In this article, we discuss the 10 best green stocks to invest in.
Green energy stocks have been on investors’ radar for quite some time now. Almost all sectors today have released their sustainability reports, aiming to achieve carbon neutrality in the near future. The Covid-19 concerns in 2020 didn’t disrupt green energy investments. According to a report published by Bloomberg New Energy Finance (BNEF), 2020 saw a $505 billion investment in energy sectors, such as renewable energy and electric vehicles, presenting a 9% growth from the previous year.
Green energy stocks generated stable returns in 2020. WilderHill New Energy Global Innovation Index (NEX) gained 142% in the past year. The trend followed in 2021 as well, as assets in environment-focused funds stood at $2 trillion globally, tripling in three years, as reported by Wall Street Journal.
The automotive industry is contributing heavily to the clean energy initiatives, by shifting the focus to electric vehicles (EVs). According to a report published by Reuters, Europe has set a target to develop 30 million electric cars by 2030, to banish all fossil fuel-based transport.
Some of the notable green stocks include General Electric Company (NYSE:GE), Tesla, Inc. (NASDAQ:TSLA), NextEra Energy, Inc. (NYSE:NEE), and Ford Motor Company (NYSE:F).
Our Methodology
Let’s analyze our list of the best green stocks to invest in. The companies mentioned below include those that utilize renewable energy means for their operations.
We chose these companies based on their popularity among the 873 hedge funds tracked by Insider Monkey.
Why pay attention to hedge fund sentiment while choosing stocks?
Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the S&P 500 ETF (SPY). Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Photo by Science in HD on Unsplash
Best Green Stocks To Invest In
10. Brookfield Renewable Partners L.P. (NYSE:BEP)
Number of Hedge Fund Holders: 20
Brookfield Renewable Partners L.P. (NYSE:BEP) is a limited partnership that owns renewable power assets and is also one of the largest investors in renewable power, with a generating capacity of over 2,000 megawatts.
At the end of Q2, 20 hedge funds tracked by Insider Monkey reported owning stakes in Brookfield Renewable Partners L.P. (NYSE:BEP), compared with 24 in the previous quarter. The total value of these stakes is $232.6 million.
This September, Raymond James upgraded Brookfield Renewable Partners L.P. (NYSE:BEP) to Outperform, with a $44 price target.
Like General Electric Company (NYSE:GE), Tesla, Inc. (NASDAQ:TSLA), NextEra Energy, Inc. (NYSE:NEE), and Ford Motor Company (NYSE:F), Brookfield Renewable Partners L.P. (NYSE:BEP) is also one of the notable stocks to invest in.
ClearBridge Investments mentioned Brookfield Renewable Partners L.P. (NYSE:BEP) in its Q1 2021 investor letter. Here is what the firm has to say:
“U.S. renewables utility Brookfield Renewable was another detractor. Brookfield Renewable is a pure-play renewables operator and developer headquartered in Canada and domiciled in the U.S., focused on international hydro, solar, wind and storage technology. As more private and public institutions announce ambitious carbon reduction initiatives, Brookfield Renewable’s globally diversified, multi-technology renewables business makes it an attractive partner. Its development pipeline stands at 18,000 megawatts, providing confidence the company can meet its targeted double-digit cash flow growth through to 2025. Shares moderated amid expectations of rising bond yields, and a cool-off on the green trade.”
9. SunPower Corporation (NASDAQ:SPWR)
Number of Hedge Fund Holders: 25
Recently, the Chinese President announced to increase the development of large-scale solar and wind projects, which resulted in the gains of solar power companies. SunPower Corporation (NASDAQ:SPWR), a solar power generation company, gained 60% over the last 12 months amid these growth catalysts.
At the end of Q2, 25 hedge funds in the Insider Monkey database reported having stakes in SunPower Corporation (NASDAQ:SPWR), valued at $231.7 million. In the previous quarter, 18 hedge funds had stakes in the company, presenting a positive hedge fund sentiment.
8. First Solar, Inc. (NASDAQ:FSLR)
Number of Hedge Fund Holders: 31
First Solar, Inc. (NASDAQ:FSLR) is an American solar company that manufactures solar panels and provides utility-scale PV power plants. In Q2, the company presented a positive hedge fund sentiment, as 31 hedge funds tracked by Insider Monkey reported owning stakes in First Solar, Inc. (NASDAQ:FSLR), up from 24 in the previous quarter. The total value of these stakes is over $317 million.
