As an investor and a CleanTechnica reader, you’re likely somebody who wants to allocate your capital into a diversified portfolio of clean energy companies. Clean energy stocks invest in companies that focus on green sources of energy, like wind, solar, geothermal, biomass, tidal, wave, and hydroelectric power, as well as energy storage and smart grid technology.
Investing in clean energy index funds can offer you portfolio diversification, the fun of sharing in an evolving industry, and a vision for producing viable financial returns. You’ll be investing in ways that help protect the earth and prod the planet toward zero emissions.
Clean energy stocks are positioned well because major environmental concerns abound over fossil fuel investments, according to Forbes Advisor. Investors today know that oil, gas, and coal companies are responsible for products that emit greenhouse gases, which result in climate pollution. Other potential environmental issues, like oil spills, become not only an ethical concern for investors, “it also makes energy companies vulnerable to costly lawsuits, which can hurt your returns.” Solar’s drop in price over the past decade had diminished coal’s appeal “and could also start hurting demand for oil, gas, and other traditional energy sectors, potentially jeopardizing their long term value.”
Various investment companies describe stock quality in different ways. Evaluative criteria for all kinds of energy stocks typically include current and projected profitability; asset utilization; capital structure; earnings momentum; and intrinsic value.
Fund managers may question why you’re investing in clean energy stocks right now. They’ve fallen about 30%, lost almost 5% of their value in 2022, and dropped 23% in 2021. Why have these numbers tumbled so precipitously?
- Rising interest rates have been especially damaging for new solar projects.
- Disappointing earnings were caused largely by higher capital costs and lower profit margins.
Clean Energy Stocks Worth a Look
Don’t give up, though! Morningstar Inc., whose fund analysts assign ratings to funds that have garnered the most investor interest and assets, is optimistic looking ahead to the long term outlook for climate funds. They base their conclusions on an analysis of funds they consider highly rated, focus on clean energy themes, and are successful at “delivering positive climate impact.” They’ve identified the optimal clean energy stocks for December, 2023. Of course, let it be said that some of the funds they’ve zoomed in on may lack a track record, as they opened in 2022. Other funds are very small. Among their top clean energy stocks are:
- Trane Technologies is a manufacturer of residential HVAC systems and refrigeration solutions.
- Nvidia, which soared nearly 180% in 2023, manufactures energy-efficient graphic processing units, which are used as semiconductors in artificial intelligence and support the development of autonomous EVs.
- Eletrobras is Latin America’s biggest power utility company and one of the largest clean energy companies in the world. It should be noted that Eletrobras has experienced recent fluctuations since a top executive resigned abruptly.
Nerdwallet, which informs and empowers consumers and small and mid-sized businesses, offers a list of promising utilities stocks involved in the production, storage or distribution of renewable energy.
- Fluence Energy Inc., which is up 45.05% in 2023, is a company involved in energy storage products and services and digital applications for renewables and storage.
- Constellation Energy Corporation rose 25.11% in 2023. It is the nation’s largest producer of carbon-free energy and provides sustainable solutions to homes, businesses, and public sector customers across the continental US.
- ReNew Energy Global plc is India’s leading decarbonization solutions provider and was up 7.66% in 2023.
To take advantage of the growth of the global renewable energy industry, Yahoo! Finance suggests that investors can look towards notable names within the industry that reign as some of the best clean energy stocks.
- Tesla, Inc. continues to attract interested investors. Tasha Keeney, director of investment analysis and institutional strategies at ARK Invest, stated in October, “Notwithstanding its current growing pains, we continue to believe that Tesla is years ahead of the competition.”
- General Electric Company was in the news this week when startup Einride, which makes autonomous trucks, took GE Appliances products from a GE Appliances factory to a warehouse less than a mile away. The companies, it turns out, have worked together for the past couple of years in different ways.
- NextEra Energy, Inc. joined with Daimler Truck North America and BlackRock Alternatives earlier this year to form Greenlane, which aims to create a high performance, zero emission public charging and hydrogen fueling network for medium- and heavy-duty battery electric and hydrogen fuel cell vehicles across the US.
Final Thoughts about Clean Energy Stocks
Some money managers say that, while clients may be interested in owning shares of sustainability-driven companies, challenges make it difficult to simultaneously maximize portfolio returns. Add to that the concern that environmental, social, and governance (ESG) investors are aware of the sector’s pervasive greenwashing. Some investors decide to lean to the abstract and, unfortunately, choose fossil fuel stocks at end of year. In fact, USA Today suggests that “not only are top legacy oil and gas stocks extremely profitable in the current climate of elevated energy prices, but many are also using a portion of those profits to invest in alternative energy or net-zero emissions initiatives, potentially preparing them to transition their businesses over time seamlessly.”
Seamlessly, my **s. This kind of rationale just makes me want to spit, especially when COP28 is taking place in the background and when advocates from all over the world are fighting against the influence of Big Oil. Reuters reports that several dozen activists called for “climate justice” and carried banners that read “Just + Equitable, Fossil Fuel Phase Out, Stop Fueling the Fire” at the demonstrations. Yet participants have been outnumbered by onlookers because of the location of the summit. In the past UN climate talks like 2021’s COP26 in Glasgow and 2015’s COP21 in Paris drew huge numbers of protesters. However, this year’s demonstrations have been muted in host United Arab Emirates, where freedom of expression is limited.
A UNEP report published this week at COP28’s Nature Day revealed that finance into nature destruction in 2022 was 30 times larger than for nature-based solutions. This report highlights the urgent need to scale investment into biodiversity, ecosystems, and those that depend on our natural world. Clean energy investors can help in this quest — you can find finding reliable resources for information. You can look for recommendations on existing mechanisms to price the externalities of nature destruction. You can advocate to divert finance away from those activities and into nature-positive initiatives, such as nature and biodiversity credit markets and sovereign sustainability-linked debt issuance.
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