12 Best Green Stocks To Invest In 2024
In this article, we discuss 12 best green stocks to invest in 2024. If you want to skip our detailed discussion on the clean energy industry, head directly to 5 Best Green Stocks To Invest In 2024.
In 2023, the solar energy market saw positive growth, while the wind energy sector faced significant challenges. Wind energy projects struggled with rising costs for materials, labor, and capital, as well as delays in interconnection, permits, and transmission. However, there was some relief in the supply chain as new clean energy and climate laws came into effect. Federal investments in clean energy and increasing demand for decarbonization from both public and private sectors are driving forces for renewables. These factors are expected to help renewables overcome obstacles in 2024 to meet climate targets, as per Deloitte. 2024 is expected to see varying speeds of growth across renewable technologies, industries, and markets. The Energy Information Administration predicts a 17% growth in renewable deployment, reaching 42 gigawatts in 2024, which would account for nearly a quarter of electricity generation.
According to S&P Global Commodity Insights, investments in clean energy technology are projected to reach nearly $800 billion in 2024, a 10% to 20% increase from 2023. Solar energy is expected to receive the largest share of this investment, accounting for around 55% of the total. Onshore wind will see significant investment as well, although at a slower growth rate. The fastest-growing sectors are anticipated to be battery energy storage and electrolysis.
Despite increasing costs for offshore wind and hydrogen energy, decreasing raw material prices are likely to lead to a continued decline in the average cost of clean energy technologies in 2024. Solar and battery costs have already dropped significantly since 2022 and are expected to fall below 2020 levels in 2024. While solar and battery manufacturers have enjoyed healthy margins, they are expected to face lower margins in the coming years. Downstream players, such as distributors and installers, may face challenges due to high inventories and declining prices. The oversupply and decreasing raw material prices in solar modules and batteries led to a price war in the second half of 2023, with further market consolidation expected in 2024. The global wind turbine supply market is historically divided between Chinese manufacturers serving the domestic market and Western firms catering to the rest of the world.
On a more positive note, one of the key commitments from COP28 is to triple global renewables capacity by 2030 to 11 terawatts. This initiative aims to reduce the reliance on fossil fuels in global energy production. The pledge is part of a broader effort to decarbonize the energy sector, which is responsible for about three-quarters of global greenhouse gas emissions. Sultan al-Jaber, the United Arab Emirates' COP28 summit President, said:
"This can and will help transition the world away from unabated coal."
Led by the European Union, the United States, and the United Arab Emirates, the pledge also includes plans to expand nuclear power, reduce methane emissions, and limit private finance for coal power. The goal of tripling renewable energy capacity is to eliminate CO2-emitting fossil fuels from the world's energy system by 2050 at the latest.
In this article, we discuss the best green stocks to invest in 2024, including General Electric Company (NYSE:GE), NextEra Energy, Inc. (NYSE:NEE), and PG&E Corporation (NYSE:PCG).
Our Methodology
Green stocks refer to renewable energy, energy storage, battery, and electric vehicle stocks, which were selected based on overall hedge fund sentiment toward each stock. We have assessed the hedge fund sentiment from Insider Monkey’s database of 933 elite hedge funds tracked as of the end of the fourth quarter of 2023. The list is arranged in ascending order of the number of hedge fund holders in each firm. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
A photovoltaic field at dawn, its solar panels shimmering in the light of a new day.
Best Green Stocks To Invest In 2024
12. Albemarle Corporation (NYSE:ALB)
Number of Hedge Fund Holders: 27
Albemarle Corporation (NYSE:ALB) creates, produces, and sells specialty chemicals all over the world. The company’s operations are divided into three segments – Energy Storage, Specialties, and Ketjen. The Energy Storage unit provides lithium compounds, services for handling reactive lithium products, and recycles lithium-containing by-products. The Specialties segment offers bromine-based chemicals, lithium specialties, cesium products for the chemical and pharmaceutical sectors, and zirconium, barium, and titanium products for pyrotechnics like airbag initiators. The Ketjen segment focuses on clean fuel technologies. Albemarle Corporation (NYSE:ALB) is one of the best clean energy stocks.
On February 22, Albemarle Corporation (NYSE:ALB) declared a $0.40 per share quarterly dividend, in-line with previous. The dividend is to be paid on April 1 to shareholders on record as of March 15.
