Sara Elford used to spend two hours a day commuting to and from her office in downtown Vancouver. Then, a few years ago, she and her husband decided to head east - all the way to Halifax. "It was a life-work balance thing," says Ms. Elford, who has won numerous awards as an analyst with Canaccord Adams. Though the move hasn't really helped on the work side - she still crisscrosses the country regularly and clocks long hours at the office - at least she can now ride her bike or walk to work. And for someone who specializes in covering sustainable and clean-tech companies, that's a real bonus.
A benefit to living far from Bay Street is that it's much easier to engage in independent analysis and thought. "There aren't many analysts in Halifax," says Ms. Elford, who joined Canaccord in 1998. "Personally, being removed from the crowd hasn't been a bad thing for me. I've never been very good at following the crowd."
Let's be clear. Ms. Elford isn't an analyst of ethical investing, which now accounts for roughly $500-billion (U.S.) in assets worldwide, according to the Toronto-based Social Investment Organization. Her job isn't to figure out which companies are greener than others. What she's working to do is find the next great emerging Canadian company with the next great green idea.
"I'm trying to find companies that are either developing new technologies that facilitate more sustainable behaviour or playing an active role in deploying those solutions within an industry," says Ms. Elford, a CFA who worked in investment banking in Vancouver and New York before switching to research 13 years ago.
There are lots of small green companies to choose from. WaterFurnace Renewable Energy, WFI-T for instance, manufactures geothermal heat pumps. And despite the crash, the company (based in Fort Wayne, Ind., but traded on the Toronto Stock Exchange) pays a dividend and is trading a few dollars below its 52-week high. Calgary-based Pure Technologies PUR-X helps monitor bridges, pipelines, buildings and reservoirs to ensure they're operating efficiently. Carmanah Technologies, CMH-T a 13-year-old Victoria-based company develops self-contained solar LED and power systems for industrial and commercial applications - think marine beacons and runway lights. It's trading under a buck, but Ms. Elford is convinced it's got huge potential upside as its solar LED lights start to penetrate the outdoor general illumination market in the next five years.
While WaterFurnace, Pure Technologies and Carmanah aren't immune from the current economic turmoil, they're certainly better positioned than most companies. "They are leaders in very specific niches, have an economic value proposition, and they're profitable and well-funded," says Ms. Elford, who has buy ratings on all three stocks.
The Lunch Test Rule
When an analyst initiates coverage of a company, it's sort of like getting hitched - you could end up writing research reports on that company for 15 years or more. And if you're like Ms. Elford, that means regular meetings with management.
"So you need to be very comfortable with the people you're dealing with - their honesty, their integrity, their ability to deliver, their ability to execute," she says. "And if I have any inkling that's not there, I don't care how compelling a company looks, I probably wouldn't take it any further." That means she spends a lot of time getting to know the people behind the business: What are they like? What's their background? What drives them? She calls it the Lunch Test Rule. "The older I get," she says with a laugh, "the more ornery I get."
Slow But Steady
