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What are Green Stocks?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 26 September 2016
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Green stocks are investments associated with companies that are somehow involved in the protection of the environment. The stocks may be issued by companies that produce goods or services using environmentally friendly materials or methods, or companies that have chosen to make changes in their operational structures as a means of reducing their impact on the local and global ecology. Some examples of green stocks include energy companies that market and promote the use of wind and other alternative energies, or even businesses that utilize recycled materials in order to manufacture new products.

With green stocks, investors have the opportunity to not only generate ongoing returns from their investments, but also to aid in reducing pollution and the general contamination of the earth. This approach often means considering newer companies that are just emerging in the marketplace, such as businesses that market newer approaches to the production of biofuels, solar energy products, or even the construction of homes using materials that are considered renewable. Along with businesses that are directly involved in these efforts, investors can also consider companies who have found ways to reduce emissions and waste within their operations, making it possible for the business to introduce less pollution into the local area.

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Investing in green stocks is a specific strategy that can be very lucrative. In order to be successful with this effort, investors will look closely at the core operation of the issuing company, making sure that the business is functioning in a manner that is environmentally friendly. Assuming that the investor is satisfied with the general operation, the next step will involve assessing the market potential of that business. This involves comparing the performance of the company and its shares with similar companies, assessing the financial stability of the business, and attempting to accurately project the future movement of the shares. When successful, an investor can choose renewable energy stocks or other forms of green stocks that are a good fit for his or her investment approach, and enjoy a return on those efforts.

Finding publicly traded green companies is not a difficult task. In fact, most brokerages can readily identify sustainable companies using several different resources, including ratings from a stock market. A competent broker can assist an investor in identifying specific green stocks that are in line with his or her environmental concerns and awareness, the amount of return required, and the risk involved with each stock option. As with most investment situations, investors will want to diversify a green portfolio to include not only green stocks, but also commodities, bonds, and other investments that are also connected with environmentally companies and provide a range of holdings that provide some balance to the portfolio.

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