End of Fossil Energy? Oil Stocks Crash: Solar Stocks Gain

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Sustainable stocks up 166.6%, fossil fuel stocks down 36.23%

LJ Furman, MBA, who writes about economics and policy at Popular Logistics, has done a comparison of stock market gains and losses comparing the top fossil energy companies stock prices, with the stock prices of near-random group of sustainable companies over the last three years till December 2015.

“On Dec. 21, 2012, I put $16 Million imaginary dollars in equal imaginary investments in 16 real energy companies; $8.0 in the Sustainable Energy space and $8.0 in the fossil fuel space.”

During a three-year period in which the Dow Jones Industrial Average was up 31.8% overall, and the S&P 500 was up 41.33% overall, fossil energy was down 36% and the sustainable stocks were up 166.6%!

“The Fossil Fuel portfolio was worth $5.1 Million, down 36.23% overall, down 12.08% on an annualized basis. The Sustainable Energy portfolio was worth $21.33 Million, up 166.6%, overall and 55.53% on an annualized basis.”

The top solar companies, NextEra, SunPower and FirstSolar stocks alone did even better

If you single out just the solar firms – the top three utility-scale solar firms are FirstSolar (utility-scale vertical company; manufactures and develops utility-scale solar and SunPower (manufactures and installs residential and utility-scale), and NextEra (which owns and operates about 20 GW of renewables between solar PV, CSP and wind power) – and then compare their stocks alone to the top three oil and gas firms (Exxon, Shell and Conoco) the contrast is even more stark.

So comparing just solar energy companies to oil&gas energy companies, solar wins big.

If you combine just the solar gains:
FirstSolar (FSLR) 112.06%
SunPower (SPWR) 453.22%
NextEra Energy (NEE) 46.14%
That is an average of +203.8%  in stock price gains.

Now combine just the biggest oil&gas companies’ losses:
BP (BP) -28.44%
Conoco Philips (COP) -23.04%
Royal Dutch Shell (RDS.A)-37.18%

You get an average of -29.55% in stock price losses.

Solar stocks easily beat fossil fuel stocks!

Coal (Peabody), the first fossil energy source to be bankrupted – albeit first by lower-priced natural gas first – has the biggest losses, but even eliminating coal (the easy target) and focusing just on the oil&gas sector the results are stark.

Furman’s sustainable picks actually included some poor choices but they still achieved a huge win.

LED makers like Cree and Lighting Science are too new to be turning big profits yet and GT Advanced Tech is not what I’d call in the renewable space (I even had to look them up to find out what they do) and it turns out they mostly make bits for electronic gizmos. Yes, Furman points out they make a little of the supply chain for making solar cells, but there are firms that are completely focused on that and they would be a better choice. And Solarzyme (a biofuel maker from algae, that hasn’t been doing great for years…). I’d have picked some firm doing EVs if I wanted to pick a transport option.

Of the sustainable stocks listed, the only one I’d have chosen as the renewable equivalent to traditional energy firms (along with the three solar firms above) would be Vestas (pretty much the world’s top wind manufacturer and developer globally).

So the bottom line is that even though Furman made some fairly ignorant sustainable choices, given how many better options there are among just solar energy companies, even so; the results are striking both ways.

Image credit: via FlickR under CC license

  • by Understand Solar
  • |
  • January 26, 2016

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