How to invest in stocks that can beat the market
New investors need to get serious about investing in solar and battery companies, a new report from Morningstar and the Vanguard Group says.
Read MoreNew investors need a clear understanding of the technology and its long-term impact on the U.S. economy and on the energy and water systems.
The report recommends a diversification of funds that focuses on companies that have significant market capitalization.
Solar companies have been hit hard by the global recession and high energy prices, and the industry is facing new competition from solar, battery, and other technologies that can generate more energy, according to the report.
While solar and batteries are becoming more affordable, investors should also consider companies that generate more than 25 percent of their power from renewables, the report says.
Solar panels can now generate more electricity per watt than nuclear plants, and they’re still cheaper than gas and coal-fired power plants.
That’s a big advantage when it comes to energy security and reliability, Morningstar says.
As for companies that produce more than 50 percent of the energy they produce, Morningstars report says the industry will be hit hard if prices remain high and supply and demand aren’t linked, especially as China slows its efforts to increase renewable energy capacity.
For investors to make an informed investment decision, they should understand the potential of the solar and energy technologies in their portfolio and the risks of investing in the wrong company, Morningstod says.