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Three stocks to play the green buildings boom

Kames' Craig Bonthron names his top bets benefitting from the need to reduce emission and use energy efficiently in construction.

Green foundations

Carbon dioxide reduction targets, emissions regulations and social demands are commercial and residential buildings markets to become cleaner, according to Craig Bonthron.

The manager of the Kames Global Sustainable Equity fund said environmentally sustainable buildings which use energy and water efficiently have become a core investment theme. In this gallery, Bonthron highlights three stocks which are benefitting from this specific trend.

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Lighting up

Bonthron highlighted LED producer Acuity Brands, which is benefitting from the US commercial new construction and renovation markets and makes up 2.7% of the fund.

‘A combination of its excellent product range – aimed at lighting designers and architects – and its market leading distribution through specialist agents has led to excellent growth for the company,’ Bonthron said.

‘Interestingly, its offering integrates technology to enable ‘internet of things’ solutions where buildings become smarter and devices and systems communicate to drive increased efficiency. This is key to its total solutions offering.’

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Keeping warm

Kingspan is an Irish company specialising in insulation panels for commercial and residential buildings and makes up 2.4% of Bonthron's fund at present.

‘Although a relatively small company globally, it has been successfully expanding and gaining market share in Europe and the US. A combination of market leading products, good distribution and expansion through acquisitions in new markets have been the drivers of its success,’ he said.

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Boiling over

Bonthron holds 2.75% of the fund in A.O Smith, which makes boilers, air filters and water filters. The company has been grown due to the demand for energy efficient boilers and filtration systems.

‘Recent lead poisoning controversies in Flint, Michigan has led to increased scrutiny on water quality in the US and A.O Smith has leveraged its distribution and product innovation to take advantage of this demand. Air and water pollution in China are huge local issues that A.O Smith solves,’ the manager said.

‘Crucially though, its ability to profitably benefit from this demand is ultimately due to forward thinking investment which has given it local distribution and brand presence in China for over 20 years.’

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Craig Bonthron
Craig Bonthron
720/1338 in Equity - Global (Performance over 3 years) Average Total Return: 8.43%
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