Alternative Financial Methods for Improving the Investment in Renewable Energy Companies

José Luis Miralles-Quirós and María Mar Miralles-Quirós
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José Luis Miralles-Quirós: Department of Financial Economics, University of Extremadura, 06006 Badajoz, Spain
María Mar Miralles-Quirós: Department of Financial Economics, University of Extremadura, 06006 Badajoz, Spain
Authors registered in the RePEc Author Service: José Luis Miralles Quirós

Mathematics, 2021, vol. 9, issue 9, 1-25

Abstract: Renewable energies have increased in importance in recent years due to the harm caused to the environment by fossil fuels. As a result, renewable energy companies seem to be profitable investment opportunities given their likely substantial future earnings. However, previous empirical evidence has not always agreed about this likely profitability. In addition, the methodologies employed in the existing empirical literature are complicated and not feasible for most investors to use. Therefore, it is proposed an approach which combines the use of performance measures, screening rules, devolatized returns and portfolio strategies, all of which can be implemented by investors. This approach results in high cumulative returns of more than 200% and other positive ratios, even when transaction costs are considered. This should encourage people to invest in these renewable energies and contribute to improving the environment.

Keywords: renewable energy; energy companies; performance measures; screening test; devolatized returns; portfolio strategies (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2021
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