11 Best Green Stocks To Invest In 2023
In this article, we discuss the 11 best green stocks to invest in 2023. To skip the detailed analysis of the renewable energy sector and the green movement, go directly to the 5 Best Green Stocks To Invest In 2023.
Renewable energy and its associated sources like wind and solar have become significant subjects of discussion, not only among everyday consumers but also within the realms of businesses, investors, and financial experts. With global warming escalating each moment, there is a growing fixation within the global community to mitigate the impact of rapid climate change and preserve the planet and its resources for future generations. The adoption of renewable energy is on the rise, emerging as the fastest-growing energy source globally. As such, a number of companies and countries have set their sights on achieving net zero carbon emissions by 2050.
Recent advancements have shown encouraging signs, with 2022 marking a record-breaking year for new renewable electricity capacity. As an illustration, approximately 340 gigawatts (GW) of capacity was added during the year. The implementation of significant policies in 2022, such as REPowerEU in the European Union, the Inflation Reduction Act (IRA) in the United States, and China’s 14th Five-Year Plan for Renewable Energy, will provide added impetus to expedite the deployment of renewable electricity in the upcoming years. Notably, in 2022, China accounted for nearly half of all investments in green energy. Their investment in clean energy amounted to $546 billion, surpassing the United States, which invested $141 billion during the same period. Additionally, the European Union recently secured a provisional agreement to increase the proportion of renewable energy to 42.5% by 2030, up from the current 32%. That said, the United States isn't lagging behind by any means. In the next decade, the nation's yearly renewable energy capacity has the potential to triple, reaching 110 gigawatts (GW), propelled by advancements in clean-energy legislation spurring increased investments in the sector.
In addition, the International Energy Agency (IEA) predicts a 3% annual increase in global electricity demand from 2023 to 2025, surpassing the growth rate seen in 2022. The firm highlights that over 70% of this surge will likely originate from China, Southeast Asia, and India. Concurrently, developed economies are striving to boost electricity production and decrease dependence on fossil fuels, particularly in heating and transportation sectors. The IEA also forecasts that renewable energy sources like solar and wind power, along with nuclear energy, will collectively cater to over 90% of the additional global demand by 2025.
To take advantage of the growth of the global renewable energy industry, investors can look towards notable names within the industry that reign as some of the best clean energy stocks, including the likes of Tesla, Inc. (NASDAQ:TSLA), General Electric Company (NYSE:GE), and NextEra Energy, Inc. (NYSE:NEE).
Our Methodology
Following an extensive analysis of the renewable energy sector, we identified 11 of the best clean energy stocks with the highest hedge fund ownership during the second quarter of 2023. The hedge fund sentiment for each stock was extracted from Insider Monkey's database, encompassing 910 top-tier hedge funds. Our selection specifically focused on stocks with significant involvement or infrastructure within the renewable energy sector.
11. Brookfield Renewable Partners L.P. (NYSE:BEP)
Number of Hedge Fund Holders: 13
Brookfield Renewable Partners L.P. (NYSE:BEP) is a publicly listed limited partnership that manages and oversees renewable power assets. The company's corporate headquarters are based in Toronto, Ontario, Canada. The Brookfield Corporation (NYSE:BN) holds a majority ownership of 60% in the partnership.
Earlier in June of this year, the green energy corporation revealed its decision to purchase Duke Energy Renewables, an integrated developer and operator of renewable power assets in the U.S. They have an impressive portfolio, including 5,900 megawatts of operational and under-construction wind, utility-scale solar, and storage assets, along with a 6,100 megawatt development pipeline. This acquisition is valued at $1.05 billion in equity proceeds, approximately $265 million net to Brookfield Renewable Partners L.P. (NYSE:BEP).
In Q2 2023, 13 hedge funds had a stake worth $108.36 million in Brookfield Renewable Partners L.P. (NYSE:BEP). Robert Joseph Caruso’s Select Equity Group was the most prominent hedge fund holder in the second quarter with over 3 million shares worth $89.789 million.
