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$4 Billion Initiative a Boon to Energy Efficiency Stocks

|Includes: AA, ABT, AMRC, Best Buy Co. (BBY), BSX, JCI, LIME, OESX, PFE, WBA

President Obama and former President Bill Clinton recently announced a $4 billion initiative to finance energy-efficiency building upgrades across the United States. Under the new program, federal agencies are required to make at least $2 billion worth of energy-efficiency upgrades over the next two years. The upfront costs will be repaid through energy savings, eliminating the cost to taxpayers. A group of 60 nonprofit organizations, state and local governments, and private companies, including Best Buy (NYSE: BBY), Walgreens (NYSE: WAG) and Alcoa (NYSE: AA), have pledged an additional $2 billion to upgrade the equivalent of 500 Empire State Buildings. The program is part of President Obama’s Better Buildings Initiative, which aims to achieve a 20% energy efficiency improvement in U.S. commercial buildings by 2020. 

Commercial buildings accounted for 20% of U.S. energy use last year, and a growing number of companies are looking to offset rising energy costs by implementing energy efficiency upgrades. Green building activity grew 50% between 2008 and 2010, according to Green Outlook 2011: Green Trends Driving Growth by McGraw-Hill Construction. Nonresidential green construction activity is expected to triple between 2010 and 2015—which should bring an influx of customers for prominent energy efficiency service companies such as Johnson Controls (NYSE: JCI), Ameresco (NYSE: AMRC), Lime Energy (NASDAQ: LIME), and Orion Energy Systems (NYSE Amex: OESX), as well as newer players such as Blue Earth, Inc. (OTC BB: BBLU).

Investors should take note of BBLU in particular. The Nevada-based company is growing rapidly through a roll-up strategy, something its management team has plenty of experience with: BBLU’s founders completed 34 acquisitions in four years at their previous venture, growing the company from $29,000 to $350 million in revenues and increasing its market cap to $1.2 billion. BBLU’s most recent acquisition is Xnergy, a profitable energy services company whose clients include Abbott Labs (NYSE: ABT), Pfizer (NYSE: PFE) and Boston Scientific (NYSE: BSX).

BBLU is also partnering with Gexpro and eCORE Technology on a program that will help more than 2,000 gas stations and convenience stores in North America implement energy-saving technology. The program could generate $60 million in revenues over the next two years. To learn why BBLU is poised to become a major player in the energy efficiency space, view the Company’s presentation from our latest virtual conference.

Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit