated this year to carry content like subscriptions to newspapers and TV shows.
Given its transformative product line, it's surprising that Apple lags its peers on environmental responsibility. The company was prodded into introducing a take-back program and eliminating toxics from products, and still doesn't produce an annual sustainability report. Instead of taking a leadership position and applying its huge creativity to solve environmental problems associated with its products, Apple has been largely reactive, which is the main reason we haven't discussed this stock as often as we would otherwise.
After ranking last on Greenpeace's annual Guide to Greener Electronics in 2006, Apple climbed to fifth place this year. All products are now free of PVC and flame retardants, but it still scores poorly on managing waste and energy, and on communicating plans for eliminating additional toxics.
A shareowner resolution requesting they publish an annual sustainability report for the second year in a row, has been met with Apple's Board recommendation that it be voted down. Unlike IBM, Dell and Hewlett Packard, which have taken leadership positions on providing such reports, along with some 7000 major corporations, Apple has been reluctant to report publicly on its emissions. They say they don't need to publish reports because they already provide details on their environmental performance on their website, but in fact, they do not report publicly on emissions - they provided the information only to the Carbon Disclosure Project upon request.
IBM (NYSE: IBM)
Market Cap: $166B
52 Week Range: $83-134
When we first discussed IBM, the stock was at $83.
A key member of our SB20 List, IBM views green practices as an integral part of its business strategy. Almost 20% of revenue comes from consulting on information systems and green data centers, increasing the intelligence of systems involved in the electric grid, water distribution and the food-supply chain. IBM is involved in 50 smart grid projects around the world. Its Venture Capital arm invests in companies that facilitate that, such as Silver Spring Networks, eMeter, and SynapSense.
This month, IBM announced a partnership with Johnson Controls (JCI) to provide a "Smart Building Solution" that integrates energy management, smart grid and building technology. The service helps building owners detect and control energy waste, measure and control greenhouse gas levels, and optimize energy and environmental performance.
IBM Research is involved with batteries, water technology and solar and plans to license the ideas from its labs to partners that will commercialize them.
The company beat Q409 expectations and raised 2010 EPS guidance. Its service businesses have a strong backlog from 2009 and higher IT budgets should provide a nice tailwind for its software and hardware segments. The stock trades at 12x earnings, below the peer group average of 16x. The stock has been upgraded from Hold to BUY and the price target raised from $130 to $150.
See SB20 profile: June/July, Issue 64.
Google (Nasdaq: GOOG)
Market Cap: $167B
52 Week Range: $289-629
Another key member of our SB20 List, we recommended Google when the stock was at $335. The stock dipped recently when the company threatened to leave China after being hit by cyber attacks originating there.
Google beat expectations for Q409 on both revenue and earnings. Paid clicks grew 13% y/y.
Major trends for 2010 include social integration, such as user reviews and recommendations; everything going local; commerce, such as comparison shopping; mobile; and acceleration of cloud computing.
This month, the Federal Energy Regulatory Commission (FERC) approved Google as an electric utility! Google already offers a smart meter that allows smart grid customers to manage their home electricity use. As a utility, Google could be a smart grid/smart charge service provider.
Plug-in vehicle owners will be able to make money by selling excess electricity to the grid. Through a service provider like Google, vehicles could automatically be charged at night when electric rates are lowest as well as display the nearest charging stations on Google Maps. Utilities want one aggregator to provide the power from hundreds of thousands of vehicles, providing a billion dollar opportunity for companies like Google and IBM.
See SB20 profile: June/July, Issue 64.