Strong growth opportunities for climate change-related stocks

As the world media closely follows the first days in office of President Obama, investors are focusing their attention on the sectors which are likely to benefit the most from his promised stimulus package.

With climate change high on the agenda of the new government, Terry Coles, co-manager of the F&C Global Climate Opportunities Fund, believes the long-term fundamentals for companies offering solutions to fight or adapt to the changing climate remain very strong. However he is cautious about the short-term opportunities in some sectors such as solar and wind energy.

"We have already seen an Obama-rally in the renewable sector, with a lot of solar and wind stocks having already moved up anything between 45 and 100% from their lows, all driven by speculation about where the new President is going to focus its stimulus package" he explained. "We are definitely keeping an eye on the sector but at present we are not heavily invested in solar. Despite the fact that solar stocks are a lot cheaper than in the past, we feel that the risk, especially given the recent rally, is more on the downside over the short-term, as people get over the euphoria about the new presidency." However, he added, the long-term fundamentals for investing in solar and wind companies remain very strong.

The F&C Global Climate Opportunities fund invests in companies that are leading the way in developing new technologies, processes and support services to address the issues resulting from climate change. At present, Coles is finding very attractive opportunities in stocks that are benefiting from both the economic slowdown and the increased awareness of climate change, such as companies providing teleconferencing technology.

A favourite stock is Norwegian company Tandberg that designs, develops and manufactures videoconferencing systems and management software.

"We like this company because of the long-term climate change aspects, as more companies become aware of environmental issues," he explained. "Also, as the price of carbon keeps going up, the cost of travel will also increase, forcing companies to seek out more efficient solutions to reduce corporate travel. At present, with travel budgets being slashed throughout all industries, video-conferencing products offer a cost-cutting opportunity for business globally."