Categories: Energy Stocks
Topics: Clean Energy

Best Clean Energy Stocks

Editor’s Note: 2024 is kicking off in profitable style with clean energy stocks leading the way to timely gains as trillions of dollars continue to pour into innovative energy projects designed to save our planet for future generations. And, as you’re about to discover in our brand-new video presentation on Clean Energy Investing in 2024 by our own Nick Hodge — it’s a lot more than just wind and solar! Nick, who’s penned books on the subject, also sees enormous profit potential across key subsectors of the clean energy space including uranium, rare earths, and lithium. It’s all in Nick’s groundbreaking video presentation you can view here. 

—Mike

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Despite all efforts to rein in emissions, global temperatures are absolutely soaring with 2023 well on its way to going down as the hottest year ever in recorded human history. 

In fact, a newly-released UN report puts our planet on a path for 2030 carbon emissions that are just 2% below 2019 levels.  

That’s woefully short of the 43% decrease the UN’s IPCC climate panel says is needed to limit warming to the Paris Agreement’s target of 1.5°C (2.7°F).

That somewhat arbitrary temperature cap represents a crucial threshold above which scientists say climate change effects such as heatwaves and droughts will become increasingly difficult for humans and entire ecosystems to adapt to.

The writing is now on the proverbial wall that the biggest polluting nations and the biggest polluting corporations need to double down, and even triple down, on their efforts to decrease carbon emissions or else leave us all doomed to a future of severe weather related phenomena, rising sea levels, coastal erosion, and mass extinction events. 

And quite sadly, we don’t need to look very hard, nor far, to find the main culprits who are to blame.

China is by far the world’s largest polluter (30% of all global emissions) with the United States and India filling out Earth’s most abominable podium. Recent per annum data reveals:

• 1st place China with ~10,000 million tons CO2 released
• 2nd place United States with ~5,400 million tons CO2 released
• 3rd place India with ~2,600 million tons CO2 released

Yet, despite these ugly statistics, there is a glimmer of hope for the future health of our planet.

President Biden’s recent highly-choreographed visit with Chinese “dictator” Xi Jinping in sparkly-clean San Francisco has put climate talks back on the table after being shut down by Xi in retaliation for America’s high-level envoys to Taiwan last summer.

With a hockey assist from former Secretary of State John Kerry, the US and China have now committed to “sufficiently accelerate renewable energy deployment” in their economies until the end of 2030 to speed up “the substitution for coal, oil, and gas.” 

They also pledged to support efforts to “triple renewable energy capacity globally by 2030,” and said they plan to meaningfully reduce emissions, including methane (which has more than 80X the warming effect of carbon dioxide), from their respective power sectors within the current decade.

The enormity of this pledge simply cannot be overstated. And it means that some of the largest stock market gains over the next few years will, without a doubt, come from the clean energy sector as trillions upon trillions in investment dollars pour in. 

According to Bloomberg New Energy Finance, it would “cost $196 trillion in investments to zero out the world’s carbon emissions by 2050, as many countries have pledged to do, to avoid society-destroying global warming.”

Starting now, they say, “annual green investments will need to nearly triple to $6.9 trillion by 2030 if we are to have any hope of hitting net zero by 2050.”

And, with costs continuing to come down, the affordability of clean power compared to fossil fuels isn’t even a particularly close call anymore.

In the latter half of 2022, a megawatt-hour of electricity from solar cost just $50 as compared to $58 for natural gas and $100 for coal. Wind power was even cheaper at $43 per megawatt hour.

With a growing disparity like that, it’s no wonder why Elon Musk recently said that energy from renewables will be $4 trillion cheaper than fossil fueled-power going forward.

With all that being said, let’s take a closer look at the merits of investing in select clean energy stocks in 2023-24.

The Benefits of Investing in Clean Energy Stocks

Benefit #1 - Strong Growth Potential: The clean energy sector is expected to grow significantly in the coming years as governments and businesses around the world invest trillions of dollars in clean energy sources such as solar, wind, hydro, geothermal, nuclear, and battery storage technologies. 

Benefit #2 - Diversification: Clean energy stocks can help to diversify your investment portfolio and reduce your overall risk factor as the sector has shown a propensity and a resiliency to outperform even as other market segments fall into decline.

Benefit #3 - Impact Investing: Investing in clean energy stocks is a way to support the transition to a more sustainable future. By investing in clean energy companies, you’re not only setting yourself up for large potential future gains but you’re also aiding in the reduction of greenhouse gas emissions by allocating capital to the only sector that’s 100%-focused on reducing the release of carbon emissions into the atmosphere.

