Brookfield Renewable (NYSE:BEP)
One of the world’s largest renewable power platforms, Brookfield Renewable Partners has a tremendous global footprint, operating nearly 6,000 facilities in North America, South America, Europe and Asia. Following the chaos of the COVID-19 pandemic, BEP was briefly one of the stocks under $20. In hindsight, this was an excellent opportunity to buy shares, with the underlying company going on to generate revenue of $3.81 billion in 2020, just 4% below 2019’s tally.
Clearway Energy (NYSE:CWEN)
Clearway Energy Inc is an electric utility company that owns, operates, and acquires contracted renewable and conventional energy generation and thermal infrastructure assets across the U.S. The company segments its operations into conventional generation, renewables and thermal divisions. Together, these groups control a portfolio of natural gas, oil, solar, and wind-fueled power-producing facilities. Most of the energy produced by the NRG Yield can be derived from its renewable assets. Almost all of the revenue generated by the company comes from selling energy and capacity under long-term, fixed-price agreements to local utilities. NRG Yield’s conventional generation, renewables, and thermal business segments each contribute significantly to the firm’s total income.
One of the most groundbreaking companies among the best green energy stocks, Covanta uses its waste-to-energy business model to address the growing landfill management crisis. Basically, as the population increases, waste has gone up exponentially. Further, the U.S. can no longer export recyclable products to other countries. Fortunately, Covanta’s proprietary incarnation process takes common waste and converts it to usable energy. Though not on discount, CVA stock is arguably worth its premium.
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As a specialist in solar panels and battery storage solutions, Sunrun is incredibly relevant to the broader storyline of green energy stocks. However, the company also benefits from a growing demographic shift. Millennials are moving to the Sun Belt region of the U.S., which of course features warmer climates. This should represent a huge boon for RUN stock, which was previously one of the stocks under $10 during the initial COVID-19 impact.
Ormat Technologies (NYSE:ORA)
While green energy stocks mostly focus on wind and solar power, Ormat Technologies is distinct in that it specializes in geothermal energy, or “heat derived within the sub-surface of the earth.” Though aspirational, Ormat Technologies featured robust growth prior to the pandemic. Even with COVID-19’s rude encroachment, Ormat managed to post net income of $85.5 million.
Eaton Corp (NYSE:ETN)
Eaton is a diversified power management company operating for over 100 years. The company operates through various segments, including electrical products, electrical systems and services, aerospace, vehicle, and most recently eMobility. Eaton’s portfolio can broadly be divided into two halves. One part of its portfolio is housed under its industrial sector umbrella, which serves a large variety of end markets like commercial vehicles, general aviation, and trucks. The other portion is Eaton’s electrical sector portfolio, which serves data centers, utilities, and the residential end market, among others. While the company receives favorable tax treatment as a domiciliary of Ireland, most of its operations take place in the U.S.
First Solar (NASDAQ:FSLR)
First Solar designs and manufactures solar photovoltaic panels, modules, and systems for use in utility-scale development projects. The company’s solar modules use cadmium telluride to convert sunlight into electricity. This is commonly called thin-film technology. First Solar is the world’s largest thin-film solar module manufacturer. It has production lines in Vietnam, Malaysia, the United States, and a new factory under construction in India.
One of the greatest and perhaps cruelest ironies in modern society is that the push for energy security — which often leads to bloody conflicts — overlooks the reality that free energy is all around us. From the abundance of hydrogen to the shining rays of the sun and gusting of the wind, energy is all around us. But converting this energy to practical power has long perplexed scientists. But now the best green energy stocks allow you to profit from these advances.
With the advent of viable green energy investments, yesterday’s science fiction has become today’s reality. Below are some of the best of these stocks, highlighting the diversity and value in this burgeoning and exciting market segment.
Quick Look at the Best Green Energy Stocks:
With many of the world’s biggest companies developing clean and renewable solutions for our utility infrastructure, you might think that the underlying concept behind green energy stocks is a recent phenomenon. However, the idea dates back centuries. What history tells us is that in 1883, Charles Fritts “created the first solar cell by coating selenium with a thin layer of gold,” according to Smithsonian Magazine. Jimmy Carter even installed solar panels on the White House, only to see them taken down by Ronald Reagan four years later. There’s been resistance to this technology, but it is creeping into the market whether we like it or not.
While the innovation must have been utterly mind-blowing at the time, Fritts’ solar panel had one glaring problem: conversion efficiency or lack thereof. With the solar cells achieving only a 1% to 2% energy conversion rate, this metric was far behind the modern standard of 15% to 20%. Therefore, the solar energy industry, along with other green solutions like wind turbines, would take decades before they would become economically and practically viable.
Indeed, as wind and solar energy systems began contributing to the overall infrastructure, critics lashed out, stating that the expenses involved with green energy integration would overtake its benefits. Yet the International Renewable Energy Agency provides data that indicates that over time, the costs for renewable solutions have declined dramatically. Economies of scale make further integration of green power more feasible, which is a net positive for the best green energy stocks.
Still, the sector isn’t without controversy and setbacks. Earlier in 2021, several green energy stocks tumbled as the Texas winter storm devastated the region. Not helping matters were partisan pundits that blamed renewable infrastructure for the grid’s disruption. But the truth is much more nuanced. Further, the sharp discount in this sector may provide a profitable opportunity for those that can stomach some risk.
