This Is the Key to Successful Investing in Renewable Energy
In this clip from "The High Energy Show" on Motley Fool Live, recorded on Feb. 8, Motley Fool contributors Travis Hoium, Jason Hall, and Zane Fracek talk about why investors should seek companies that have some degree of differentiation and why they should consider taking a basket approach.
Travis Hoium: Another question here that I think is really important is, "How can investors avoid mistakes in renewable energy?" I'll start off on that. I think the two things that I focus on now more than ever after learning from a lot of mistakes over the last decade, decade and a half, is find companies that are predictable and reliable, and differentiated in some way that is sustainable long-term. That's really hard to define. But if you're going to try to get into something like component manufacturing, even project development, you have to figure out how is a company differentiating itself. Over the last 10 years, I think it's been really hard, specifically in the solar panel manufacturing and inverter space, to differentiate yourself when there's 50 companies. Like Jason said, a lot of them funded by Chinese banks, just given a blank check of a billion dollars to go build manufacturing. What's changed in the last few years is that there has been a ton of consolidation. What I'm hesitantly saying is that I think we're starting to see the industry reach a level of maturity that we might be able to expect more steady earnings. That doesn't necessarily mean it's going to be steady, but I think we're not going to see these companies explode and then literally go out of business the way that we did in 2013, 2014. But that being said, my strategy is buy a basket of companies that you think have some differentiation because you're going to be wrong on at least one of those.
Source Fool.com