According to Insider Monkey’s fourth quarter database, 27 hedge funds were bullish on Albemarle Corporation (NYSE:ALB), down from 37 funds in the preceding quarter. Philippe Laffont’s Coatue Management held a significant position in the company, with 591,603 shares worth $85.47 million.
In addition to General Electric Company (NYSE:GE), NextEra Energy, Inc. (NYSE:NEE), and PG&E Corporation (NYSE:PCG), Albemarle Corporation (NYSE:ALB) is one of the best clean energy stocks.
The London Company Large Cap Strategy stated the following regarding Albemarle Corporation (NYSE:ALB) in its fourth quarter 2023 investor letter:
“Albemarle Corporation (NYSE:ALB) – ALB underperformed as weak lithium prices drove downward revisions to earnings expectations, and sentiment became more negative regarding demand for electric vehicles. Commodity prices are inherently uncertain, but we continue to view ALB-as a winner in this growing industry and favorably positioned on the cost curve. Our long- term view of ALB is not affected by short-term supply- demand dynamics for the commodity.”
11. Fluence Energy, Inc. (NASDAQ:FLNC)
Number of Hedge Fund Holders: 28
Fluence Energy, Inc. (NASDAQ:FLNC) provides energy storage solutions, services, and AI-powered software for renewable energy and storage projects worldwide. Their products include integrated hardware, software, and digital intelligence. Fluence Energy, Inc. (NASDAQ:FLNC) serves the Americas, Asia Pacific, Europe, the Middle East, and Africa. It is one of the best clean energy stocks.
On February 7, Fluence Energy, Inc. (NASDAQ:FLNC) announced financial results for the first quarter of fiscal year 2024. The company reported a GAAP EPS of -$0.14 and a revenue of $364 million.
According to Insider Monkey’s fourth quarter database, 28 hedge funds were bullish on Fluence Energy, Inc. (NASDAQ:FLNC), up from 17 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is the largest shareholder of the company, with 2.28 million shares valued at $54.45 million.
Here is what ClearBridge Investments Value Equity Strategy has to say about Fluence Energy, Inc. (NASDAQ:FLNC) in its Q4 2021 investor letter:
“During the quarter we participated in the initial public offering of Fluence Energy, one of the market leaders in the rapidly growing electricity storage market. Energy storage is set to become one of the key areas of investment for energy transition given the intermittency of renewables. Current estimates project spending on energy storage will grow from roughly $5 billion per year currently to $50 billion annually over the coming decades. As this spending ramps up, we expect Fluence’s revenues to grow well above 20% over the next several years and allow the business to scale profitably. Based on the IPO price, Fluence was valued at roughly 2x forward revenues and less than market multiples on cash flow and earnings by mid-decade in our base case scenario. With over 20% market share the stock is well-positioned to follow growth higher, especially if Fluence can enhance its business model with services revenues and a software offering to handle the growing complexity of an increasingly digital grid.
10. Array Technologies, Inc. (NASDAQ:ARRY)
Number of Hedge Fund Holders: 32
Array Technologies, Inc. (NASDAQ:ARRY) is one of the best clean energy stocks. It produces and markets ground-mounted tracking systems for solar energy projects globally, including in the United States, Spain, Brazil, and Australia. The company has two segments – Array Legacy Operations and STI Operations. It was established in 1989 and is based in Albuquerque, New Mexico.
On November 7, Array Technologies, Inc. (NASDAQ:ARRY) announced a Q3 non-GAAP EPS of $0.21, outperforming market consensus by $0.08. Its revenue came in at $350.4 million, missing estimates by $26.53 million.
According to Insider Monkey’s fourth quarter database, 32 hedge funds were bullish on Array Technologies, Inc. (NASDAQ:ARRY), compared to 40 funds in the prior quarter. Herbert Frazier’s Hill City Capital held the largest position in the company, with 8.84 million shares worth approximately $148.52 million.
