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Aria Melton
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Aria Melton is a green entrepreneur. She reads widely on economics and environmental issues and supports animal rescue charities. Aria successfully started, operated, and later sold two green businesses. She has a keen interest in investing in companies that make a difference in the world and... More
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Aria Melton - Ethical Investing
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  • It's A Dirty Job, But Someone's Got To Do It

    Hazardous waste is a problem.

    Way back in the 16th century, tanners and butchers were banned from keeping shops on Florence's Ponte Vecchio bridge because their industrial waste polluted the Arno River. The city of Niagara Falls, NY will always be remembered for its Love Canal neighborhood, built on a dump site and later demolished. And in 2003, a quarry near Cardiff, Wales erupted, sending toxic fumes into the air - a nasty shock for area residents, who had no idea that Monsanto Chemical had used the site for illegal dumping in the '60s and '70s.

    Companies with ethical and environmental concerns often seek to reduce or eliminate their hazardous waste. This is wonderful, but what about companies who haven't reached that point yet? Chemical plants, oil refineries, factories, steel mills, biotechnology companies, medical institutions, and even the military produce waste that can't simply be left in a landfill or poured down a drain without causing harm. That waste has to go somewhere, and must be handled safely.

    Enter US Ecology, Inc. (NasdaqGS: ECOL). US Ecology has provided safe disposal of radioactive waste since 1952, and added hazardous waste services in 1968 - one of the few companies in the USA to handle such delicate work. The company places safety at a premium - all four of their operating sites participate in OSHA's SHARP and VPP programs, which recognize small companies with exemplary health and safety management. US Ecology even posts its operating permits and compliance records online. That level of transparency is a far cry from Monsanto's sneaky dumping in Wales!

    US Ecology handles transportation, treatment, disposal, and (where applicable) recycling of hazardous and radioactive waste from a variety of sources, with sites in Nevada, Idaho, Texas, and Washington. Companies and government agencies in much of the USA could easily rely on US Ecology for waste management because it has multiple distant locations, and many already do. The company even offers offsite management services for medical waste, mercury, batteries, cyanide, e-waste, and other refuse. Rather than exclusively using gas-guzzling trucks, US Ecology also takes the greener step of transporting waste largely by train, maintaining a dedicated fleet of rail cars for safety reasons.

    US Ecology has adequate working capital and sufficient operating cash flow to handle its manageable debt, given its fairly consistent net income levels. The modern world shows no signs of eliminating hazardous waste anytime soon, so US Ecology should continue to deliver earnings for some time.

    US Ecology stock is currently trading at $19.25. Two years ago the stock was trading at a high of $32.82, and it is reasonable to believe that in the future the stock will regain its former highs. Because US Ecology also handles waste management for government entities, tighter environmental legislation may well give the company a healthy boost. The stock even pays a 3.7% dividend! I suggest buying under $19.50 and holding US Ecology on a long-term basis. Waste management is a dirty job, but until we can learn to live without chemicals, someone's got to do it.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Feb 11 11:26 PM | Link | Comment!
  • A Geothermal Surprise

    Paleolithic humans used it to take warm baths. Ancient Romans used it to heat their homes. Today, it's used to generate electricity in 24 countries.

    Geothermal power is produced by volcanic activity, mineral decay, and the Earth's core. It's renewable, cost effective, significantly cleaner than fossil fuels, and safe. Geothermal energy can be applied on a large or small scale - it is used in small towns in the Pacific Northwest and also supplies 30% of Iceland's electricity. Several years ago, environmentalists on both ends of the political spectrum were in uproar over the discovery that although George W. Bush's Texas home used clean energy sources including geothermal heating, Al Gore's house did not.

    Geothermal energy does have a downside: in some areas, deep drilling and exploration are required to access geothermal power. The costs can be high (about $10 million per well in the state of Nevada), and about one well in five fails to produce sufficient results. Therefore, I hesitate to recommend a pure geothermal energy company.

    Believe it or not, the world's largest producer of geothermal energy is Chevron (NYSE: CVX). Ripley - take note. Although Chevron is usually associated with petroleum, the company has expanded into renewable power. Currently, Chevron is researching and developing solar, wind, biofuel, fuel cells, and hydrogen fuel in addition to its geothermal operations. The company has even trimmed its own energy usage by implementing hydrogen fuel cells and solar panels at Chevron facilities.

