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Tesla Motors Inc (TSLA), SolarCity Corp (SCTY): Buy These Green Stocks for High Returns

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A couple of recent energy reports claimed that the global energy demand will increase between 6%-8% annually for the next 10 years. With the rising environmental concerns and depleting hydrocarbon reserves, however, the demand for clean energy is growing rapidly. According to a report by the International Energy Agency, renewable energy will become the world’s second largest source of energy by 2016, after coal.

This leads me to believe that the time of green energy is finally here, and companies that are directly or indirectly related to renewable energy could deliver massive returns over the next five years. Of course, not all companies can be the “next big thing.”  Here are a few companies that offer more growth potential.

Electric vehicles

Tesla Motors Inc (NASDAQ:TSLA)

With its recent technological achievements, I don’t think that Tesla Motors Inc (NASDAQ:TSLA) needs an introduction to the investing community. Its revolutionary supercharger technology has enabled electric vehicles to cover practical distances (around 200 miles) on a single charge. This has directly stacked Tesla Motors Inc (NASDAQ:TSLA) up with its petrol and diesel engine rivals.

Tesla Motors Inc (NASDAQ:TSLA) recently unveiled its 90-second charging technology, wherein customers can get their batteries recharged for $60-$80 within a minute and a half. This is faster than any gasoline filling station, and beats the basic premise that electric cars take a long time to recharge. Its regular battery recharge is done in 30 minutes, which can be done for free at any of its supercharger stations.

Since its electric cars don’t have combustion engines, Tesla Motors Inc (NASDAQ:TSLA)’s offerings are free from engine-related problems such as overheating or carbon accumulation. Apart from offering low-cost travel, these technical advantages allow hassle-free and low-cost maintenance for Tesla Motors Inc (NASDAQ:TSLA)’s vehicles. That’s certainly the next big thing, which I have covered since last year.

But with a forward price-to-earnings ratio of 20 times, its shares appear to be greatly overvalued and it is debatable whether this the right entry point or not. In my opinion, instead of following the rules of conventional investing, investors should gauge the depth of Tesla Motors Inc (NASDAQ:TSLA)’s speculative growth potential and proceed likewise.

Solar panels

Out of the companies I’m looking at, First Solar, Inc. (NASDAQ:FSLR) appears to be the most undervalued play with a forward price-to-earnings ratio of 13.5 times. Its shares have appreciated by nearly 185% over the last year, and yet it still seems to offer a lot of upside potential.

First Solar, Inc. (NASDAQ:FSLR) primarily manufactures solar panels which are sold for both industrial and domestic purposes. The company currently dominates the global solar industry with just 7% market share. The reason behind its small market share is the abundance of small companies in the industry. These smaller companies also offer solar panels that convert solar energy into electricity just fine.

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