Are Green Tech Stocks Less Profitable?

May 24. 2022. 8 mins read

Crab legs go quick at all-you-can-eat Vegas buffets because of demand – customers like eating expensive food at a lower cost. They also go quickly because of supply – the buffet operator doesn’t like giving away a food product they’re losing money on. It’s the same reason Indian restaurants get pissed off when you order a cheeky curry without a naan or rice. But they may cut you some slack if you order a fountain soda, as the profit margin on sugar syrup and water is quite high. So are the cups of hot flavored water you buy from Starbucks every day.

Many of the high-margin products peddled to retail consumers can be avoided, so they’re not resilient in times of economic turmoil. Retail consumers are fickle, so we always want to invest in high-margin products or services that provide solutions to businesses which can’t easily be displaced by competitive offerings or substitutes. Today, we’re going to look at a metric we recently introduced called “gross margin” and how it relates to some of the green technology stocks we’re holding.

Changing Priorities

The market’s reaction to The Rona was short-lived for an event that’s still unfolding. Even if we assume everything is back to normal, the economic impact is far from over. When going through our stock catalog to calculate gross margin, we refreshed Q1-2022 data points for around 75 companies we love and like. One commonality we observed is latest quarterly revenues aren’t growing much for high-growth firms, especially now that there’s a new Russian boogeyman to point the finger at when investors’ lofty expectations aren

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