Update on the Kip Green 25
Of our picks for stocks that can benefit from the environmental movement, one became a takeover target and most posted impressive returns.
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The Kiplinger Green 25 continues to post high-energy results. Our index of 25 green stocks is up 17% from August 20, 2007, when we set the index, through the middle of the day on December 17. Standard & Poor's 500-stock index eked out a 1% gain during the same stretch of time.
| Row 0 - Cell 0 | The Kiplinger Green 25 |
| Row 1 - Cell 0 | The Kiplinger 25 Best Funds |
| Row 2 - Cell 0 | An Under-the-Radar Overseas Fund |
And now we have the first takeover of an index component. Ingersoll-Rand has announced a $10 billion acquisition of Trane (symbol TT), which until late November was known as American Standard (ASD).
Ingersoll will pay Trane shareholders $36.50 a share in cash and 0.23 of each of its shares for each share of Trane. The announcement propelled Trane's stock price up 21.8% on December 17, to close at $45.31.
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Ingersoll covets Trane's heating, ventilation and air-conditioning business. Trane is particularly strong in energy-efficient systems, which will benefit as high energy prices encourage building owners to replace outdated units.
Indeed, the push for cheaper, cleaner and renewable sources of energy can be seen in the performance of the Green 25. The three best performers, Suntech Power Holdings (STP), SunPower (SPWR) and MEMC Electronics Materials (WFR), respectively up 124%, 93% and 56%, are all cashing in on strong demand for solar power.
The returns of the power-generator builders -- McDermott International (MDR), Shaw Group (SGR) and ABB (ABB) -- have also been electrifying, up 46%, 24% and 22%.
Ormat Technologies (ORA), which specializes in running geothermal power plants, has gained 19%, and trash-to-energy Covanta (CVA) is up 24%. The more mainstream utilities of Exelon (EXC) and FPL Group (FPL), both of which rely heavily on nuclear energy, are up 18% and 16%, respectively.
The biggest losers so far in the Green 25 are Tenneco (TEN), down 24%, and Trinity Industries (TRN), off 20%.
We liked Tenneco for its position in fuel-efficient emissions equipment for diesel engines, but for now the company is weighed down by the auto slump. Trinity makes railcars that are used to haul, among other things, ethanol. Ethanol volumes have zoomed, but it's been tough to make profits in the industry.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Andrew Tanzer is an editorial consultant and investment writer. After working as a journalist for 25 years at magazines that included Forbes and Kiplinger’s Personal Finance, he served as a senior research analyst and investment writer at a leading New York-based financial advisor. Andrew currently writes for several large hedge and mutual funds, private wealth advisors, and a major bank. He earned a BA in East Asian Studies from Wesleyan University, an MS in Journalism from the Columbia Graduate School of Journalism, and holds both CFA and CFP® designations.
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