White Brook Capital mentioned First Solar, Inc. (NASDAQ:FSLR) in its Q1 2021 investor letter. Here is what the firm has to say:
“First Solar (FSLR) and Itron (ITRI), both of which I’ve written about in past In Focus sections were long-term positions that were sold as their prices exceeded price targets. Both are solid companies that remain on my watchlist, but the opportunity cost of not investing in other potential investments exceeded their potential mid-term returns.”
7. Plug Power Inc. (NASDAQ:PLUG)
Number of Hedge Fund Holders: 34
Plug Power Inc. (NASDAQ:PLUG) ranks seventh on our list of the best green stocks to invest in. The company develops hydrogen fuel cell systems that replace traditional batteries. In the past year, Plug Power Inc. (NASDAQ:PLUG) delivered a 67% return to shareholders.
At the end of Q2, Plug Power Inc. (NASDAQ:PLUG) presented a positive hedge fund sentiment, as 34 hedge funds tracked by Insider Monkey reported owning stakes in the company, up from 25 in the previous quarter. The total value of these stakes is $848.7 million.
6. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 34
NIO Inc. (NYSE:NIO), a Chinese automobile manufacturer, recently launched Nio power, which provides a charging experience with battery swap stations through its extensive power network.
At the end of Q2, the number of hedge funds tracked by Insider Monkey having stakes in NIO Inc. (NYSE:NIO) increased to 34, from 28 in the previous quarter. The total value of these stakes is over $2.06 billion. Aubrey Capital Management is the leading shareholder of NIO Inc. (NYSE:NIO) in Q2, with shares worth $26.2 billion.
In October Goldman Sachs upgraded NIO Inc. (NYSE:NIO) to Buy, with a $65 price target.
5. Sunrun Inc. (NASDAQ:RUN)
Number of Hedge Fund Holders: 45
According to a report published by the Solar Futures Study, solar energy is going to play a major role in decarbonizing the American power grid and has the potential to power over 40% of the nation’s electricity by 2035.
Sunrun Inc. (NASDAQ:RUN) is an American solar company that provides solar panels and home batteries in residential areas.
As of Q2, 45 hedge funds tracked by Insider Monkey were bullish on Sunrun Inc. (NASDAQ:RUN), up from 41 in the previous quarter. The total value of these stakes is over $2.5 billion.
Horizon Kinetics mentioned Sunrun Inc. (NASDAQ:RUN) in its Q2 2021 investor letter. Here is what the firm has to say:
“What this table did not cover is valuation. What’s expensive, what’s cheap? A good business that is too expensive is not a good investment. The most expensive business in the table is Sunrun. Sunrun is the nation’s largest residential rooftop solar panel system seller/installer. Sunrun’s valuation might also shed Thumbnail valuation.
To start at the top of the income statement, Sunrun shares trade at 10.3x revenues. The most profitable company in the S&P 500, Microsoft, trades at 13x revenues. Sunrun operates at a loss. Obviously, not only is tremendous growth anticipated, but tremendous profitability, too.
Let’s simply accept that investors have correctly anticipated Sunrun’s future success and make that the starting point for a valuation exercise…” (Click here to see the full text)
4. Ford Motor Company (NYSE:F)
Number of Hedge Fund Holders: 55
Ford Motor Company (NYSE:F), an American automobile manufacturer, aims to achieve carbon neutrality by 2050, in line with Paris Climate Agreement. The company has invested over $11.5 billion in electric vehicles through 2022, making it one of the best green stocks to invest in.
In Q2, Ford Motor Company (NYSE:F) presented a positive hedge fund sentiment, as 55 hedge funds in the Insider Monkey database were bullish on the company, up from 49 in the previous quarter. The total value of these stakes is over $2.1 billion. D E Shaw is the leading shareholder of Ford Motor Company (NYSE:F) in Q2, with over 45.3 million shares.
Recently, JPMorgan lifted its price target on Ford Motor Company (NYSE:F) to $20, while keeping an Overweight rating on the shares.
Greenlight Capital Fund mentioned Ford Motor Company (NYSE:F) in its Q1 2021 investor letter. Here is what the firm has to say:
“General Motors (GM) was a disappointment. The damage from last year’s strike consumed most of the cash flow GM would have otherwise generated in 2019. We had expected a strong bounce back in earnings and cash flow in 2020, but the annual guidance, while meeting Wall Street expectations, was worse than we expected. Further, the cash burned during the strike needed to be re-earned in order to protect GM’s investment grade rating. Pre-crisis, there would have been, at best, a minimal share repurchase late in the year. At the analyst day, our hopes that 2020 would finally be the year were dashed. We sold our stock. Over our five-year holding period, we made a 9.6% IRR on GM. In the difficult environment, its most comparable peer, Ford, lost about half its value.”
