Voting with your money - part II: Wind Power

In a previous post I began my spiel about Voting with your money. The basic concept is easy, so I’ll not belabor the point.

The thing is, it can be surprisingly difficult to determine if you’ll be Doing Good while also doing well by investing in a given stock.

Wind Power is my example in this case.

Investing in Wind Power is theoretically Doing Good, as wind power is good for the environment.

And investing in wind power should allow the investor to be doing well, as all indications are that it’s a serious growth industry.

But are either of these things absolutely certain?

Let's focus first on my quest to do well with my money.

I’m very frustrated in my search for wind stocks in which to invest. Most wind stocks don't have good fundamentals. There's really only two wind-related stocks with good fundamentals that I can find being traded on American stock markets:

American Superconductor Corporation (NasdaqGM: AMSC)

and

Zoltek Companies Inc. (NasdaqGS: ZOLT)

AMSC looks pretty solid in the long term. Its P/B is a little high, but wind is expanding like mad in the US. Maybe it's worth it.

ZOLT has had some serious issues this quarter, so I'm waiting to see their new P/B before I invest. Really I'm waiting to see their revised balance sheet. (And, of course, I'm waiting to see if there's something else I'm willing to sell in order to buy some shares in ZOLT.)

I'm not certain enough of either of these companies. I'd rather invest in a more established player in the wind market.

There are a couple other companies out there to consider:

Owens Corning (NYSE: OC)

General Electric Co. (NYSE: GE)

These companies are big, established companies, which hopefully explains the fact that their debt outweighs their cash, while at the same time their assets outweigh their liabilities. These are stocks in which to take long positions.

OC makes a lot of building products, and as such they've been adversely affected by the housing bust. They seem to have adjusted, so it may be a good buy. Windmill-blades are made of fiberglass, so this is a wind play, although it’s not a purely wind play.

GE, on the other hand, is also not a purely wind play. In fact, GE is the poster-child for what Eisenhower was talking about when he coined the phrase "military-industrial complex".

This brings us around to my quest to Do Good with my money.

According to Yahoo! Finance "General Electric Company (GE) operates as a technology, media, and financial services company worldwide. It operates through four segments: GE Capital, Energy Infrastructure, Technology Infrastructure, and NBC Universal."

GE manufactures aircraft for the military, but I guess this falls under the general heading of “Technology”. This isn't an inherently bad thing, but it makes me question the impartiality of their media division.

GE’s aircraft manufacturing gives them a leg up in the wind business. I understand that GE is one of the biggest manufacturers of turbines for windmills. This is what makes them a good wind play, if not a pure wind play.

GE manufacturing's environmental record is not good, though. They’re moving slowly to clean up a section of the Hudson in which they were polluting for decades, and may be polluting still. This is just the biggest example of their environmental missteps.

GE has an ad campaign - ecomagination - that I would classify as Greenwashing.

And yet, when I go out and buy a compact fluorescent bulb, it will probably be a GE product that I buy. (I can't find dimmable CFBs from any other company). Also, I personally consume a lot of GE television through NBC Universal, which owns NBC and all NBC-branded channels, as well as USA Network and the SciFi Channel (just to name a few cable channels they own. There are more).

I guess GE is, at the end of the day, another company that has huge potential to change the world, one way or another.

And I'm sure that my portfolio would be doing well, long-term, should I invest in GE.

At present, though, I'm going to refrain from taking a long position in GE, even if it is one of the better bets in wind energy. I think that they may be doing more harm than good, overall.

I’ll still buy their compact fluorescent bulbs, though. I can still encourage them to Do Good.