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The Emerging Sustainable Stock Market

Bill Roth | Wednesday January 6th, 2010 | 3 Comments

So where does a stock investor look for value in a landscape dominated by the Federal Reserve, Peak Everything, Unsustainable Debt and Unaffordable Health Care? The emerging answer is to invest in companies that are building “smart answers” that offer consumers “cost less, mean more” solutions. These companies will grow sustainable revenues as they succeed in aligning with customers’ search for goods and services that “align value with values.” A market segment I estimate could achieve $10 trillion in global annual revenue by 2017.

“Smart companies” successfully integrate technology, business best practices and consumer marketing to grow revenues/profits by offering “cost less, mean more” goods and services. A classic example is Apple and iTunes. At 99 cents a song it costs less. It is sustainable compared to the old carbon-centric system that delivered CDs in plastic packaging to conditioned retail stores via diesel powered trucks. And Apple is the master marketer demonstrated by their acumen in engaging the Millennial Generation in migrating from MP3 technology into a smart phone that is “cool.” Currently Apple is one of our economy’s “smartest companies” with a stock price that has doubled over the last 24 months to above $200 per share. Comparatively, HP is a well managed company recognized for its environmental commitment with an attractive line of products but their combination of technology, best business practices and consumer marketing has resulted in basically a level stock price of around $50 per share between 2007 and 2009. One investment observation is that the stocks of smarter companies outperform smart companies and are noteworthy outperformers of companies struggling to align with the consumer’s search for cost less, means more.

So here is a path for finding and investing in smart companies serving smart customers:

Return of manufacturing to the U.S.

Smart manufacturing will be the basis for the reemergence of manufacturing in America. As Asian labor costs rise along with the cost of shipping due to higher fuel costs I have seen an explosion of early stage companies developing smart manufacturing located in the U.S. Their strategy is based upon technologies and business best practices that are singularly focused upon gaining price competitiveness through material and fuel efficiency.

“Buy Local” will gain a marketing power with consumers that “Buy American” once held

Credit is due to the many pioneers for this economic model but finally, across America, local communities are figuring out that buying local means local jobs, community prosperity and individual wellness. For example, the industrial agricultural model so heavily dependent upon oil and water will be shaped by, and supplement with, a growing local agricultural/restaurant/grocery industry that will provide healthy, cost competitive foods that are sustainable in terms of their consumption of natural resources and creation of local jobs. Tied to the return of manufacturing, local economies will pioneer the adoption of the new technologies like smarter, electric hybrid cars that will cost less to operate, be more fun to drive and emit less than our current fossil fuel cars.

Smart energy

We have just begun a transformation from our current fossil fuel based system into a smart energy economy where the combination of “greener” electricity, sustainable biofuels and smart end-uses will be superior in price and local benefits compared to oil imported from overseas (and potentially coal imported from mines). A major technology leap will be price and performance breakthroughs in battery technologies that will enable electric cars and distributed generation. Smart cars, homes, buildings and factories enabled through computer linked systems (including our smart phones!) will optimize performance to achieve low cost, sustainable operations. Our electricity supply will diversify in source and location using a myriad of price competitive “cleaner” technologies including rooftop solar panels, biofuels, natural gas fired and nuclear power plants. The synergies of distributed battery storage housed across our inventory of cars, buildings and electric grid plus energy efficiency gained from a growing number of cost savings higher efficiency appliances, motors, lighting systems, etc. will lower our electric bills and emissions.

From this vision a potential investment strategy emerges that is focused upon those companies that are aligned with:

    1. The return of manufacturing to the U.S.
    2. Living local economies
    3. Smart energy

 

There will be clear stock winners and losers as Americans buy smarter and local. For example, what if one utility company embraces these trends and another does not? Or if one restaurant chain embraces local organics and the other continues to sell only food sourced from industrial agriculture?

This implies a new investment portfolio strategy where funds are allocated across industries among the “smart” companies within that industry. Investing in “Cost Less, Mean More” is my prediction for the best path for growing investment valuation.

Bill Roth is the founder of EARTH 2017 and author of The Secret Green Sauce. This article is an expression of public opinion by Bill Roth. It is not investment advice nor should it be used as such. Nothing in this article is a warrant or expression of assurance or an investment solicitation.


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  • http://www.level3securities.com investor relations

    APPL is so hot right now.

  • http://www.level3securities.com investor relations

    APPL is so hot right now.