3. NextEra Energy, Inc. (NYSE:NEE)
Number of Hedge Fund Holders: 59
NextEra Energy, Inc. (NYSE:NEE) ranks third on our list of the best green stocks to buy now. On October 20, the company announced its Q3 results, posting an EPS of $0.75, beating the estimates by $0.04. NextEra Energy, Inc. (NYSE:NEE) is an American energy company that is considered as one of the largest producers of renewable energy, mainly wind and solar.
On October 15, NextEra Energy, Inc. (NYSE:NEE) declared a quarterly dividend of $0.385 per share, yielding 1.89%. The company has a track record of 11 years of consistent dividend growth. This July, Credit Suisse initiated its coverage on NextEra Energy, Inc. (NYSE:NEE) with an Outperform rating and an $85 price target. The stock gained 13.5% in 2021.
At the end of Q2, 59 hedge funds tracked by Insider Monkey reported having stakes in NextEra Energy, Inc. (NYSE:NEE), down from 63 in the previous quarter. The total value of these stakes is over $2.6 billion.
2. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 60
Tesla, Inc. (NASDAQ:TSLA), a leading American manufacturer of EVs, has always been a very committed supporter of green energy as the company’s batteries utilize stored and consumed solar energy. Moreover, the company also sells solar panels through Tesla Energy.
Of the 873 elite funds tracked by Insider Monkey, 60 hedge funds had stakes in Tesla, Inc. (NASDAQ:TSLA) at the end of Q2, compared with 62 in the previous quarter. The total value of these stakes is over $9.2 billion. Cathie Wood’s ARK Investment Management was one of the leading shareholders of Tesla, Inc. (NASDAQ:TSLA) in Q2, owning shares worth $3.6 billion
Worm Capital LLC mentioned Tesla, Inc. (NASDAQ:TSLA) in its Q3 2021 investor letter. Here is what the firm has to say:
“Our core portfolio as of this writing—TSLA, SPOT, SHOP, ABNB, and AMZN—are all premier examples of companies that use the concept of aggregation of marginal gains to continuously improve their value proposition for customers. After all, what is innovation if not just a continuous search for fractional advantages in business?
The way we see it, Tesla is perhaps the generational example of the marginal gain aggregation theory. It’s also been our largest position for several years now. There are many ways to characterize and value this business (see previous letters for longform write-ups), but perhaps the best way to think about the company is that it is a highly vertically-integrated software and hardware firm that’s devoted entirely to aggregating marginal gains across its organization. The goal? Lower costs, improve thruputs, and dramatically enhance the value proposition—at scale—for consumers…”
1. General Electric Company (NYSE:GE)
Number of Hedge Fund Holders: 67
General Electric Company (NYSE:GE) tops our list of the best green stocks to invest in. Recently, the company has signed an agreement with GE Renewable Energy to improve the supplies of metals used for manufacturing EVs and renewable energy equipment.
As of Q2, 67 hedge funds tracked by Insider Monkey reported having stakes in General Electric Company (NYSE:GE), compared with 68 in the previous quarter. The total worth of these stakes is over $6.08 billion.
On September 10, General Electric Company (NYSE:GE) declared a quarterly dividend of $0.08 per share, yielding 0.31%. In Q2, the company reported a 33% growth in its total orders, worth $18.3 billion.
Vulcan Value Partners mentioned General Electric Company (NYSE:GE) in its Q1 2021 investor letter. Here is what the firm has to say:
“General Electric is outperforming our expectations for 2021 as the economic recovery is occurring faster than expected. We are particularly pleased with its free cash flow generation. We are happy to own it in our portfolio.”
You can also take a look at 10 Best Solar Energy Stocks To Buy Now and 11 Best Clean Energy Stocks To Buy.
Follow Insider Monkey on Twitter
Suggested articles:
- 15 Best Energy Stocks to Buy Now
- 15 Largest Energy Companies
- 10 Largest Wind Energy Companies In The World
Disclosure. None. 10 Best Green Stocks To Invest In is originally published on Insider Monkey.
