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With the bulk of the companies in the S&P 500 having reported their Q2 results, about three quarters of them have beaten analyst earnings expectations and they have done so with an impressive average year-over-year earnings growth of 38%. Improving earnings by itself is not necessarily a good business indicator, as during bad times companies can achieve profitability goals with aggressive cost cuts, e.g. layoffs. What is encouraging this time around is the fact that these earnings come from expansion of sales, with most companies in the large cap index achieving revenue well over the year-ago quarter, and over 60% of them above analyst revenue expectations.

Of even more interest to us is the renewable energy sector, which did even better, with 80% of the companies we track beating earnings and revenue consensus estimates, with a good number of them raising guidance for the second half of the year, a positive indicator for the health of their business.

A prime example of solid revenue growth came this morning from one of our recommended photovoltaic stocks, Trina Solar (NYSE:TSL), which beat expectations handily with sales up 147.2% year-over-year. This great green stock has returned a cool 72.78% in one year (compared to 4.02% for the S&P 500), and nearly as much since we recommended it here on SeekingAlpha in September 2009. The primary reason we liked Trina back then, and still like the company today, is because of their leadership in cutting cost/watt for their silicon solar panels faster than anyone else in the industry. Their relentless cell efficiency enhancements coupled with manufacturing cost optimizations has led them to increase their gross margin (to 32.1%), instead of the profit squeeze many pundits had been predicting.

While some alternative energy sectors have been weak this year -- such as wind energy, which even saw a major earnings and revenue miss by bellwether Vestas Wind Systems (OTCPK:VWDRY) -- the vast majority of the sectors represented in our Green Portfolio are growing significantly above market average, which should lead to continued outperformance from our green stocks.

Disclosure: No positions

Source: Revenue Growth Bullish for Green Stocks