Here is what ClearBridge Investments has to say about Array Technologies, Inc. in its Q2 2021 investor letter:
“Commodity price increases have led to margin pressure across industries, and in some cases have altered our thesis for holding a company. This was the case this quarter with top detractor Array Technologies, an equipment manufacturer that makes trackers and associated software for ground-mounted solar projects, which we sold and may revisit again in the future. Margins also came under pressure for pasture-raised eggs company Vital Farms, due to an increase in commodity prices that it was unable to pass through to end customers. This aspect of the business model is being re-evaluated by management; we saw better opportunities elsewhere and sold our position.”
9. Nextracker Inc. (NASDAQ:NXT)
Number of Hedge Fund Holders: 33
Ranking 8th on our list of the best clean energy stocks is Nextracker Inc. (NASDAQ:NXT), an energy solutions firm, which delivers solar tracker and software solutions for utility-scale and distributed solar projects globally. On January 31, Nextracker Inc. (NASDAQ:NXT) announced financial results for the third quarter of fiscal year 2024. The company reported a non-GAAP EPS of $0.96 and a revenue of $710.43 million, outperforming Wall Street estimates by $0.47 and $92.94 million, respectively.
According to Insider Monkey’s fourth quarter database, 33 hedge funds were bullish on Nextracker Inc. (NASDAQ:NXT), up from 26 funds in the preceding quarter.
8. Sunrun Inc. (NASDAQ:RUN)
Number of Hedge Fund Holders: 35
Sunrun Inc. (NASDAQ:RUN) is one of the best clean energy stocks, and is involved in the design, development, installation, sale, and maintenance of residential solar energy systems across the United States. The company also provides battery storage options alongside solar systems and offers services to commercial developers, including multi-family and new homes.
On February 23, Sunrun Inc. (NASDAQ:RUN) revealed the pricing details of $475 million in total principal amount for their 4.00% convertible senior notes due in 2030, which were offered in a private placement.
According to Insider Monkey’s fourth quarter database, 35 hedge funds were bullish on Sunrun Inc. (NASDAQ:RUN), an increase from 26 funds in the last quarter. William B. Gray’s Orbis Investment Management is the largest position holder in the company, with 14.2 million shares valued at $279 million.
Here is what Horizon Kinetics has to say about Sunrun Inc. (NASDAQ:RUN) in its Q2 2021 investor letter:
“What this table did not cover is valuation. What’s expensive, what’s cheap? A good business that is too expensive is not a good investment. The most expensive business in the table is Sunrun. Sunrun is the nation’s largest residential rooftop solar panel system seller/installer. Sunrun’s valuation might also shed Thumbnail valuation.
To start at the top of the income statement, Sunrun shares trade at 10.3x revenues. The most profitable company in the S&P 500, Microsoft, trades at 13x revenues. Sunrun operates at a loss. Obviously, not only is tremendous growth anticipated, but tremendous profitability, too.
Let’s simply accept that investors have correctly anticipated Sunrun’s future success and make that the starting point for a valuation exercise.
If, 10 years from now, Sunrun is ultimately valued at 25x net income, and if today’s $9.5 billion valuation is appropriate, that would require $380 million of net income ($9,500 million ÷ 25).
Let’s say Sunrun will have the same net profit margin as the average S&P 500 company, which is 10%. That means it would need $3,800 million of sales to generate that level of earnings ($380 mill ÷ 10%).
Since sales are now $920 million, they would have to rise by 4.1x in the next 10 years. That would require annual sales growth of 15.2%.
You see how neatly that all works: investors accept the company’s 10-year, 15% annual sales growth projections, and if a 10% net profit margin and a P/E of 25x earnings are reasonable, then the company will have a $9.5 billion market cap at that time. Except that is the current price. That means a 10-year return of zero.
In order to get a 10% annualized return from the stock, Sunrun would need to be priced at a P/E of 65x its earnings 10 years from now, if at a 10% net margin. Or it would have to have some combination of lower P/E and higher growth and/or higher profit margin.
In the meantime, this is Sunrun’s recent pattern of revenue growth and profitability (the company did recently increase its estimate of installed-capacity growth in 2021 from 20-25% to a new estimate of 25% to 30%).
For the time being, Sunrun loses an extraordinary amount of money, an amount that has been getting larger. Perhaps there are economies of scale that will manifest in the future, so that it will attain profitability. Perhaps from the roughly one-half of Sunrun’s revenues that are from long-term customer service agreements that run up to 25 years. For now, though, the company would seem to require a lot of external financing, and that is one of the greatest business risks.”