ClearBridge Investments made the following comment about Brookfield Renewable Partners L.P. (NYSE:BEP) in its Q4 2022 investor letter:
“Rising interest rates remain the key risk to renewables utility Brookfield Renewable Partners L.P. (NYSE:BEP), an underperformer in the fourth quarter, though we view Brookfield’s stable fundamentals (with >90% of contracted cash flows having an average term of 14 years), inflation protection (~70% of power purchase agreements are indexed to inflation) and long-term growth opportunities as attractive in the current environment. Brookfield’s balance sheet is also relatively well-protected against rising rates given it has 97% fixed-rate debt with an average term to maturity of 12 years.”
Much like Tesla, Inc. (NASDAQ:TSLA), General Electric Company (NYSE:GE), and NextEra Energy, Inc. (NYSE:NEE), Brookfield Renewable Partners L.P. (NYSE:BEP) is a prominent player in the race for renewable energy.
10. Fluence Energy, Inc. (NASDAQ:FLNC)
Number of Hedge Fund Holders: 19
Fluence Energy, Inc. (NASDAQ:FLNC) is a U.S.-based company specializing in renewable energy storage solutions and services. Additionally, they provide AI-powered digital applications tailored for renewable energy and storage purposes. Ranking among the best clean energy stocks to invest in, the company extends its services to approximately 47 international markets.
According to the 2023 Battery Energy Storage System Integrator Report by S&P Global Commodity Insights, Fluence Energy, Inc. (NASDAQ:FLNC) has secured the position of being one of the leading global suppliers of battery-based energy storage systems. This ranking is determined by the market share of projects that are either installed or in the planning stages. The report also highlights Fluence as one of the foremost storage providers in the U.S. market, holding a 22% market share based on the installed capacity measured in megawatts.
Fluence Energy, Inc. (NASDAQ:FLNC) experienced notable bullish sentiment from hedge funds during the second quarter of 2023 with a total of 19 hedge funds holding the company's stock, collectively amounting to a stake value of $143.776 million. Comparatively, in the preceding quarter, 13 hedge funds possessed shares of Fluence Energy, Inc. (NASDAQ:FLNC), with a combined value of $122.270 million.
9. Clearway Energy, Inc. (NYSE:CWEN)
Number of Hedge Fund Holders: 29
Clearway Energy, Inc. (NYSE:CWEN) stands as a major renewable energy proprietor in the United States, boasting an impressive portfolio of over 5,500 net MW from installed wind and solar generation projects. The company possesses a varied collection of contracted assets in the United States, encompassing both renewable and traditional power generation as well as thermal infrastructure. This assortment, which includes fossil fuel, solar, and wind power facilities with the capability to cater to over two million residences and enterprises in the United States, makes Clearway Energy, Inc. (NYSE:CWEN) a prominent clean energy stock.
Clearway Energy (NYSE:CWEN) saw a 10% increase in October 6 trading following an upgrade by Bank of America from Neutral to Buy, accompanied by a price target of $27. This upgrade is based on the anticipation of rising power prices in California. Julien Dumoulin-Smith from BofA noted the potential for significant upside, citing the higher pricing in California's power markets related to resource adequacy. He believes this will drive dividend growth above the average and effectively counterbalance the impacts of increased interest rates.
As of the close of Q2 2023, 29 hedge funds in Insider Monkey’s database reported having stakes in Clearway Energy, Inc. (NYSE:CWEN), worth collectively $114.9 million. This is compared to 25 hedge funds in the previous quarter that held stakes valued at $106.18 million.
8. SolarEdge Technologies, Inc. (NASDAQ:SEDG)
Number of Hedge Fund Holders: 43
SolarEdge Technologies, Inc. (NASDAQ:SEDG) is an Israeli solar technology company based in Herzliya. It provides a variety of different products such as solar inverters, optimizers, and energy management systems. Established in 2006, SolarEdge Technologies, Inc. (NASDAQ:SEDG) developed a DC optimized inverter system and was among the first to successfully commercialize Power Optimizers, making it one of the best clean energy stocks to look out for.
