We recently published a list of 10 Best Climate Change Stocks to Buy Now. In this article, we will look at where Clearway Energy, Inc. (NYSE:CWEN) stands against other best climate change stocks to buy now.
Investors are focusing on companies driving the transition to a low-carbon economy. Climate change stocks, as defined by the Climate Change Collective, are linked to renewable energy, electric vehicles, and carbon capture technologies. These stocks operate in the reduction of the Greenhouse effect, global warming, and overall carbon emissions.
The past year has been a defining one for ESG investing. The Corporate Sustainability Reporting Directive (CSRD) in Europe and the adoption of the International Financial Reporting Standards for Sustainability (IFRS) across multiple countries have pushed corporate sustainability disclosures forward. However, political and economic headwinds have also emerged. According to Forbes, ESG mentions in U.S. corporate reports peaked in 2023 and have since begun to decline, reflecting a more complex regulatory and market environment.
In the United States, the stock market is navigating an intricate landscape shaped by economic slowdowns and shifting political dynamics. With private sector debt shrinking by 2.4% of GDP in late 2024—the steepest contraction since the 2008 financial crisis. Bloomberg reports that while the broader sustainable debt market faces challenges, a $1.8 trillion segment, backed by U.S. government agencies, continues to thrive. The demand for social bonds, which finance projects in healthcare, housing, and education, has surged by 130% globally, rivaling the traditionally dominant green bond market.
Global investment trends indicate a strong commitment to climate action. Reuters reported that energy transition investments surpassed $2 trillion in 2024 alone, underscoring the financial scale required to reach net-zero emissions by midcentury. Meanwhile, Shell forecasts an annual growth of 4-5% in LNG sales over the next five years, driven by expectations of a 60% increase in global demand by 2040. However, political shifts have also impacted climate stocks—Donald Trump’s return to the White House has led to a dip in European clean energy stocks, as investors anticipate possible rollbacks in U.S. climate policies.
Green finance is gaining momentum, but challenges remain. BloombergNEF Energy Transition Investment Trends estimates that to achieve net-zero emissions by 2050, annual energy transition investments need to reach $5.6 trillion between 2025 and 2030. Currently, investments stand at just 37% of this target, signaling a vast growth potential in climate-focused sectors. Green bond issuance, a key driver of climate finance, hit $575 billion in 2023, with strong contributions from Europe, though U.S. issuers saw a decline. The World Economic Forum’s Fostering Effective Energy Transition 2023 report highlighted the need for trillions in annual investments to meet climate goals, reinforcing the critical role of climate finance.
However, as sustainable investing gains traction, so does scrutiny. Greenwashing allegations have surfaced, with environmental law group ClientEarth taking legal action against BlackRock, accusing the asset manager of misleading investors about its so-called sustainable funds. In response, the European Union has finalized stricter investment fund labels to combat such practices. Morningstar’s 2023 Voice of the Asset Owner Survey showed that ESG considerations now influence a growing portion of institutional investments, yet transparency and credibility remain key concerns.
With all these dynamics at play, the question remains: Which climate change stocks are the best to buy now? Institutional investment remains a key driver. Initiatives such as Mission 2025 have united major corporations and financial institutions in urging governments to elevate their climate ambitions, thereby aligning $31 trillion toward the pursuit of zero emissions. In the following section, we break down the best climate change stocks as investment opportunities in this rapidly evolving sector.
A wind farm in motion, its many turbines spinning in the breeze.
Our Methodology
For selecting the best climate change stocks, we screened stocks in climate change industries, including renewable energy, carbon capture, electric vehicles, and green technology. From that group, we picked 10 stocks with the highest number of hedge fund investors, as per Insider Monkey’s database of Q4 2024. The stocks are ranked in ascending order of hedge funds having stakes in them.
Why are we interested in the stocks that hedge funds pile into? 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Clearway Energy, Inc. (NYSE:CWEN)
Number of Hedge Fund Holders: 32
Clearway Energy, Inc. (NYSE:CWEN) is a prominent player in the renewable energy sector, focusing on the ownership and operation of clean energy generation facilities across the United States. The company’s diversified portfolio includes wind, solar, and natural gas-fired power plants, positioning it strategically to capitalize on the growing demand for sustainable energy solutions. It is among the best climate change stocks to invest in.
In the fourth quarter of 2024, Clearway Energy, Inc. (NYSE:CWEN) reported a net loss of $48 million. However, the company’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) stood at $228 million, with cash from operating activities totaling $55 million. It exceeded its 2024 financial goals and committed approximately $450 million to growth investments during the year, underscoring its dedication to expanding its renewable energy footprint.
A significant development for Clearway Energy, Inc. (NYSE:CWEN) was the signing of a binding agreement to acquire a 137 MW wind portfolio, with the transaction expected to close in the first quarter of 2025. This acquisition aligns with the company’s strategy to enhance its renewable energy capacity and is anticipated to contribute positively to its 2025 financial results.
On March 26th, Deutsche Bank Aktiengesellschaft issued a “Buy” rating for the stock, setting a price target of $38.00. This target suggests a potential upside of 27.41% from its current trading price.
Overall, CWEN ranks 8th on our list of the best climate change stocks to buy now. While we acknowledge the potential for CWEN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CWEN 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.