7. Constellation Energy Corporation (NASDAQ:CEG)
Number of Hedge Fund Holders: 41
Constellation Energy Corporation (NASDAQ:CEG) produces and sells electricity across the United States. Their operations are divided into five segments – Mid-Atlantic, Midwest, New York, ERCOT, and Other Power Regions. The company possesses over 32,000 megawatts of generating capacity via nuclear, wind, solar, natural gas, and hydroelectric assets.
On November 6, Constellation Energy Corporation (NASDAQ:CEG) reported a Q3 GAAP EPS of $2.26, beating estimates by $1.23, and a revenue of $6.11 billion, missing market consensus by $1.01 billion.
According to Insider Monkey’s fourth quarter database, 41 hedge funds were bullish on Constellation Energy Corporation (NASDAQ:CEG), in contrast to the prior quarter when 45 funds had invested in the stock. William B. Gray’s Orbis Investment Management is the largest shareholder of the company, with 6.15 million shares valued at $718.88 million.
Like General Electric Company (NYSE:GE), NextEra Energy, Inc. (NYSE:NEE), and PG&E Corporation (NYSE:PCG), Constellation Energy Corporation (NASDAQ:CEG) is one of the best clean energy stocks to invest in 2024. It ranks 6th on our list.
Sound Shore Management made the following comment about Constellation Energy Corporation (NASDAQ:CEG) in its Q3 2023 investor letter:
“On the plus side of the ledger, we had strong contributions from independent power producers Vistra and Constellation Energy Corporation (NASDAQ:CEG). Both stocks surged with higher US electricity prices as strong summer demand exposed reliability issues in many regions of the nation’s electric grid. Meanwhile, Midwest focused Constellation is the biggest producer of carbon-free electricity in the US with nuclear power plants representing the majority of its capacity. We added the name in January 2023 when the stock was trading at a below normal 15 times earnings. Our research identified an upside to earnings power from maturing hedges and regulatory changes, including the Inflation Reduction Act’s nuclear credit. A recent spinout from Exelon Corp, we viewed the strength of Constellation’s clean, reliable baseload power model as an appealing and high potential offering for residential and commercial customers. The company’s recent contract to supply Microsoft at premium power prices is evidence of the opportunity. Constellation is yet another example of an industry undergoing tremendous change that can offer attractive investment opportunities for investors with patience and a research process to uncover specific companies that are well positioned.”
6. Enphase Energy, Inc. (NASDAQ:ENPH)
Number of Hedge Fund Holders: 43
Enphase Energy, Inc. (NASDAQ:ENPH) creates home energy solutions for the solar industry worldwide. The company’s products include semiconductor-based microinverters that convert energy at the solar module level. These microinverters are integrated with proprietary networking and software technologies, enabling energy monitoring and control. Enphase Energy, Inc. (NASDAQ:ENPH) is one of the best clean energy stocks.
On February 7, Enphase announced that it anticipates an increase in demand for its products in the second quarter, particularly in Europe. The company projects improved revenue numbers in June 2024, attributing the positive outlook to seasonally better sell-through numbers, especially in the European market where demand is on the rise.
According to Insider Monkey’s fourth quarter database, 43 hedge funds were bullish on Enphase Energy, Inc. (NASDAQ:ENPH), compared to 40 funds in the last quarter. D E Shaw held a significant position in the company, with 1.06 million shares worth $140.37 million.
ClearBridge Sustainability Leaders Strategy made the following comment about Enphase Energy, Inc. (NASDAQ:ENPH) in its Q3 2023 investor letter:
“Against this backdrop the Strategy underperformed, with the majority of detractors renewable- or utility-related companies suffering largely from cyclical interest rate pressures that have pushed up financing costs for the companies and weighed on income-producing sectors such as utilities. Most acutely, higher interest rates have dampened near-term U.S. residential solar demand, hurting Enphase Energy, Inc. (NASDAQ:ENPH) in particular. As a result, we sold Enphase, and invested proceeds into SolarEdge Technologies, which has greater exposure to European and utility-scale end markets, which are under comparatively less pressure.”
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Disclosure: None. 12 Best Green Stocks To Invest In 2024 is originally published on Insider Monkey.
