Following two weeks of intense negotiations, 195 countries came together to ink a historic agreement on climate change last Saturday. This draws to a close the quest for a plan to cut emissions in order to combat the ills of global warming.
This accord is also a victory for President Obama. Provisions of the agreement have been retooled to dodge approval from Congress.
As nations across the world begin migrating to sustainable energy solutions, it may be a good idea to add related stocks to your portfolio.
Landmark Agreement
Several features of the new deal set it apart from previous agreements on emission control. First, it requires the developed world, including the U.S. and European Union, to provide developing nations with a minimum of $100 billion a year to help them counter climate change.
Developing nations, on their part, will have to finds methods to reduce emissions. This will be a tall order for several countries such as India, which are simultaneously attempting to reduce poverty levels.
Further, governments across the world have agreed to limit the rise in average global temperature to under 2 degrees Celsius from the dawn of the industrial era. Attempts will be made to pursue a more aggressive target of 1.5 degrees Celsius.
Win for Obama, Renewable Energy to Gain
The Paris agreement comes as a major victory for President Obama. Even though the White House faces stiff opposition from Republicans and certain sections of U.S. industry, the fact that the agreement requires no Congressional approval is a major positive for the president. Secretary of State John Kerry said it is unlikely that the U.S. will not honor these commitments once a new government assumes office.
Meanwhile, Energy Secretary Ernest Moniz said that the U.S. has promised to reduce emissions by 27% from levels experienced in 2005. This means that renewable energy will get a solid boost in the near future. The U.S. Energy Information Administration projects solar capacity to jump 123% between 2014 and 2016. Wind power is expected to experience growth of 27% over the same period.
Our Choices
Given the push that the landmark agreement is anticipated to give to the renewable energy sector in the days ahead, companies in related sectors such as waste management and recycling are also expected to benefit.
Picking such stocks would be prudent at this point. We have narrowed down our search to the following stocks based on a good Zacks Rank and other relevant metrics.
JA Solar Holdings Co., Ltd. JASO manufactures high-performance solar cells. The company reported solid third-quarter results helped by strong demand in the Asian market.
JA Solar Holdings has a Zacks Rank #1 (Strong Buy) and projected growth for the current year is 78.9%. Its earnings estimate for the current year has increased 26.8% over the last 30 days. The forward price-to-earnings ratio (P/E) for the current financial year (F1) is 5.53 compared to the industry average of -8.70.
U.S. Geothermal Inc. HTM focuses on the development, production and sale of electricity from geothermal energy.
U.S. Geothermal has a Zacks Rank #2 (Buy) and expected earnings growth of 25% for the current year. Its earnings estimate for the current year has increased 50% over the last 30 days.
SunPower Corporation SPWR designs, develops, manufactures, markets and sells high-performance solar electric power technology products, systems and services worldwide for residential, commercial and utility-scale power plant customers.
SunPower has a Zacks Rank #2 and projected growth for the current year is 64.6%. It has a P/E (F1) of 13.21, better than the industry average of -8.70. Its earnings estimate for the current year has increased 34% over the last 60 days.
First Solar, Inc. FSLR designs, manufactures, and sells solar electric power modules using a proprietary thin-film semiconductor technology.
First Solar has a Zacks Rank #2 and its estimated growth for the current year is 15.3%. It has a P/E (F1) of 12.81, better than the industry average of -8.70.
Waste Management, Inc. WM provides collection, transfer, recycling and resource recovery, as well as disposal services to nearly 20 million residential, commercial, industrial and municipal customers.
Waste Management has a Zacks Rank #2 and its projected growth for the current year is 3.8%. It has a P/E (F1) of 20.22, lower than the industry average of 24.14. Its earnings estimate for the current year has improved over the last 60 days.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment