Green stocks have a lot of conceptual and emotional appeal, but may offer limited investment potential. Investments in environmental or green stocks may need a long time to move from the research or concept stage to profitability in the face of high initial costs and uncertain government subsidies. So they may not be profitable for investors. It’s hard to set up any company that grows into a profitable business. It’s even harder to profit in pioneering fields like those that green stocks generally focus on. But it’s relatively easy to launch a stock promotion that purports to have answers to social problems, or ways to profit from emerging green technology. That’s why stock promotions, of green stocks or anything else, are always more common than legitimate start-ups. Still, even the legit start-ups mostly wind up going broke. Green stocks should never make up more than a modest part of your portfolio. Our view is that if you want to invest so that you make money and help the environment, your best bet is to build a portfolio of well-established companies, spread out across the five main economic sectors. Then, donate some of your profits to worthwhile socially conscious organizations....

Aggressive investing stock picks can give you bigger gains than conservative selections. But they can also give you bigger losses. Aggressive stocks are only suitable for investors who can accept substantial risk. You can be wrong on any of your stock picks, of course. But when you’re wrong on a speculative stock, losses are likely to be larger than with a well-established company. Here are three key ways to cut risk in your aggressive stock picks:

Tip #1

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Wind power stocks include companies that make components for wind turbines and those that use wind turbines to generate power.

Although publicly traded wind companies are considered green stocks, wind power does draw some objections from environmental groups. It also faces some challenging technical problems.

Concept has appeal, but wind power is imperfect

One of the key problems with wind power is that varying wind speeds cause its electricity output to fluctuate. In many areas, the wind is stronger in the daytime, when demand is lower, and dies down in the evening, when consumers use more appliances. Also, electrical power can’t be stored efficiently, so to make economic sense, it must be used when it is produced. As a result, it can’t supply all electricity needs, and utilities must maintain back-up power capacity or costly storage that is equal to their reliance on wind power.

One way for wind power stocks to overcome some of these problems is to have a large number of wind turbines operating at the same time. But this raises another problem: although the space between the wind turbines can be used for agriculture, a wind farm dominates the landscape, making it unsuitable for tourist areas or nature reserves.

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MOLSON COORS BREWING CO. $44 (New York symbol TAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 184 million; Market cap: $8.1 billion; Price-to-sales ratio: 2.1; WSSF Rating: Average) is the world’s fifth-largest brewer by volume. Its major brands include Coors Light, Molson Canadian and Carling. Molson Coors was formed in February 2005, when Canadian brewer Molson Inc. merged with U.S.-based Adolph Coors Co. The merger let Molson Coors close plants and combine distribution networks in the face of growing competition. Canada is Molson Coors’largest market, accounting for 40% of its 2008 sales and 57% of its gross profit. The U.S. (32% of sales and 33% of profit) was its second largest, followed by the U.K. (28% of sales and 10% of profit). It exports its beers to other markets, such as Asia and Latin America, or licenses them to local brewers....

TEXAS INSTRUMENTS INC. $19 (New York symbol TXN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.3 billion; Market cap: $24.7 billion; Price-to-sales ratio: 2.1; WSSF Rating: Average) makes chips for a wide variety of electronic devices, including cellphones, DVD players and digital cameras. It also makes handheld calculators. The company has over 80,000 customers, but cellphone maker Nokia Corp. (New York symbol NOK) accounted for 18% of its 2008 sales. Texas Instruments earned $17 million, or $0.01 a share, in the three months ended March 31, 2009. In the year-earlier quarter, it earned $662 million, or $0.49 a share. Sales fell 36.2%, to $2.1 billion from $3.3 billion. The company spends around 18% of its revenue on research. In response to slowing sales, Texas Instruments has cut 3,400 jobs (or 12% of its workforce). Severance and other payments will cost it $400 million (including $105 million in the latest quarter), but the layoffs should lower its annual expenses by $700 million when it completes these cuts later this year....

