In this article, we discuss the 5 best climate change stocks to buy according to hedge funds. If you want to read our detailed analysis of these stocks, go directly to the 11 Best Climate Change Stocks To Buy According To Hedge Funds.
5. Enphase Energy, Inc. (NASDAQ:ENPH)
Number of Hedge Fund Holders: 44
Few renewable energy firms have the global clout that Enphase Energy, Inc. (NASDAQ:ENPH) possesses. The company markets home energy solutions and has operations across the world. It recently announced plans to market microconverters to residential and commercial users in Brazil. The company has also teamed up with a fast-growing domestic solar service provider in the US to market solar systems to a wider audience in the country. It is placed fifth on our list of 11 best climate change stocks to buy according to hedge funds.
The growth of Enphase Energy, Inc. (NASDAQ:ENPH) as a household name in the US solar market is acknowledged by investment advisory KeyBanc. Analyst Sophie Karp initiated the stock with an Overweight rating and a price target of $179 on September 21. Karp said the firm “enjoys significant market share in its core microinverters business”.
At the end of the second quarter of 2021, 44 hedge funds in the database of Insider Monkey held stakes worth $724 million in Enphase Energy, Inc. (NASDAQ:ENPH), down from 49 the preceding quarter worth $803 million.
In its Q2 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Enphase Energy, Inc. (NASDAQ:ENPH) was one of them. Here is what the fund said:
“Also in the solar space, we initiated a position in Enphase Energy (classified in the IT sector), which designs and manufactures microinverters for residential and small commercial solar photovoltaic (PV) systems. Enphase was the first company to commercialize microinverters for residential and small commercial solar PV systems. A microinverter, a type of MLPE, is a small inverter placed directly on the back of each solar module, as opposed to the traditional system of one string inverter on the side of the building.”
4. NextEra Energy, Inc. (NYSE:NEE)
Number of Hedge Fund Holders: 59
NextEra Energy, Inc. (NYSE:NEE) operates in the electrical utility sector and has interests in power generation through wind, solar, nuclear, and other methods. The stock was assumed with an Outperform rating and a price target of $85 by Credit Suisse analyst Maheep Mandloi in July. It is ranked fourth on our list of 11 best climate change stocks to buy according to hedge funds. The firm has recently been making renewed efforts to get the operating license of a Florida nuclear power plant it runs extended for another 20 years. The firm had already obtained approval for the extension of a license of a similar plant in Florida earlier.
NextEra Energy, Inc. (NYSE:NEE) is expected to benefit from a predicted rise in utility prices after the longest rout the industry has seen came to end last month. With the gains of September 29, the utility sector was up 2.7% year-to-date, ending a record 14-day slide. The firm beat market expectations on earnings per share in the second quarter.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in NextEra Energy, Inc. (NYSE:NEE) with 14 million shares worth more than $1 billion.
3. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 60
Tesla, Inc. (NASDAQ:TSLA) is perhaps the most well-known renewable energy company in the world. Although it is famous for producing electric cars that help reduce the carbon footprint of the auto industry, it also makes and sells solar energy solutions. In fact, the solar business of the firm is growing at a spectacular pace. In the second quarter, the firm installed 1,274 megawatt-hours of energy storage. This was a 205% increase from the same period last year and brought in revenue worth $370 million.
Tesla, Inc. (NASDAQ:TSLA) is placed third on our list of 11 best climate change stocks to buy according to hedge funds. The firm recently announced plans to shift headquartered to Texas from California. Several market analysts remain bullish on the firm, with advisories like Wedbush, Canaccord, and Deutsche Bank highlighting several growth catalysts for the firm in investor notes recently.
At the end of the second quarter of 2021, 60 hedge funds in the database of Insider Monkey held stakes worth $9 billion in Tesla, Inc. (NASDAQ:TSLA), down from 62 in the previous quarter worth $10 billion.
Here is what Baron Partners Fund has to say about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2021 investor letter:
“Tesla, Inc. designs, manufactures, and sells fully electric vehicles, solar products, energy storage solutions, and battery cells. The stock fell during the quarter as a result of general market dynamics and a potential production slowdown due to parts shortages. A refreshed S/X and China Model Y ramp could also have a negative impact on margins in early 2021. We anticipate strong growth and improved margins driven by new production capacity, manufacturing efficiencies, localization of its manufacturing and supply chain, and maturation of Tesla’s full self-driving technology.”
2. General Electric Company (NYSE:GE)
Number of Hedge Fund Holders: 67
General Electric Company (NYSE:GE) has invested heavily in clean and green initiatives in recent years, pouring over $15 billion into wind, solar, and hydro projects. The company claims it has installed 400 gigawatts of renewable energy globally. This includes 40,000 wind turbines and 25% of the hydropower installations worldwide. It is ranked second on our list of 11 best climate change stocks to buy according to hedge funds. It recently signed an MoU with General Motors for supply of rare-earth minerals that are used in renewable energy generation.
Wells Fargo analyst Joseph O’Dea initiated coverage of the stock on October 7 with an Equal Weight rating and a price target of $107. General Electric Company (NYSE:GE) was also recently named among a list of top picks for the fourth quarter by Bank of America.
At the end of the second quarter of 2021, 67 hedge funds in the database of Insider Monkey held stakes worth $6.08 billion in General Electric Company (NYSE:GE), down from 68 in the previous quarter worth $6.16 billion.
In its Q1 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and General Electric Company (NYSE:GE) was one of them. Here is what the fund said:
“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.”
1. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 155
Alphabet Inc. (NASDAQ:GOOG) is the only technology company on the climate change stock list and it is placed first on our list of 11 best climate change stocks to buy according to hedge funds. Since inception, the firm has set a standard for other corporate businesses in the clean energy adoption race. Despite being among the most valuable companies in the world, it has been carbon neutral since 2007 and has invested heavily in clean energy programs. In 2020, the firm announced that the net carbon footprint of the firm was zero.
Alphabet Inc. (NASDAQ:GOOG) is the largest corporate purchaser of clean energy. There is no indication that this will change in the near-future and will provide the firm with an advantage while other big firms undergo energy transitions in the next decade or so, balancing their business activity with green spending.
Out of the hedge funds being tracked by Insider Monkey, London-based investment firm TCI Fund Management is a leading shareholder in Alphabet Inc. (NASDAQ:GOOG) with 2.9 million shares worth more than $7.3 billion.
In its Q1 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ:GOOG) was one of them. Here is what the fund said:
“Large-cap tech companies have been resilient through the pandemic—Alphabet among them. A top contributor, Alphabet’s Play Store and Google Cloud are in demand as businesses accelerate online activity which, along with strong YouTube user growth, is helping stabilize temporarily weaker search ad revenue trends. Through the lens of our disciplined bottom-up research process, we view Alphabet as one of the best businesses in the world, capable of expanding revenues at a rapid rate for years to come, with a bullet proof balance sheet and an average asking price. It’s a name we’ve owned since 2012 and for which we continue to have high hopes regarding future prospects.”
You can also take a peek at 10 Best EV Materials Stocks to Buy and 10 Best NFT Stocks to Buy Now.
