Investing in these environmentally conscious companies could put green in your wallet, too.
Rising political and social acceptance of environmentalism is bolstering companies that have already been immersed in the green economy and encouraging change in those that haven’t. Weather events such as wildfires and floods have intensified. Nations are continuing to discuss climate policies this week at a United Nations summit in Scotland. Some consumers are becoming more conscious and demanding more eco-friendly products. And clean energy technology is getting cheaper. “Any serious professional investor should be making green and clean at least some part of their portfolio,” says Andrew DeFrancesco, CEO of SOL Global Investments Corp. “I don’t know a sector outside of crypto that has as much global opportunity and appeal, including cannabis.” These are the best green stocks to add to your portfolio now.
UGE International Ltd. (ticker: UGEIF)
Nicholas Boychuk, analyst with Cormark Securities, says the company’s model of developing, building, owning and operating commercial and community solar projects will result in a strong and diversified recurring revenue base. He likes that the business model allows property owners to monetize unused space and consumers to get access to clean, local, renewable power at or below grid rates. A tail wind for the company is the goal of President Joe Biden’s administration to power the equivalent of 5 million American homes with community solar systems. Boychuk says that would mark a 700% capacity increase. “Combined with low ongoing operating costs, UGE should generate consistently high EBITDA margins and free cash flow,” he says, referring to earnings before interest, taxes, depreciation and amortization. “We expect the company will thrive.”
Beyond Meat Inc. (BYND)
Beyond Meat’s shares have been in a slump, recently trading below $100, when they were near $200 a little over a year prior. That’s an opportunity to invest in a leader in a growing market, says Peter Krull, CEO with Earth Equity Advisors. “We like Beyond Meat,” he says. “The importance of shifting to a plant-based diet is a vital climate-change solution.” Still, Beyond Meat faces increasing competition for pieces of a relatively small pie. And some of that competition in the plant-based protein space is coming from much bigger companies such as Tyson Foods Inc. (TSN), Kellogg Co. (K) and Conagra Brands Inc. (CAG). “However, we believe the quality of their product, in addition to their first-mover status, positions them quite well moving forward,” Krull says.
Itron Inc. (ITRI)
This technology and services company’s products measure, monitor and provide data analytics that help utilities and municipalities manage energy and water. The company’s most recent results were negatively impacted by the dearth of semiconductors plaguing many businesses. But again, for Krull, this seems like a good time for bargain hunters. “They took a hit recently because of the chip shortage, but we believe their products and services are very important in an energy- and water-limited world,” he says. “Risks include sustained chip shortages, but we believe the opportunity to buy is now, while the stock is down.”
ChargePoint Holdings Inc. (CHPT)
This electric vehicle charging company is in a great place to take advantage of increasing demand for cars and trucks that use electricity instead of gasoline. The company says someone is plugging into the ChargePoint network every two seconds. But it’s not just about the infrastructure. The company also provides cloud services that allow customers to locate, reserve, authenticate and transact charging sessions. The stock is down around 30% so far this year. “But with the growth of the EV market, there is ample opportunity to see this stock move up rapidly,” Krull says. “They are a market leader and bound to benefit from decisions made at COP26 and a budget reconciliation bill in Congress.” Headwinds for ChargePoint include increased competition, such as Tesla Inc. (TSLA) opening its charging network to non-Tesla vehicles.
Amyris Inc. (AMRS)
“If the world is going to have a sustainable future, it’s going to need to transition to clean chemistry,” says Randy Baron, lead portfolio manager at Pinnacle Associates. “Bioindustrial solutions can be more environmentally sustainable than what industry has traditionally used.” He says synthetic biotechnology company Amyris is at the forefront of this movement. The company uses sugar cane fermentation to convert plant sugars into molecules of naturally occurring ingredients used in skin care, food, medication, fragrances or electronics. “Unlike via the exploitation of fossil fuels that is the backbone of many of today’s industries, synthetic biology affords a virtuous cycle,” Baron says. “Industry and investors can know they are making a positive impact on their bottom lines while also feeling good they are working toward balance and stability of the world via more efficient energy, waste reduction and clean health.”
Orsted used to be a company called Dong Energy, which sold power and heat that was mostly produced by coal, making it one of the most carbon-intensive European energy companies. But the Danish company now develops onshore and offshore wind, solar and storage solutions. It is a major player in the emerging U.S. offshore wind sector, which promises to be a solid revenue driver as the Biden administration has set a goal for 30 gigawatts of installed offshore wind capacity by 2030. The country currently has much less than 1 gigawatt. Recently, Orsted became the world’s first energy company to have its net-zero commitment validated by the Science Based Targets initiative. The company says it will phase out coal completely by 2023 and will generate nearly 100% green energy by 2025.
Capstone Green Energy Corp. (CGRN)
Capstone specializes in carbon reduction and green energy solutions. Much of its business focuses on its microturbine energy and battery storage systems that help customers reduce their carbon footprint and save on energy costs. Its microturbines can burn “green waste,” such as methane gas from landfills, wastewater treatment facilities and food-processing operations. They can power fossil fuel operations by using gas that would otherwise be flared. DeFrancesco says the company has a strong board and solid management team and has embarked on a “great turnaround story with the right plan.”
Ballard Power Systems Inc. (BLDP)
This Canadian company makes hydrogen fuel cells for buses, trucks and other vehicles. “It’s a green hydrogen play and is one of the leading providers of clean energy fuel cell solutions,” DeFrancesco says, noting that the company has a solid client base that includes Belgian bus builder Van Hool. In April, Ballard announced its membership in a consortium that will enable heavy-duty mining equipment to run on hydrogen instead of diesel. In November, the company announced an order for 40 modules that will be used in hydrogen fuel cell electric buses across Europe.
FuelCell Energy Inc. (FCEL)
Another DeFrancesco pick, this hydrogen fuel cell company’s power plants help utilities and other power producers add clean power generation that isn’t dependent on weather or if it’s day or night. “Utilizing state-of-the-art fuel cells, our … plants provide environmentally responsible solutions for various applications such as utility-scale and on-site power generation, carbon capture, local hydrogen production for both transportation and industry, and long-duration energy storage,” the company says. Customers have included Dominion Energy Inc. (D), Avangrid Inc. (AGR) and Southern Co. (SO). In its latest results, the company reported $26.8 million in revenue, a year-on-year gain of 43%.
Help the planet and your portfolio with these nine environmentally conscious companies.
— UGE International Ltd. (UGEIF)
— Beyond Meat Inc. (BYND)
— Itron Inc. (ITRI)
— ChargePoint Holdings Inc. (CHPT)
— Amyris Inc. (AMRS)
— Orsted (DNNGY)
— Capstone Green Energy Corp. (CGRN)
— Ballard Power Systems Inc. (BLDP)
— FuelCell Energy Inc. (FCEL)
More from U.S. News