Sustainable investing is more than just ditching oil stocks.
With higher gasoline prices stoking decades-high inflation, electric vehicles can look like an appealing alternative. But green investing goes beyond companies that make vehicles that aren’t powered by internal combustion engines. It can include buying shares of companies that make solar panels or develop wind farms, or that are working on growing food or making products using less energy and water. Even though the stock market is on the back foot at the moment, you may want to consider these nine stocks. “Most investments are looking at a possible recession, which will leave very few unscathed,” says Todd Cort, a lecturer in sustainability at the Yale School of Management. “However, green stocks have shown greater resilience to market downturns over time, making these stocks a potential bright light.”
Unilever PLC (ticker: UL)
One way companies have been shifting their focus beyond just the bottom line for shareholders, such as with environmental concerns, is by getting B Corp status. It’s a certification from nonprofit network B Lab that shows a company meets high standards for social and environmental performance, accountability and transparency. Multinational consumer goods company Unilever has multiple subsidiaries certified. “Unilever has long been a leader amongst large publicly traded companies in environmental and social sustainability,” says Cort, who points to the company for investors “seeking a stable holding with a company committed to smart, sustainable performance.”
Natura & Co. Holding SA (NTCO)
This Brazilian cosmetics multinational has also hopped on the B Corp bandwagon, providing “some reassurance to investors that Natura is walking the talk on sustainability,” Cort says. The company also gives investors a play in emerging markets, he notes. Emerging markets can provide more upside than developed markets, but they can also come with more risk. Natura also spreads its sustainability practices to other entities: “We work directly with over 30 local communities in the Amazon region, including more than 300 families, to help them develop sustainable business models that benefit the forest,” the company says.
Amyris Inc. (AMRS)
This biotechnology company makes ingredients used in cosmetics with lab-created molecules that are “bioidentical” to those found in nature. The company also has a joint venture with Minerva Foods to develop fermentation-based protein as an alternative to animal-based protein. “AMRS is the leader in clean chemistry, which matters because bioindustrial solutions can be more environmentally sustainable than what industry has traditionally used,” says Randy Baron, lead portfolio manager with Pinnacle Associates. “Petroleum is the normal raw material for fuels and chemicals, while renewable bio-based fuels and chemicals by definition have a lower carbon footprint.” With the stock down 66% for the year through its June 13 close of $1.84, buyers are getting a bargain, as Baron thinks the stock is worth at least five or six times where it’s trading now.
Local Bounti Corp. (LOCL)
This indoor-farming company employs a greenhouse production system that results in a smaller carbon footprint and less waste than traditional agriculture. Its shares are now sharply lower than their go-public price last year, but Baron sees potential. Privately held food and agriculture giant Cargill is one of the backers of Local Bounti. “With Local Bounti, Cargill will be able to supply lettuce to McDonald’s Corp. (MCD), as one example, as ‘just in time’ inventory, reducing the amount of food that’s thrown out, and tangentially water needed to grow that food, significantly,” Baron says. “They will do this by, eventually, building their greenhouses next to McDonald’s/Cargill food distribution centers.”
Clearway Energy Inc. (CWEN.A, CWEN)
With more than 5,000 megawatts of wind and solar electric generation assets, Clearway Energy is one of the largest renewable energy owners in the U.S. It also owns about 2,500 megawatts of natural gas-fired generation facilities. It has long-term agreements with corporations, residential consumers and wholesale customers that include utilities, municipal governments, cooperatives and competitive retail providers. “They are likely to generate significant positive earnings per share growth in 2022/23,” says Sumeet Sinha, CEO of personal financial education blog FinLightened. He sees Clearway growing its revenue by more than 5% this year. “I believe the company is likely to be able to pay off its debts and achieve a high return on equity,” he says.
ChargePoint Holdings Inc. (CHPT)
This electric vehicle charging company is well placed to ride the increasing demand for electric vehicles. Srinath Narayanan, CEO of Project Energy Reimagined Acquisition Corp. (PEGR), sees “increasing momentum” for the company as major automakers begin rolling out their electric vehicles. And that’s on top of pure-play electric vehicle makers such as Tesla Inc. (TSLA). ChargePoint says someone plugs into its network every second or less, and customers can access hundreds of thousands of charging places with a single account. The company also provides cloud services that allow customers to locate, reserve, authenticate and transact charging sessions.
Hannon Armstrong Sustainable Infrastructure Capital Inc. (HASI)
Cort likes this stock “for those who want to make money by riding the green energy wave.” Hannon Armstrong claims to be the first public U.S. company dedicated only to investing in climate solutions. It finances companies involved in energy efficiency, renewable energy and other sustainable infrastructure markets. Transactions closed during the first quarter will avoid an estimated more than 63,000 metric tons of carbon emissions, the company said in May. “Hannon Armstrong is at the center of the solar energy transition and well positioned to take advantage of growth in solar and other green infrastructure as soon as supply chain constraints ease,” Cort says.
Sunrun Inc. (RUN)
Just as high gasoline prices can prompt some to switch to electric vehicles, so too can the high price of natural gas make alternative ways of generating electricity more appealing for utilities. Meantime, the switch to electric vehicles means households use more electricity. Those factors bode well for Sunrun, which provides solar panels and batteries for purchase or lease. In May, the company said it was seeing strong demand as utility rate inflation exceeded 11% across the nation. “We are seeing tremendous growth across our business, with customer orders increasing 39% compared to the prior year as more families demand clean, affordable and reliable energy,” CEO Mary Powell said in a press release at the time.
UGE International Ltd. (UGEIF)
Government incentives could also help solar companies, especially with President Joe Biden’s goal of powering the equivalent of 5 million American homes with community solar systems by 2025. That bodes well for UGE International, which develops, owns and operates commercial and community solar projects that allow property owners to make money on unused space and consumers to get access to local renewable power. On top of a shift toward cheaper solar energy in a recession, “add in possible government incentives for green infrastructure and companies already invested in green energy could come out ahead,” Cort says.
These green stocks are set to profit from innovation:
— Unilever PLC (UL)
— Natura & Co. Holding SA (NTCO)
— Amyris Inc. (AMRS)
— Local Bounti Corp. (LOCL)
— Clearway Energy Inc. (CWEN.A, CWEN)
— ChargePoint Holdings Inc. (CHPT)
— Hannon Armstrong Sustainable Infrastructure Capital Inc. (HASI)
— Sunrun Inc. (RUN)
— UGE International Ltd. (UGEIF)
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9 of the Best Green Stocks to Buy Now originally appeared on usnews.com
Update 06/14/22: This story was published at an earlier date and has been updated with new information.
