There’s been a lot of buzz around green/environmental technology in recent years, and for good reason. The glacial move toward electric vehicles over the past decades has suddenly exploded, with cars like Tesla dominating the landscape and EV charging stations springing up all over. Renewable energy sources such as wind and solar power are also gaining momentum.
However, as anyone who follows the markets will tell you, what seem like good ideas in the real world don’t always translate to the best investments on Wall Street. Especially in emerging areas like these, it can be hard to select the ultimate winners. Until technology becomes proven, the stocks can be extremely volatile. This is why it can be a good strategy to buy a mutual fund or ETF, or at least a basket of stocks, to dampen down your risk when looking at green tech investments.
With that in mind, here’s a list of some of the most prominent players in the industry, along with the most prominent ETF, to give you some ideas that you can research further on your own or discuss with your financial advisor.
NextEra Energy (NEE)
- Price as of Oct. 31, 2023: $58.13
NextEra Energy’s primary business is generating, selling and transmitting electrical energy in Florida. However, it’s got a lot of green investors excited about its growing renewable energy division, which produces wind and solar energy in addition to being involved with green hydrogen and battery storage.
While not quite a pure play on green tech, as a diversified energy company, NextEra can rely on the consistent earnings from its traditional electrical power generation while building out its wind and solar units, which analysts see as the key drivers for NextEra’s long-term growth.
NextEra’s management projects that it will grow earnings for 2025 and 2026 in the 6% to 8% range from 2024.
Enphase Energy (ENPH)
- Price as of Oct. 31, 2023: $79.06
Enphase is much more of a pure-play green tech company than NextEra, but that singular focus makes the stock extremely volatile. YTD in 2023, for example, the stock is down a whopping 69%, but long-term investors have still reaped huge rewards. On the back of gains of 475% in 2018 and 437% in 2020, the stock has still posted an incredible 1,859.43% return over the past five years, even after its disastrous 2023.
Enphase’s primary business is to be a “one-stop shop” for solar products, from microinverters to battery storage to EV charging to apps and monitoring software. Although the company posted sour earnings results on Oct. 26, 2023, analysts still have a consensus “strong buy” on Enphase, with an average 12-month price target of $120.29, roughly 50% above current levels.
First Solar (FSLR)
- Price as of Oct. 31, 2023: $139.75
Unlike many solar companies, First Solar doesn’t produce its product in China. In fact, First Solar has the Western Hemisphere’s largest solar manufacturing footprint in Ohio, with three plants. An additional manufacturing facility is slated to open in the U.S. Southeast in 2025.
First Solar is betting big on international growth, particularly in Europe. In its most recent annual report, the company said, “Most markets across Europe reflect strong demand for photovoltaic (PV) solar energy due to its ability to compete economically with more traditional forms of energy generation and, more recently, as a means to establish greater energy independence.”
First Solar has only given back about 4% of the 72% it gained in 2022, even after selling off roughly 31% in the past three months, so it’s holding up much better in the current environment than Enphase. Analysts have a consensus “strong buy” on the stock, with a 12-month average price target about 70% higher than current levels.
Vestas Wind Systems A/S (OTC: VWDRY)
- Price as of Oct. 31, 2023: $7.11
Sometimes, governmental action can put a company into play. Vestas Wind Systems fits into that category. While still a speculative stock with no profits, Vesta Wind Systems is hoping to benefit from the Biden Administration’s goal of having 30 gigawatts of wind energy from large farms off the U.S. coast by 2023. This may or may not have a direct effect on the business of Vestas Wind Systems, but it marks the first concrete step the U.S. is taking towards generating more wind energy, where it has been a laggard compared with countries in Europe and Asia.
Still, as one of the world’s largest manufacturers of wind turbines, Denmark-based Vestas should benefit if global wind energy demand increases. But the stock isn’t for the faint of heart, suffering losses of 35% in 2021, 5% in 2022 and an additional 25% thus far in 2023.
The company doesn’t have any analyst coverage, and while revenues are growing, losses are still mounting. In its most recent interim Q2 2023 report, the company posted a quarterly loss of 115 million euros. For speculators believing in the future of wind energy — and the risk tolerance to take big losses — Vestas Wind Systems could be an interesting play.
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