How to Choose the Best Clean Energy Stocks

As with any sector of the stock market, you’re unfortunately going to encounter far more pretenders than contenders. Here are a few keys to look for when seeking out the best investments in the clean energy space.  

Financial Strength: Choose only clean energy companies with healthy balance sheets and a history of sound financial performance. Those two factors alone can help ensure that the companies you invest in are well-positioned to weather any economic downturns, which, by the way, we could certainly see in the coming quarters as world economic growth continues to slow.

Experienced Management: Look for clean energy companies with experienced and qualified management teams as that can make all of the difference in the world in terms of long-term success.

Strong Growth Potential: Choose only clean energy companies with the potential for strong growth in the coming years. That means investing in companies that are operating in expanding markets and that have a strong track record of innovation and growth in market share.

One way to accomplish all of that is to examine the top holdings of the top clean energy ETFs such as the iShares Global Clean Energy ETF (ICLN).

The fund’s current top two holdings by allocation are First Solar Inc. (Nasdaq: FSLR) and Vestas Wind Systems (OTC: VWSYF). These two firms are led by seasoned management teams with a focus on innovation with both exhibiting strong growth potential in the global clean energy transition.

First Solar is a leading solar technology company and the only top-ten global solar manufacturer headquartered in the US that isn’t manufacturing its products in China. The company expects to have a global annual manufacturing capacity of over 20 gigawatts (GW) by 2025 via four US-based factories.

Mark Widmar, CEO of First Solar, said this on 31 October 2023:

“Since our last earnings call, we have made steady progress, establishing the foundations for our long-term growth journey, including investments in manufacturing and the infrastructure needed to rapidly evolve and scale our technology. Our growth is underpinned by our points of differentiation and solid market fundamentals, including continued strong demand for our products, proven manufacturing excellence, a uniquely advantaged technology platform, and, crucially, a balanced business model focused on delivering value to our customers and our shareholders.”

Vestas Wind Systems is a global leader in sustainable energy solutions with over 173 GW of wind turbines installed in 88 countries with management stating that its energy solutions have already prevented 1.9 billion tonnes of CO2 from being emitted into the atmosphere.

The company announced a return to profitability in Q3 2023 highlighted by wind turbine orders more than doubling year-over-year driven by strong demand for its turbines across the North American and European markets.

The iShares Global Clean Energy ETF and its top holdings are an excellent place to commence your own due diligence in the space. 

Yet, as with any investment, there are a number of risks associated with investing in clean energy stocks. Let’s take a look at a few of those now. 

Risks of Investing in Clean Energy Stocks

Regulatory Risk: Clean energy companies have exposure to government regulations, which are subject to change at any given time. Shifts in policy can negatively impact the profitability of certain clean energy companies. At present, US policy can be factored in as a positive as the Biden administration remains a staunch proponent of green energy solutions as a means of phasing out fossil fuels to the benefit of society.

Technological Risk: The clean energy sector is constantly evolving with new technologies emerging all of the time, which means certain clean energy stocks can be vulnerable to disruption by new technologies. That’s why you want to focus on clean energy companies that are recognized as bona fide innovators.  

Economic Risk: As noted earlier, clean energy companies have exposure to economic downturns as demand for their products and services may decline during periods of slow growth. Ensuring that you only invest in clean energy companies with healthy balance sheets can mitigate some of that economic risk factor.

In Summary

The clean energy transition is one of the most important trends of our time, and clean energy companies are at the very forefront of that transition. 

That makes select clean energy stocks a timely investment as they offer exposure to a rapidly growing industry where innovation is key.

We discussed many of the benefits and risks associated with clean energy investing, and we took a look at the top two holdings of the iShares Global Clean Energy ETF (ICLN): First Solar Inc. (Nasdaq: FSLR) and Vestas Wind Systems (OTC: VWSYF).

For those seeking a deeper dive into the sector, check out our brand-new, eye-opening video presentation on Clean Energy Investing in 2024. 

It’s the work of our own Nick Hodge of Foundational Profits who has a long-established history of finding hidden profit-gems in the energy space. 

He’s even written books on the subject including Energy Investing for Dummies, which he co-authored a full decade ago when the green energy push was just getting underway. 

Inside, Nick also reveals his Top-4 Picks for 2024 Gains from the space.

As you’ll soon discover, Nick’s insights go much, much deeper than just wind and solar. Nick also sees enormous growth potential from a select number of often overlooked subsectors of the clean energy market including uranium, rare earths, and lithium. 

Uranium, as just one example, just broke above US$100 per pound for the first time in 16 years with select small-caps starting to break out. 

So… if you’re interested in profiting from the clean energy renaissance as we kick off 2024, simply click this link for instant access to our brand-new video.

Yours in profits,

Mike Fagan
Editor, Daily Profit Cycle