Retail Stocks and Solar Ambitions: Shining a Light on Renewable Profits

Will Kenton, Kapitall: Big box retailers like IKEA and Walmart want solar power to replace high energy bills. Will retail stocks benefit?

Environmentalists who oppose the Keystone XL pipeline may be worried by today’s story in Bloomberg that “Speculators Boost Bullish Oil Bets to Record” due to the opening of the southern leg of the supply line in January. But before you sell your Birkenstocks and add oil and gas companies to your portfolio, you should be aware of another trend in energy that might up-end the electricity game for all players.

Fast Company Exists reports that many large retailers, including Walmart (WMT), Costco (COST) and Kohl's (KSS) are adding solar and wind power generating infrastructure to bring down their energy costs in the long run. By far the leader in alternative power generation, Walmart can produce 89 megawatts of electricity, almost twice the level of power generation produced by the next largest producer.

IKEA, the world’s leading retail home furnishing company, has planned to install 1 million solar panels and thirteen wind farms by 2016. Steve Howard, IKEA’s chief sustainability officer, says in a Forbes interview, “IKEA also has a long-term business philosophy, where we own most of our stores, our factories, and the land they are built on. We have the capital, so why would we rent? It’s the same with energy – if we can own our own energy production why would we not want to do it?” Some businesses operating in big box stores don’t own their locations, but retailers who own, like Walmart, would be foolish not to follow IKEA’s lead.

"You can turn a fallow roof into a fertile economic asset," says Howard. Energy security and thrifty good business go hand in hand with this strategy, which means higher profits for retailers down the road. Clearly, solar panel makers, installers and maintenance personnel also stand to gain from a widespread acceptance of solar energy by the retail industry.

We constructed a list of the five largest retailers aggressively adopting solar power and three leaders in solar production and roll out. IKEA deserves special mention, as they are now selling solar panels to homeowners in the United Kingdom, and, if successful there, will probably expand sales to the US.

Analyze These Ideas:  Access a  performance overview  for all stocks in the list

Click on the interactive chart to see data over time. Sourced from Zacks Investment Research.

Dig Deeper:  Real-Time Opinion:  Scan the latest tweets about these companies  (feed will open in a new window)

Do you think retail stocks will benefit from agressively pursuing alternative energy sources? Use this list as a starting point for your own analysis.

 

1. Wal-Mart Stores Inc. ( WMT): Operates retail stores in various formats worldwide. Market cap at $243.42B, most recent closing price at $75.13.
 

 

2. Walgreen Co. ( WAG): Engages in the operation of a chain of drugstores in the United States. Market cap at $65.59B, most recent closing price at $69.09.
 

 

3. Kohl's Corp. ( KSS): Operates department stores in the United States. Market cap at $11.90B, most recent closing price at $55.89.
 

 

4. Costco Wholesale Corporation ( COST): Operates membership warehouses that offer a selection of branded and private label products in a range of merchandise categories. Market cap at $51.09B, most recent closing price at $116.65.
 

 

5. Macy's, Inc. ( M): Operates department stores and Internet Web sites in the United States. Market cap at $21.20B, most recent closing price at $57.65.
 

 

6. SolarCity Corporation ( SCTY): Engages in the design, installation, and sale or lease of solar energy systems to residential and commercial customers. Market cap at $6.60B, most recent closing price at $82.64.
 

 

7. First Solar, Inc. ( FSLR): Manufactures and sells solar modules using a thin-film semiconductor technology. Market cap at $5.74B, most recent closing price at $57.71.
 

 

8. Hannon Armstrong Sustainable Infrastructure Capital, Inc. ( HASI): Provides debt and equity financing focusing on energy efficiency, clean energy, and infrastructure projects. Market cap at $233.92M, most recent closing price at $14.81.
 

 

( List compiled by Will Kenton. Financial information sourced from Zack's Investment Research.)

 

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