NVIDIA CORP. $10 (Nasdaq symbol NVDA; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 546.2 million; Market cap: $5.5 billion; Price-to-sales ratio: 2.0; WSSF Rating: Average) designs 3D-capable chips for computers, video-game consoles and other devices. The company outsources most of its production to chipmakers in Asia. The recession has hurt new-computer sales. In turn, computer makers are ordering fewer graphics chips from Nvidia. Computer makers are also switching to cheaper chips, particularly those that work well with “netbook” computers. Netbooks are small, inexpensive laptop computers whose processors are less powerful than those of traditional laptops. Because of their lower prices and portability, they are currently selling faster than desktops and laptops....

VERIGY LTD. $12 (Nasdaq symbol VRGY, Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 58.2 million; Market cap: $698.4 million; Price-to-sales ratio: 1.5; WSSF Rating: Extra Risk) designs and makes test systems that are used in the production of computer chips. Verigy’s products help chipmakers cut down on errors and improve the reliability of their products. The company has installed more than 4,500 of its systems worldwide. Aside from test systems, Verigy sells consulting and support services. These include start-up assistance, and system calibration and repair. These account for around 45% of Verigy’s revenue, and help lower the company’s reliance on sales of new systems, which have been slowed by the recession. Verigy lost $25 million, or $0.44 a share, in its second quarter, which ended April 30, 2009. Still, that was a lot better than analysts’ predictions of a loss of $0.65 a share. In the year-earlier quarter, Verigy earned $13 million, or $0.22 a share. These figures exclude non-recurring items, particularly costs related to an 18% cut to its workforce in 2008. The layoffs should lower Verigy’s annual expenses by $60 million. The company expects to complete the plan by the end of this year. Revenue dropped 56.2%, to $71 million from $162 million....

AMEREN CORP. $23 (New York symbol AEE; Income Portfolio, Utilities sector; Shares outstanding: 213.6 million; Market cap: $4.9 billion; Price-to-sales ratio: 0.6; WSSF Rating: Average) provides electricity and natural gas to 3.4 million customers in Illinois and Missouri. Ameren has faced a number of challenges recently. The recession has driven down electricity demand, and a warmer-than-usual winter hurt natural-gas sales. As well, a severe ice storm in January forced Ameren’s biggest power customer, an aluminum smelter in Missouri, to scale back its operations. As a result, Ameren’s earnings in the first quarter of 2009 fell 14.9%, to $114 million, or $0.54 a share. The company earned $134 million, or $0.64 a share, a year earlier. These figures exclude one-time items, including losses of $0.14 a share on futures contracts that Ameren uses to lock in its fuel costs. Revenue fell 7.9%, to $1.9 billion from $2.1 billion....

ALLIANT ENERGY CORP. $23 (New York symbol LNT; Income Portfolio, Utilities sector; Shares outstanding: 110.6 million; Market cap: $2.5 billion; Price-to-sales ratio: 0.7; WSSF Rating: Average) provides electricity and natural gas to 1.4 million customers in Wisconsin, Iowa, Minnesota and Illinois. Like Ameren, the recession and warmer-than-usual winter weather hurt Alliant’s first-quarter earnings. In the three months ended March 31, 2009, earnings rose 6.6% to $72.6 million, or $0.66 a share, from $68.1 million, or $0.62 a share, a year earlier. However, if you disregard a one-time income-tax gain, the company’s earnings fell to $0.30 a share. Revenue fell 4.2%, to $949.9 million from $992 million. Revenue at its regulated power plants rose 7%, but that was more than offset by a 14% drop in gas revenue. In light of the weak economy, Alliant will probably wait until next year before it asks power regulators for permission to raise rates. Meanwhile, it will look for ways to lower its costs. For instance, in March the company decided to cancel a new coal-fired power plant in Iowa. This should save it $1.2 billion over the next three years. Cancelling this plant also eliminates the need for Alliant to issue new shares, which could dilute the holdings of its existing shareholders....

A few years ago, many investors valued drug stocks the way they value the top software makers, bidding them up to 30 or more times earnings. However, drug stocks are riskier than investors generally realize. Because of that, while drug stocks can show fantastic profits, it might be more appropriate to value drug makers the way you value companies that are trying to bring new mineral discoveries into mines: at 10 times earnings or less. Drug buyers have no brand loyalty; when a better drug comes along, use of the old standby collapses overnight. Drug companies must invest large sums to bring new drugs to market, and there is great risk that their drugs will fail to clear all the necessary hurdles. If a drug does fail, it can leave the developer with a return of zero....