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Companies That Will Benefit From Climate Change: 10 Stocks to Watch

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·9 min read
In this article:
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  • TPIC
  • PLUG
  • BEP
  • TSLA
  • SUNW
  • GOOGL
  • AMZN

In this article, we discuss the 10 companies that will benefit from the climate problem. If you want to skip our detailed analysis of these stocks, go directly to Companies That Will Benefit From Climate Change: 5 Stocks to Watch.

Climate change is not only threatening the long-term future of our planet but the rapid and intensifying nature of the climate problem is now threatening the financial well-being of people across the world as well. According to a report by Swiss Re Institute, a data-driven research firm, if world temperatures rise by 3.2 degrees Celsius in the next three decades, more than 18% of the global Gross Domestic Product (GDP) would be wiped out. Asian economies, fast becoming the backbone of the world economy, will be hardest hit by this crisis.

The urgency of the situation has led to awareness campaigns and even businesses have started to incorporate Environment, Social, and Governance (ESG) protocols in their operations. Some of the top companies in this regard include Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), Tesla, Inc. (NASDAQ:TSLA) and Alphabet Inc. (NASDAQ:GOOG), among others discussed in detail below. Business in climate change tech has also exploded, with electric vehicles, solar plants, and clean energy firms leading the way.

Coherent Market Insights, a business management consultant, has forecast that the global climate change consulting market will grow at a compound annual growth rate of 4% in the next seven years to increase in value to over $8 billion by 2028. Sectors like manufacturing, mining, and even services will turn to climate change consultants to improve their ESG profiles as a strategic step against the climate crisis. Risk management, especially related to climatic factors, is becoming more popular as well.

As the world population grows, forecast to hit 10 billion by 2050, most of the people would be living in countries that are most vulnerable to climate crisis, like South Asia, Africa, and Australia. Climate change business is a booming sector in these regions, with EV-based transport, as well as solar and wind-based energy solutions, becoming essential to survival as temperatures rise. Investors who want exposure to companies that stand to benefit from climate change should check out the discussion below.

Matthew J Thomas/Shutterstock.com

Our Methodology

The companies listed below stand to benefit the most as world temperatures rise, water levels go up, and fossil fuels go out of fashion. In order to provide readers with some more context for their investment choices, the business fundamentals and analyst ratings of each stock were also considered. The hedge fund sentiment around each company was calculated using the data of 867 hedge funds tracked by Insider Monkey.

Companies That Will Benefit From Climate Change: Stocks to Watch

10. Sunworks, Inc. (NASDAQ:SUNW)

Number of Hedge Fund Holders: 8

Sunworks, Inc. (NASDAQ:SUNW) makes and sells photovoltaic-based power systems. The stock stands to benefit from the recent approval of the Infrastructure Plan that has set aside investment, tax breaks, and other incentives to accelerate clean energy adoption in the US.

Sunworks, Inc. (NASDAQ:SUNW) has a market cap of $141 million and posted $37 million in revenue last year. It was founded in 2002. The 52-week price range of the stock lies between $3.7 and $29.3.

At the end of the third quarter of 2021, 8 hedge funds in the database of Insider Monkey held stakes worth $3.3 million in Sunworks, Inc. (NASDAQ:SUNW), up from 5 in the previous quarter worth $3 million.

Just like Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOG), Sunworks, Inc. (NASDAQ:SUNW) is one of the stocks that stands to benefit from climate change.

9. Brookfield Renewable Partners L.P. (NYSE:BEP)

Number of Hedge Fund Holders: 17

Brookfield Renewable Partners L.P. (NYSE:BEP) is a renewable power generating company. It has interests in power generation through hydroelectric, wind, and solar. Investments in renewable energy are soaring as climate change leads to the decline of fossil fuels.

In September, investment advisory Raymond James upgraded Brookfield Renewable Partners L.P. (NYSE:BEP) stock to Outperform from Market Perform and raised the price target to $44 from $41, noting that the firm had materially improved since last year.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Select Equity Group is a leading shareholder in Brookfield Renewable Partners L.P. (NYSE:BEP) with 72,425 shares worth more than $2.6 million.

In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Brookfield Renewable Partners L.P. (NYSE:BEP) was one of them. Here is what the fund said:

“U.S. renewables utility Brookfield Renewable was another detractor. Brookfield Renewable is a pure-play renewables operator and developer headquartered in Canada and domiciled in the U.S., focused on international hydro, solar, wind and storage technology. As more private and public institutions announce ambitious carbon reduction initiatives, Brookfield Renewable’s globally diversified, multi-technology renewables business makes it an attractive partner. Its development pipeline stands at 18,000 megawatts, providing confidence the company can meet its targeted double-digit cash flow growth through to 2025. Shares moderated amid expectations of rising bond yields, and a cool-off on the green trade.”

