This month, the International Energy Agency published a report showing that some types of clean energy have made big strides, but more investment is necessary if the world is going to hit net-zero emissions by 2050.
Global electric car sales hit a record of more than 10 million last year, while renewable electricity capacity additions saw their largest-ever deployment, helping boost renewables to 30% of global electricity generation, the IEA said.
Despite that progress, the IEA said that most of the roughly 50 components of the global energy system the report evaluated are not on track for the 2050 target.
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“Stronger policy support and greater investment are needed across a wide range of different technologies, in all regions of the world, to enable a broader and faster shift toward clean energy to keep net-zero emissions by 2050 within reach,” the IEA said.
That leaves plenty of room for growth in already-established markets, such as those for solar and wind farms and electric vehicles, but it also means innovative companies have plenty of runway in other areas of decarbonizing the global economy.
“With the continued spotlight on climate change and a global push toward a greener economy, the demand for eco-friendly investments is expected to flourish,” says Taylor Kovar, CEO of Kovar Wealth Management.
With that in mind, here’s a look at seven green stocks that could end up putting green in your wallet:
| Stock | Year-to-date performance as of July 17 |
| NextEra Energy Inc. (ticker: NEE) | -12% |
| Tesla Inc. (TSLA) | 135.7% |
| Louisiana-Pacific Corp. (LPX) | 33.8% |
| Watts Water Technologies Inc. (WTS) | 26.6% |
| Hannon Armstrong Sustainable Infrastructure Capital Inc. (HASI) | -1.8% |
| Samsung SDI Co. Ltd. (006400.KS) | 17.6% |
| Ecopro BM Co. Ltd. (247540.KQ) | 202.9% |
NextEra Energy Inc. (NEE)
This renewables powerhouse is a leader in solar and wind electricity generation and is continually mentioned as a top green stock by investing experts.
“They’ve demonstrated strong performance and leadership in the renewable energy sector,” Kovar says.
During the first quarter, the company added more than 2,000 megawatts of renewables and storage projects to its backlog. Its pipeline of potential projects exceeds $20 billion and would require more than 15 gigawatts of new renewables.
NextEra also recently signed a memorandum of understanding with the world’s largest ammonia producer to create green hydrogen, a small but growing part of the clean-industry landscape that is expected to contribute to decarbonization efforts.
NextEra’s stock took a hit in January after the company announced weaker-than-expected earnings for the fourth quarter of 2022, and it’s down about 12% so far in 2023.
Tesla Inc. (TSLA)
Kovar also likes this top maker of electric vehicles: “Tesla is not only a pioneer in the electric vehicle market but also in battery storage technology, making (it) an exciting pick for eco-conscious investors.”
While Tesla earns most of its money from auto sales, its fastest-growing revenue segment is energy generation and storage. That unit’s revenue jumped nearly 150% year over year in the first quarter of 2023, while auto sales grew 22% and services rose 44%.
This month, the company said it produced nearly 480,000 vehicles and delivered more than 466,000 during the second quarter. TSLA shares have been in overdrive so far in 2023, adding 135.7% as of July 17.
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Louisiana-Pacific Corp. (LPX)
Louisiana-Pacific makes building materials for the construction industry, including a carbon-negative exterior cladding product that stores more carbon than is released in manufacturing and distribution.
In addition to sustainable manufacturing processes, Louisiana-Pacific engages in sustainable forestry management, including planting about 4 million trees each year in the forests it manages.
LPX shares have gained 33.8% in 2023 as of July 17.
Watts Water Technologies Inc. (WTS)
Watts Water Technologies makes plumbing, heating and water-quality products for residential, industrial, municipal and commercial customers.
The company’s pressure-reducing valves avoid the use of more than 19 billion gallons of water globally per year, the company says. Last year, its high-efficiency gas-fired boilers and water heaters helped customers avoid more than 100,000 metric tons of carbon dioxide.
WTS shares have risen by 26.6% year to date as of July 17.
Hannon Armstrong Sustainable Infrastructure Capital Inc. (HASI)
Kovar says green stocks not only compete with companies that aren’t as eco-friendly, they can also outperform them.
“Companies focused on sustainability are investing in the future, which can lead to innovative products, services and technologies that drive growth,” he says. “Plus, they’re likely to fare better as regulatory environments increasingly favor sustainable practices.”
One major tailwind for green stocks is the clean energy incentives included in the Inflation Reduction Act. HASI stands to benefit from the legislation as green investments ramp up.
The real estate investment trust, or REIT, says it is the first U.S. public company solely focused on climate solution investments. It provides capital to companies involved in energy efficiency, renewable energy?and other sustainable infrastructure markets.
As of March 31, 53% of Hannon Armstrong’s $4.7 billion portfolio was in behind-the-meter energy efficiency, distributed solar and storage investments, while 42% was in grid-connected wind, solar and storage projects. The rest was in renewable natural gas, fleet decarbonization and ecological restoration.
HASI shares have ticked downward so far in 2023, falling by about 1.8% as of July 17.
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Samsung SDI Co. Ltd. (006400.KS)
Vivek Tanneeru, portfolio manager at Matthews International Capital Management, likes emerging markets-based electric vehicle supply chain companies.
One that he likes for its global technological and cost leadership and its ability to scale production quickly to address climate change is Samsung SDI, a South Korean battery maker.
The company produces high-quality electric vehicle batteries and is also able to “allocate capital in a judicious fashion while capably managing supply chain risks,” Tanneeru says.
Without an American depositary receipt, U.S. investors would need to go through a South Korean broker or fill out investing paperwork in that country to invest directly in Samsung SDI.
But you could also buy a fund that contains the stock, such the Matthews Emerging Markets Sustainable Future Fund (MASGX). But while the fund is focused on sustainable companies, it doesn’t have a narrow focus on electric vehicles.
For investors who want to go that route, one option is the KraneShares Electric Vehicles & Future Mobility Index ETF (KARS), where Samsung SDI is the sixth-largest holding. The stock is up 17.6% year to date as of July 17.
Ecopro BM Co. Ltd. (247540.KQ)
Both funds also contain this Korean battery materials company. It’s the eighth-largest holding in MASGX and the 15th-largest holding in KARS.
Tanneeru likes Ecopro for its ability to produce high-quality products critical for achieving higher battery densities and longer driving ranges.
Green stocks like Ecopro can do as well as companies that aren’t as environmentally focused, he says.
“High-quality and long-term-focused companies that address global environmental challenges benefit from the … long-term growth tailwinds from changing regulations and societal preferences,” Tanneeru says.
Ecopro shares have gained a whopping 202.9% so far in 2023.
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7 Best Green Stocks to Buy for 2023 originally appeared on usnews.com
Update 07/18/23: This story was previously published at an earlier date and has been updated with new information.
