Investing in "green" companies has become popular as people have become more aware of environmental issues such as peak oil and global warming. But just as investing in "dot coms" during the 90s was the trend of the times, "green" is also a trend and should not be taken as an indicator of guaranteed profits. In fact, investing in "green" companies can be quite risky due to undercapitalization and lack of operating history due to their start-up status. But you can reduce the risk by investing in established companies that are strategically adding green methods and systems to their existing business models. Here are a few industries to consider.

Existing energy companies across the globe are researching and developing alternative fuels. All of the major oil companies are expanding into wind, solar and geothermal energy systems. And local utility companies across the United States are already introducing wind and solar power options to their customers. As many states make tax credits available to residents for installing solar panels, local utility companies are creating energy buy-back programs that should be effective in increasing profitability.

In response to increasing consumer demand, the transportation industry has already made a commitment to alternative fuels. Automobile companies like Honda, Toyota and Saturn are aggressively manufacturing and promoting alternative fuel vehicles. In the long run, these types of vehicles are expected to become increasingly popular as new alternative fuel methods are developed and refined. Smaller manufacturers are emerging as well, as an increasing number of consumers turn to scooters, bicycles and short range electric vehicles for local transportation.

In the US, water shortages have begun to be predicted as a result in population growth, changes in weather patterns as a result of global warming, and aging infrastructure. In response, there is an increasing amount of research being done on how to convert salt water into potable fresh water (desalinization), how to efficiently recycle gray water for household use, and other methods of recycling water on a large scale for industrial use.

Since much of the future of any "green" company rests on its ability to fund research and development, the smart investment move is to look for the older companies that have deep R & D pockets and that have a long term strategy of developing alternative products and methods. The world is in transition trying to adjust to its increasing demands on limited resources. So there is no doubt that companies will create alternative products and systems. Its just a mater of selecting the healthiest of those companies for your investment portfolio.