SolarEdge Technologies, Inc. (NASDAQ:SEDG) disclosed its Q2 non-GAAP EPS of $2.79 on August 1, surpassing market expectations by $0.23. The company experienced a notable 36.2% year-over-year revenue growth, reaching $991.29 million. However, it slightly missed the Street consensus by $4.6 million.
According to Insider Monkey’s second quarter database, SolarEdge Technologies, Inc. (NASDAQ:SEDG) was part of 43 hedge fund portfolios, compared to 42 in the prior quarter. D E Shaw is the largest stakeholder of the company, with 1.50 million shares worth $404.65 million.
Here is what ClearBridge International Growth EAFE Portfolio has to say about SolarEdge Technologies, Inc. (NASDAQ:SEDG) in its Q2 2022 investor letter:
“We are well-positioned to participate in the accelerating energy transition. High and rising utility costs combined with policy support are driving increased penetration of home solar plus storage systems in Europe. Israel-based SolarEdge Technologies (NASDAQ:SEDG) expects to see significant growth in solar installations in this market led by Germany and Italy, among others, where consumers are not only demanding solar on the roof but a complete system solution including batteries. This phenomenon is accelerating revenue growth for these companies.”
7. Constellation Energy Corporation (NASDAQ:CEG)
Number of Hedge Fund Holders: 46
Constellation Energy Corporation (NASDAQ:CEG) is an American firm specializing in providing electric power, natural gas, and energy management services throughout the United States. The company delivers utility services to its customer base utilizing various energy sources such as fossil fuels, nuclear energy, and renewables. Established in 1999, Constellation Energy Corporation (NASDAQ:CEG) has its headquarters in Baltimore, Maryland.
On August 3, Constellation Energy Corporation (NASDAQ:CEG) reported robust Q2 results, achieving a GAAP EPS of $2.56, significantly surpassing estimates by an impressive margin of $1.94. Moreover, its revenue of $5.45 billion exceeded forecasts by $900 million.
In Q2 2023, Constellation Energy Corporation (NASDAQ:CEG) stock was held by 46 hedge funds, amounting to a combined value of $1.85 billion. William B. Gray's Orbis Investment Management was the firm's largest shareholder for the quarter, with a stake worth approximately $495.38 million.
6. Enphase Energy, Inc. (NASDAQ:ENPH)
Number of Hedge Fund Holders: 50
Enphase Energy, Inc. (NASDAQ:ENPH) is a company based in California, specializing in clean energy technology. The company provides a range of products including solar micro-inverters, EV charging stations, and battery energy storage solutions. A market leader with products in over 140 countries worldwide, Enphase Energy, Inc. (NASDAQ:ENPH) reigns as one of the best clean energy stocks to buy.
On September 21, Seaport Research upgraded Enphase Energy, Inc. (NASDAQ:ENPH) from Neutral to Buy, setting a price target of $180. The research firm highlighted the company's expected benefits from ongoing share repurchases, growth in the European solar market, and "a clear emergent recovery in U.S. residential solar installations."
According to the Insider Monkey database, 50 hedge funds were bullish on Enphase Energy, Inc. (NASDAQ:ENPH) in the second quarter of 2023. Of these, Philippe Laffont's Coatue Management is the company's leading shareholder, with stakes worth roughly $102.5 million.
Here’s what Carillon Tower Advisers said about Enphase Energy, Inc. (NASDAQ:ENPH) in its second-quarter 2023 investor letter:
“Enphase Energy provides solar microinverters and energy storage solutions. The company’s shares lagged benchmark counterparts amid concerns surrounding a near-term moderation in the growth of residential solar installation in the United States. Despite this, the company possesses a market-leading position in its core microinverter product and remains wellpositioned over the long term to benefit from ongoing solar adoption trends. Additionally, Enphase is focused on growing its international presence while also unveiling new products that could provide the next tailwind to its growth story.”
Similar to Tesla, Inc. (NASDAQ:TSLA), General Electric Company (NYSE:GE), and NextEra Energy, Inc. (NYSE:NEE), Enphase Energy, Inc. (NASDAQ:ENPH) ranks high among the best clean energy stocks to invest in.
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Disclaimer: None. 11 Best Green Stocks To Invest In 2023 is originally published on Insider Monkey.
