Back in college, I was working on a paper for a Writing for Business and Professions Class. My professor challenged my initial thesis to my final graded essay in which the constructed argument was the installation of canopies in parking lots. She challenged my idea as it was not offering a commercially viable solution to the patron. It merely required the patron to build infrastructure to provide shade for the thousands of commuters. She redirected my focus on finding a commercially and financially viable solution: solar canopies. These solar panels on stilts provided a framework to construct a good research final essay to earn a good grade in the class.
The paper presented a business argument as to why solar canopies should be installed in the commuter parking lots located in the Cook Douglass campus of Rutgers University, New Brunswick. The professor rewarded the paper well, and as time carried forward, the concept disappeared from my conscience. I revisited the concept when I was looking for companies to invest in energy-efficient project engineering and infrastructure sectors. Moreover, I wanted to find a company that had successfully worked with private and public enterprises to strengthen the consensus argument that climate change needs to be an issue of the highest urgency. There is a dire need to construct a brand new infrastructure to enable the future’s fast-paced, high energy economies. It is also important to note that not everything needs to be removed entirely; some may only need restructuring and efficient models to make it an economically and financially viable situation.
The company I chose was a Massachusetts based Energy-Efficiency solutions provider: Ameresco Inc (AMRC). It trades on the New York Stock Exchange, has a market capitalization of $3.1 Billion, and was founded in 2000. Ameresco was founded by Mr. George Sakellaris, who serves in the Chairman of the Board of Directors, President, and Chief Executive Officer roles.
My entry into this stock occurred in April 2020, when the article Ameresco Named One of the Best and Brightest Companies to Work For in the Nation, published in March 2020, demanded my attention. Furthermore, Ameresco Completes First Phase of Department of Defense Funded Flow Battery Investigation, allowed to deconstruct the notion that minimal effort was being applied to energy efficiency and management efforts. The company offers 6 services: Energy Efficiency, DEG, Storage & Microgrids, Energy Infrastructure, Energy Analytics & Supply, Operations and Maintenance, and Financial Options. An argument presented is that every one of those services listed is ever more critical in this rapidly transforming world that increasingly relies on the magic of electricity.
If generation and transmission play the most significant role in determining electricity price, then the rising historical price can only hint towards rising costs in the future. Society is increasingly reliant on electricity to enable the various devices it has invented and is reflected in the rise of Electricity Retail Sales to Residential Sector in the Total Energy data provided by the EIA . Lastly, the EIA estimated “that electricity transmission and distribution (T&D) losses equaled about 5% of the electricity transmitted and distributed in the United States in 2015 through 2019″ . If a process that required the output of 100 required you to start with an input of 105, it demands the adoption of efficient measures to ensure that the input to output ratio is beneficial. While inefficient processes might render a decent structure, efficient processes evince a confident foundation to elevate and escalate.
Finding a company that delivered on energy efficiency infrastructure needs was necessary since it allows for the patron’s long-term financial well being. In the short-term, investing in energy efficiency measures does appear a costly-endeavor, but investment in efficiency is needed to secure better future series of cash flows. When you visit www.Ameresco.com, the first service they promote is Energy Efficiency. The customers they support are in the following industries: Airports, Colleges and Universities, Commercial/Retail, Federal Government, Healthcare Facilities, K-12 Schools, Manufacturing and Industries, Public Housing, State and Municipal Government. Of the many customers that they serve, particular ones that gave credibility in defining the business were: Boston Housing Authority, San Francisco Housing Authority, Philadelphia Navy Yard, U.S. Marine Corps Recruit Depot Parris Island, Savanah River Site Biomass Cogeneration Facility, and Chicago Public Schools to say a few. One service that I find the company to be a valuable partner in energy efficiency is Smart Cities. In 2017, Ameresco partnered with Silver Spring Networks (acquired by Itron Inc ITRI in January 2018) and received a contract from the City of Chicago to bring a smart street lighting project that would replace the “approximately 85 percent of the City’s existing street lights with smart LEDs” . The initiatives listed above show an enterprising partnership between private and public entities to move towards a more efficient energy infrastructure.
Financially, the company had grown its retained earnings year over year from $184million in 2015 to $314million in 2019 . As of Q3 2020, the company carried retained earnings of $345million . The company has established a stable asset turnover and payables period ratio between 2015 and 2019 . It was an interpretation of these fundamentals and the research regarding the company itself that allowed me to create credence to my decision to buy Ameresco (AMRC) shares in April 2020.
The current political environment dictates investors to seek companies that focus on providing green solutions to carbon problems. Politics does not play much of a factor in the way I look for companies. Politics plays a guide to understand the regulations that provide oversight for industry and sector’s smooth operations. People with skills, talents, and emotions manage these companies, not politicians with egos. Mr. Sakellaris is an esteemed professional with an incredibly nuanced background in the field . It was the reputation, trust, and partnership that Mr. Sakellaris and his team of individuals who comprise some of the Best and Brightest in Boston encouraged my decision to invest in the company.