    Chevron is not perfect - among other things, the company has refused to pay an $8.6 billion fine demanded by a court in Ecuador in reference to Texaco's pollution in the Amazon between 1972 and 1992. However, this was an "inherited" problem, and I like the direction Chevron is taking to provide energy from diversified green sources.

    Chevron has also approved the Wheatstone Project, a proposed liquid natural gas plant and processing facility in Australia. With a price tag of $29 billion, this is not a light undertaking, but the project is expected to process nearly 9 million tons of liquid natural gas each year, much of which will be destined for growing Asian markets.

    Chevron's balance sheet is solid, and its stock price is fairly valued. Growth is steady, debt is reasonable, and P/E is a good 7.7. Even better, investors receive a 3.1% dividend. Chevron is a world-class company demonstrating ethical behavior from its ventures into renewable power. I like the stock at its current level of $104.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: CVX, energy
    Jan 29 11:51 PM | Link | Comment!
  • An Automaker's Redemption

    Many, many companies do bad things. However, just as individuals can make amends for their mistakes, companies can make amends for theirs.

    For decades, a prominent Detroit automaker committed one sin after another.

    This company spied on its employees during and after business hours, firing or failing to promote many of them for such "infractions" as having wives who worked outside the home. There is no excuse for the violent anti-union tactics formerly used by this company's management, regardless of your take on unions. In 1968, British female employees had to stage a walkout to receive equal pay.

    One of the company's retired vehicle models is notorious for fuel-tank explosions, and was the subject of a product liability case in 1981. The company lost, and some sources allege that management knew about the car's design flaws but chose not to fix them before it was manufactured. The EPA has also linked this company to 54 current and former Superfund sites.

    Thankfully, Ford Motor Company (NYSE: F) has turned a corner.

    Many companies have received federal bailout money to ease them through the recession. Ford was offered bailout money but turned it down. Compare that to Bank of America, which was only too happy to accept a fat bailout and then disregard the terms specified for accepting the money. Or to Solyndra, which took over half a billion federal dollars, then went bankrupt. Ford has had serious losses in recent years, yet the company avoided filing for bankruptcy and chose not to take money that ultimately came out of taxpayers' pockets.

    Ford acquired Volvo Car Corporation in 1999. As I've discussed previously, the company has since sold Volvo to Geely Automotive. However, Ford began implementing Volvo-developed safety features into their own cars not long after they purchased Volvo. Did Ford buy Volvo to learn how to make a safer car, as I suspect Geely did? Whatever the case, safer cars are a good thing, and for most consumers, Ford cars are much more affordable than Volvos. Installing Volvo-quality safety features in inexpensive cars is a far cry from cranking out the explosion-prone Pinto.

    Ford has also been "greening" its product line and increasing the efficiency of its cars for several years. Compressed natural gas vehicles, flexible fuel vehicles, and hybrid electric vehicles are now made by Ford, with plans for all-electric vehicles, plug-in hybrids, and hydrogen fuel cell vehicles in the works. Ford also developed upholstery foam containing 25% soybean oil, which is now installed in three-quarters of their vehicles. Upholstery foam is petroleum-based, and replacing even one-quarter of the petroleum helps trim the company's carbon footprint and reliance on oil. (Henry Ford was an early proponent of soybean-based materials, even owning a soybean suit.)

    Clearly, Ford's management has learned something about ethics. They also know how to keep a company financially viable during tough times. Ford's balance sheet is reasonably strong - debt is higher than I prefer, but the company has been significantly reducing its debt level in the past two years. Ford's sales are also on the rise again, with an 11% increase in just one month (August 2011).

    Ford already has four plants under construction in China and plans to build more in India. Given the rising demand for Western goods in Asia, Ford is proving that they have a global strategy.

    Ford is redeeming its past mistakes, and I expect the company to compete effectively over the next several years. As of today, the stock is trading at $12.59, significantly lower than its February 2011 high of $18.71, and will begin to pay a dividend in March. With a P/E of less than 8, the Ethical Investor likes Ford stock at current prices, but be patient - Detroit wasn't built in a day.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: F, automobiles
    Jan 22 11:36 PM | Link | Comment!
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