Renewable energy is a tide that's only getting stronger. In this segment from Industry Focus: Energy, Motley Fool energy analysts Sean O'Reilly and Taylor Muckerman talk about what a long-term investor's best bets are forbuying into this growing industry without taking on too much risk.
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A full transcript follows the video.
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This podcast was recorded on Feb. 2, 2017.
Sean O'Reilly: So, I'm an investor, you're an investor, we're all Fools, we're all investors. How do you get in on this? What do you see as the reasonable way to make money off these trends?
Taylor Muckerman: For me, personally, I would probably look at the bigger providers of the equipment. Like we mentioned, GE hedges your bets a little bit, because they're involved in oil and gas, and also, they have exposure to renewable-energy sources. So I think that hedges your bets a little bit.
O'Reilly: The hardware is like, eh. What do you think about an advanced solar-panel manufacturer, like a Canadian Solaror something?
Muckerman: They have had their troubles.
O'Reilly: If you can't see him, he's wincing right now.
Muckerman: That's just because these companies have gone in waves. One company makes an advancement, and everyone jumps on their bandwagon, and then somebody else's solar panel cells become more efficient, so everybody jumps ship and starts using them.
O'Reilly: It's like computers.
Muckerman: Yeah. So that's why I would say big holding company like GEor Siemens to get access to wind power. Then, companies that are effectively adding solar power at utility scale. I think that's really where you're going to make your money. So, MidAmericanmight be a good choice, or SunPower(NASDAQ: SPWR), which is a more global company. You see SunPower installing solar panels, and First Solar(NASDAQ: FSLR), too, all over the world. SunPower is fortunate enough to have the backing of Total, which is a forward-thinking oil and gas company.
O'Reilly: Right. What do they own, 30% of that thing?
Muckerman: It might be more, it's at least 30%. They may have upped their stake in the past couple years. I'm not 100% sure. [Editor's note: As of SunPower's Nov. 10, 2016, 10-Q, Total S.A. owns 57% of SunPower.]
O'Reilly: That wouldn't surprise me.
Muckerman: Then there's another company that's hedging its bets between traditional fossil fuels and renewable energy -- Total, a French company. There's just a few to point out. But, like I said earlier, a lot of these companies are private. You have to do some digging, but maybe you could hold a portfolio of a few of these companies, little bits and pieces of each, rather than betting your entire portfolio of renewable energy on one or two companies. You can, maybe, buy a basket of them.
O'Reilly: Awesome. Yeah, the bottom line, it sounds like, is that this trend is happening. It is becoming increasingly common in more and more places.
Muckerman: Yeah, it sure is. You think about Tesla (NASDAQ: TSLA) and SolarCity being combined, with some help from Panasonic and that lithium-battery factory. If energy storage does happen -- which, I think it would have to from renewable-energy sources -- the Tesla Gigafactory out there in California is looking to build more batteries than the entire capacity to build batteries worldwide is right now. So they're expecting the need to be there.
Muckerman: If you don't have renewable-energy generation, you don't need those batteries. So they'd better pray that the trend continues, which I expect it to.
Sean O'Reilly has no position in any stocks mentioned. Taylor Muckerman owns shares of Tesla. The Motley Fool owns shares of and recommends Tesla. The Motley Fool owns shares of General Electric. The Motley Fool recommends Total. The Motley Fool has a disclosure policy.