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Vestas - The Best Green Technology Stock?
Check out the various indices that have been created to measure the performance of international green mutual funds and one stock seems to stand out - Danish wind turbine giant Vestas Wind Systems.
For example, it represents 2.01 per cent - equal to the largest constituent - of the well-known WilderHill New Energy Global Innovation Index, which in mid-2008 comprised 91 stocks.
The S&P Global Clean Energy Index comprises 30 stocks, with American company First Solar representing 5.57 per cent of the total and Vestas next at 5.55 per cent.
It is also part of the Renewable Energy Industrial Index, which comprises the world's 30 largest renewable energy companies, the World Alternative Energy Index, which is made up of the 20 largest stocks in renewable energy and energy efficiency and the DAXglobal Alternative Energy Index, which comprises just the 15 largest companies in the alternative energy sector.
What is the company's secret? Here are some suggestions:
* It is big - a market capitalization of $23 billion. That is important for fund managers. It suggests liquidity for the shares. Many funds - except those specializing in the small end of the market - will not consider companies with a market cap below a certain level.
* It is a leader. It claims a 23 per cent world market share, and 35,000 wind turbines installed.
* It is profitable. The after-tax profit soared from 111 million euros in 2006 to 291 million euros in 2007, and from 17 million euros in the 2007 first quarter to 33 million euros in the 2008 first quarter.
* It is growing. Sales revenues nearly tripled between 2003 and 2007. Furthermore, it is in a sector - wind energy - that is seen as enjoying enormous growth prospects.
* It is green. That may seem obvious - virtually all it does is related to wind energy. But take one of its big rivals, American giant General Electric. This company is a major producer of wind energy turbines, but these are a relatively small portion of its business. Few investors would rate it a green stock.
July 28th, 2008