8. TPI Composites, Inc. (NASDAQ:TPIC)

Number of Hedge Fund Holders: 19

TPI Composites, Inc. (NASDAQ:TPIC) markets wind blades and other systems used by wind energy farms. The future for the firm looks exceedingly bright as countries across the world turn to wind energy farms, a key source of revenue for the firm, to solve energy problems while keeping environmental damage to a minimum.

BTIG analyst Gregory Lewis has a Buy rating on TPI Composites, Inc. (NASDAQ:TPIC) stock with a price target of $25. In an investor note, the analyst predicted modest revenue and margin growth for the company in the first half of 2022.

Among the hedge funds being tracked by Insider Monkey, London-based investment firm Greenvale Capital is a leading shareholder in TPI Composites, Inc. (NASDAQ:TPIC) with 1.7 million shares worth more than $58 billion.

In its Q4 2020 investor letter, Wasatch Micro Cap Value Fund highlighted a few stocks and TPI Composites, Inc. (NASDAQ:TPIC) was one of them. Here is what the fund said:

“TPI Composites, Inc. (TPIC) was also a large contributor. Occasionally, we’re asked how our holdings measure up to the priorities of the Democratic Party. In general, we believe a strong company will thrive regardless of which political party is in power. But it’s possible some of our holdings will align particularly well with the incoming Democratic agenda. TPI Composites is a good example of a company that’s well-positioned for green-energy initiatives. The company designs and manufactures composite wind blades for wind energy. The stock was up strongly after TPI announced third-quarter net sales had increased 23.5% compared to the year-ago period. We believe some of this increase was due to the resumption of business that had been postponed during the height of the Covid anxiety. We’d like to find more alternative-energy companies to invest in, but it’s often difficult to uncover companies in this segment that meet our valuation and business-quality standards.”

7. Plug Power Inc. (NASDAQ:PLUG)

Number of Hedge Fund Holders: 20

Plug Power Inc. (NASDAQ:PLUG) markets hydrogen fuel cell solutions. These solutions are becoming more popular as new energy vehicles hit the roads. As the adoption of these vehicles increases due to climate change fears, the company stands to directly benefit.

Morgan Stanley analyst Stephen Byrd recently raised the price target on Plug Power Inc. (NASDAQ:PLUG) stock to $65 from $43 and kept an Overweight rating, backing the firm to grow hydrogen production and electrolyzer business in the coming months.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm DE Shaw is a leading shareholder in Plug Power Inc. (NASDAQ:PLUG) with 7.5 million shares worth more than $192 million.

In its Q2 2020 investor letter, Massif Capital, an asset management firm, highlighted a few stocks and Plug Power Inc. (NASDAQ:PLUG) was one of them. Here is what the fund said:

“We also closed our short position in Plug Power this quarter as the market was subsumed with enthusiasm over their recent acquisitions, resulting in an almost 80% rally in the stock over ten trading days. Our decision to exit was painful at the time as we were forced to reconcile with a collective exuberance that was (and is, in our opinion) not grounded reality. In hindsight, it was the correct decision as we avoided most of its recent vertical trajectory.”

6. Tesla, Inc. (NASDAQ:TSLA)

Number of Hedge Fund Holders: 60

Tesla, Inc. (NASDAQ:TSLA) is an electric vehicle and clean energy firm headquartered in California. With EV and battery power sales surging across the world, mostly with regards to the climatic effects of fossil fuel based solutions, the company has emerged as the most valuable name within the climate change industry in the past few years.

Wedbush analyst Daniel Ives recently maintained an Outperform rating on Tesla, Inc. (NASDAQ:TSLA) stock and raised the price target to $1,400 from $1,100, noting that the company was leading the way in the $5 trillion EV market.

At the end of the third quarter of 2021, 60 hedge funds in the database of Insider Monkey held stakes worth $10 billion in Tesla, Inc. (NASDAQ:TSLA), the same as in the previous quarter worth $9 billion.

Along with Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOG), Tesla, Inc. (NASDAQ:TSLA) is one of the stocks that has the potential to grow as the climate changes.

Here is what Baron Partners Fund has to say about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2021 investor letter:

“Tesla, Inc. designs, manufactures, and sells fully electric vehicles, solar products, energy storage solutions, and battery cells. The stock fell during the quarter as a result of general market dynamics and a potential production slowdown due to parts shortages. A refreshed S/X and China Model Y ramp could also have a negative impact on margins in early 2021. We anticipate strong growth and improved margins driven by new production capacity, manufacturing efficiencies, localization of its manufacturing and supply chain, and maturation of Tesla’s full self-driving technology.”

To see the rest of the stocks click to continue: Companies That Will Benefit From Climate Change: 5 Stocks to Watch.

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Disclosure. None. Companies That Will Benefit From Climate Change: 10 Stocks to Watch is originally published on Insider Monkey.