We recently compiled a list of the 10 Best Clean Energy Stocks According to Reddit. In this article, we are going to take a look at where Chevron (NYSE:CVX) stands against the other clean energy stocks.
The clean energy or the renewable energy market is one of the most largest growing sector globally. Clean energy sources, such as wind, hydropower, biofuel, and solar energy, are gaining momentum due to environmental concerns and government regulations in countries around the world. These factors have significantly boosted the sector, leading to a rise in installed capacity for clean energy sources. Additionally, the growing demand for power and rising energy consumption are driving the expansion of the clean energy market.
The U.S. Energy Information Administration (EIA) forecasts a 17% increase in clean energy deployment in 2024, potentially reaching 42 GW and accounting for nearly a quarter of the nation’s electricity generation. This growth could lead to a temporary rise in clean energy costs due to higher expenses for financing, labor, and land. Despite these challenges, tax credits from the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA) are expected to help maintain the competitiveness of solar and wind energy. The solar and energy storage markets are poised for further growth, supported by tax incentives and government programs such as the DOE’s Loans Program. Conversely, the wind and hydrogen energy sectors face obstacles, with wind energy experiencing higher costs and approval delays, and hydrogen development slowed by a lack of government incentives.
In a recent interview, Bruce Flatt, CEO of Brookfield Asset Management, discussed the transformative impact of decarbonization on industries and investments, describing it as a major trend reshaping the market. The company has launched a renewable energy fund and raised $15 billion, with plans for a second fund to help companies reduce carbon emissions, with solar and wind projects in 15 countries. Brookfield’s strategy includes building renewable infrastructure and directly supplying power to corporate clients to help them meet net-zero goals. Flatt highlighted that the U.S. Inflation Reduction Act (IRA) has provided incentives that accelerate clean energy projects, which will lead to improved completion rates and benefit the sector. Brookfield targets returns of 9-10% for debt products and around 20% for equity investments in the clean energy sector, with optimism for future growth and returns as more capital flows into the market.
As the world shifts towards more sustainable energy solutions, the demand for clean energy is expected to increase significantly, driven by rising environmental concerns and government incentives. Some of the largest players in the energy market are transitioning towards clean energy and are well-positioned to benefit from the ongoing push towards a more sustainable future.
Our Methodology
For this article, we sifted through several active subreddits to compile an initial list of 30 clean energy stocks that retail investors were bullish on. From that list, we narrowed our choices to 10 stocks according to their hedge fund sentiment, which was taken from our database of 912 elite hedge funds as of Q2 of 2024. We also included the market cap of these companies as of September 4. The list is sorted in ascending order of their hedge fund sentiment, as of the second quarter.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An aerial view of an oil rig at sea, the sun glinting off its structure.
Chevron (NYSE:CVX)
Number of Hedge Fund Holders: 66
Market Capitalization as of September 4: $260.54 Billion
Chevron (NYSE:CVX) is an integrated energy company involved in global oil and gas exploration, production, and refining. Chevron (NYSE:CVX) also offers energy services and invests in R&D for clean energy innovations.
Chevron (NYSE:CVX) is actively pursuing various clean energy sources, including wind, solar, and biofuels. The company’s Casper Wind Farm in Wyoming has a 16.5 MW capacity and powers 13,000 homes annually. Additionally, Chevron (NYSE:CVX) has a 49 MW geothermal facility in California that powers 40,000 homes each year. Chevron (NYSE:CVX) has been distributing renewable diesel made from non-petroleum sources such as vegetable oils and animal fats, with California terminals supplying diesel containing 6-20% renewable diesel.
In May, Chevron (NYSE:CVX) achieved a significant milestone by successfully operating a gas turbine on a 60% hydrogen fuel blend, for multiple days. This marks the first time a lower-emissions power turbine ran continuously with such a high proportion of hydrogen. The turbine, located at Chevron’s (NYSE:CVX) Pipeline & Power Business Unit facility in California, generates power and steam to be used in oil fields in surrounding areas.
Chevron’s (NYSE:CVX) achievement is notable for its potential to reduce carbon emissions in industrial applications such as manufacturing and data centers. By blending hydrogen with natural gas, Chevron (NYSE:CVX) is making strides toward lowering the carbon intensity of its operations. The success of this pilot project could encourage broader adoption of hydrogen technologies.
Industry analysts have a consensus on the stock’s Buy rating, setting an average share price target at $159.49, which represents a 12.35% upside potential from its current level. As of the second quarter, the stock is held by 66 hedge funds and the stakes amount to $122.40 billion. Berkshire Hathaway is the largest shareholder in the company with stocks worth $18.55 billion as of June 30.
Overall CVX ranks 4th on our list of the best clean energy stocks to buy. While we acknowledge the potential of CVX as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CVX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.