Companies that have adopted eco-friendly policies and programs are part of the ever-growing Green Movement; a popular trend that’s here to stay. “Going Green” has become so popular not just because companies think it’s the right thing to do, but also because it’s a great way to make money. Over the past few years there have been a tremendous number of businesses that have adopted environmentally friendly programs and, in fact, gone green. Now entire countries are starting to follow the trend. So what does this mean for you and how can these companies make you money? Through investing in green stocks.
The basic rule of investing in stocks is that profits are available when there are pricing inefficiencies or strong growth opportunities. Today, green stocks meet both these conditions. Many companies that have implemented green programs may be valued below their true earning potential (a pricing inefficiency) because the value of their eco-friendly programs has not yet been fully reflected in the stock’s price. On the other hand, companies that plan to implement green programs within the next few months may have significant growth opportunities which will help boost the stock’s price. But this doesn’t mean every stock that has gone green, or plans to, is a good fit for portfolio—you’ll still have to do your research.
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