President Biden’s $1.2 trillion infrastructure framework for 2021 aims to invest in clean energy, ensuring that America will turn to this industry for power more often in the future. While it is not the “Green New Deal” that many progressives were hoping for, it is a step in the right direction. As a result, this plan should lift many green energy stocks and commodities. As the plan addresses “good-paying union jobs,” it might also lift parallel companies that support those building the green energy sector.
Remember that the Green New Deal can grow jobs and allow green energy businesses to get off the ground, but that doesn’t mean they’ll make you wealthy overnight. Decades from now, economists will be talking about green energy companies that grew organically from this legislation. That is why you must be patient when investing, do your research and buy into companies that fit your portfolio. You may find that companies are coming on and off the market frequently. Don’t be afraid to make changes to your portfolio when this occurs.
Best Online Brokers for Green Energy Stocks
Undoubtedly, green energy stocks represent a fresh perspective on sustainable living. What this sector likely is not, though, is a complete replacement of current energy infrastructures. For instance, nuclear power has a massive power density that overtakes most other sources by a country mile. As well, renewable energy infrastructures are intermittent — they don’t work at night or when the wind isn’t blowing. At the same time, there are locations with massively high winds that could produce more energy over longer periods of time.
In other words, the narrative for green energy stocks isn’t 100% invincible, far from it. With enough vulnerabilities for bears to poke at, this sector can get volatile as the events of February 2021 proved. Therefore, investors serious about engaging this space should consider online brokers that are versatile and easy to use. You just never know when you’ll need to take evasive action, and that alone is part of building a successful portfolio. At times, you may even wish that your broker sent you more alerts so that you can make more timely, wise decisions.
Below is a list of best online brokers who can help you invest in the best green energy stocks.
- Best For:Active and Global TradersSecurely through Interactive Brokers’ website
- Best For:Traders of All Levelssecurely through Moomoo's website
- Best For:Mobile Userssecurely through Plus500's website
- Best For:Momentum traderssecurely through Centerpoint Securities's website
- Best For:Intermediate Traders and Investorssecurely through Webull's app
Features to Look for in Green Energy Stocks
- Expansive market: Though the human narrative behind the best green energy stocks is centuries in the making, the investment thesis is a much younger storyline. Nevertheless, the top-tier companies in this sector typically have an expansive market and consumer base. While it’s possible for niche players to succeed, for now, the numbers game is vital because of economies of scale. Therefore, try to focus on the heavyweights of this market segment.
- Sales traction: On a related note, the underlying companies behind your prospective green energy stocks should demonstrate evidence of robust sales traction. Yes, the COVID-19 pandemic disrupted the economy in an unprecedented manner, so take 2020 revenue results with that context in mind. Still, you should see a trend in prior years of higher growth, which implies consumer interest and therefore, future viability.
- Favorable technicals: When the cold snap in early 2021 devastated Texas and surrounding regions, prior bullishness toward green energy stocks suffered a heavy blow. Partisan pundits heaped criticism on renewable energy infrastructure’s intermittency, which had a kernel of truth. But the reality is that society needs green energy to address climate change. This sector offers an upside opportunity but you should get a discount for your wager. Look for stocks that have come down from their February highs.
- Social relevance: Some businesses can take off when they become socially relevant. While you won’t make all your money on socially relevant companies, there are firms that can grow much more quickly because of the press they’re getting. At the same time, look at more established companies that are relevant, but not necessarily household names.
- New technology: Because the energy sector will continue to grow, you also want to look at companies with brand new technology that could change the trajectory of the industry. Green energy can be so excited that a stock could quite literally go viral if it uses the right technology or strikes a nerve. Moreover, you may find that a hot, new technology could lead to a meme stock situation.
Go Green to Get Green
Even in the 19th century, scientists and researchers had the same idea that people take for granted today: Leverage nature’s kinetic energy and convert it to practical power. In so doing, global communities can enjoy the pleasures and conveniences of modern technology without imposing an undue footprint on our planet.
Still, it wasn’t until relatively recently that advanced technologies could improve green energy efficiencies to the point where they were financially sensible. As well, economies of scale helped contribute to the viability dilemma. At one point or another, a company will peak or break through with new technology. However, it’s impossible to predict which companies could break through and which will become merger or acquisition fodder—or simply fold.
Although many challenges remain, the overriding reality is that climate change is real. To mitigate this environmental crisis while supporting modern infrastructures, renewable energy is intractably part of the long-term solution. Therefore, if you have a patient outlook, you should consider adding the best of these stocks to your portfolio. Remember, green energy and our concept of what’s “green” is going to change. You should allow your portfolio to change along with the sentiments of society at-large.
At the same time, some companies will benefit more from government programs or state initiatives than others. For example, the state of New Jersey pushes quite hard for residents to switch over to solar energy. The state pays to support this industry, and power companies are also investing in the process. This supports solar energy companies that spend quite a lot of money to install solar panels, but they get consistent revenue from effective “rent” payments made by customers.
Frequently Asked Questions
What are green energy stocks?
Green energy stocks are shares in companies that deal in green energy.
Are green energy stocks a good investment?
Considering the fact that green energy is used more and more, green energy stocks are likely a good investment.
What are the best green energy stocks?
Above, you will find a list of Benzinga’s choices for the best green energy stocks.
About Joshua Enomoto
His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.