Environmental Services Sector

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>>> 15 Best Environmental Stocks To Invest In


Insider Monkey

by Syed Ijaz

November 20, 2023


https://finance.yahoo.com/news/15-best-environmental-stocks-invest-143941826.html


In this piece, we will take a look at the 15 best environmental stocks to invest in. To know more about the top stocks, go directly to 5 Best Environmental Stocks To Invest In.

Environmental stocks have become a global subject of discussion as organizations, governments, and regulatory bodies are highly concerned about global warming and increasing carbon footprints. Around the world, companies are devising policies to cut their carbon emissions and adopt more favorable methods including switching their operations to renewable and electric energies. Over time, environmental, social, and governance practices are being implemented widely and firms are allocating a portion of their budgets to ESG activities. Environmental stocks are shares of firms that are focused on sustainability, renewable energy, energy efficiency, and other green initiatives. Out of all the approaches toward sustainability and mitigating environmental hazards, electric vehicles, and renewable energy offer a way out. Since the manufacturing of electric vehicles is growing globally, a couple of firms in our list of the best environmental stocks belong to the EVs sector. Chinese companies have earned a big name in the EVs industry as a lot of Chinese firms are putting their capital into the production of electric cars.

The electric vehicle market is growing exponentially. According to the International Energy Agency, a total of 14% of automobiles sold globally last year were EVs, up from 9% in the prior year. In the first quarter of this year, more than 2.3 million EVs were sold around the globe, while the agency expects around 14 million in sales by the end of 2023. Outside Europe and North America, Asian regions are also seeing an increase in EV production. For instance, India, Thailand, and Indonesia collectively witnessed 80,000 sales of EVs in 2022 which was more than three times compared to 2021. Looking ahead, China maintains its ranking as the biggest market for electric cars with 40% of consolidated sales by 2030, the IEA said.

Renewable energy also plays a fundamental role in the global environment. The International Renewable Energy Agency, or IRENA, stated that around 300 gigawatts of renewables were added globally in 2022, which resulted in 83% of new capacity. The research also highlighted that investments around the world in energy transitions reached $1.3 trillion last year. In terms of the best environmental stocks, some leading players have invested heavily in ESG initiatives as investors keep an eye on those environmentally focused firms that are frequently adopting streamlined approaches towards people, the planet, and profits. To know more about green stocks, visit 11 Best Green Stocks To Invest In 2023.

Fund managers today are keen to invest in sustainable organizations and that's why some of the best environmental stocks have become their top choice for investment. Sustainable investing is a high priority for fund managers because they conclude that ESG and shareholder value have a direct link. According to Bloomberg, by 2025, ESG assets will hit $50 trillion in value.

"Global business leaders across all industries anticipate strong growth in ESG assets, and they are making investments in ESG with the same bottom line-driven focus as their non-ESG investments. A resounding 71% of global business leaders believe that, “Eventually, no investment decisions will be made without considering ESG," Bloomberg said.

Some of the best environmental stocks include Elon Musk's Tesla, Inc. (NASDAQ:TSLA), XPeng Inc. (NYSE:XPEV), and others. For this, we decided to take a look the 15 best environmental stocks to invest in.

A closeup of a finger resting on a stock chart as investors carefully examine the market.

Our Methodology

To compile the list of the best environmental stocks to invest in, we filtered companies listed on the New York Stock Exchange and Nasdaq which were engaged in ESG initiatives including renewable energy projects and EVs manufacturing. The stocks were ranked based on Insider Monkey’s database of 910 hedge funds tracked at the end of Q2 this year. The ranking was based on the ascending order of the number of hedge fund investors in each stock and then the top 15 best environmental stocks are selected for investment purposes.

Best Environmental Stocks To Invest In

15. NIO Inc. (NYSE:NIO)

Number of Hedge Fund Holders: 19

NIO Inc. (NYSE:NIO) designs, manufactures, and sells EVs in China. The company offers luxurious electric SUVs as well as smart electric sedans. Apart from EVs, NIO Inc. (NYSE:NIO) also provides power solutions, including Power Home, a home charging solution; Power Swap, a battery swapping service; Power Charger and Destination Charger, and others. The company was founded in 2014 and is headquartered in Shanghai, China. Last year, NIO Inc. (NYSE:NIO) and United Nations Development Programm signed an agreement as the partner of the Clean Parks platform. Out of 910 hedge funds profiled by Insider Monkey at the end of Q2, 19 held stakes in NIO Inc. (NYSE:NIO). The largest stakeholder was George Soros' Soros Fund Management which owned 115.3 million stakes of NIO Inc. (NYSE:NIO) that were valued at $110.1 million.

14. Plug Power Inc. (NASDAQ:PLUG)

Number of Hedge Fund Holders: 20

Plug Power Inc. (NASDAQ:PLUG) is a New York-based firm that offers end-to-end clean hydrogen and zero-emissions fuel cell solutions for supply chain and logistics applications, on-road electric vehicles, stationary power market, and others in the North American continent. Plug Power Inc. (NASDAQ:PLUG) recently signed an agreement for a 280 MW (megawatt) proton exchange membrane electrolyzer system to rcadia’s Vordingborg plant to produce sustainable aviation fuel. In Q3, it posted revenue of $198.7 million. At the end of June 30 this year, Plug Power Inc. (NASDAQ:PLUG) had 20 hedge funds investors out of 910 funds tracked by Insider Monkey database. Ken Griffin's Citadel Investment Group was the largest stakeholder with 133.1 million shares that were valued at $281.3 million.

13. Sunrun Inc. (NASDAQ:RUN)

Number of Hedge Fund Holders: 24

Sunrun Inc. (NASDAQ:RUN) develops, installs, and sells solar energy systems in the US. The company has pledged to have net-zero emissions across all of its operations by 2040. Last year, Sunrun Inc. (NASDAQ:RUN) redeployed or recycled over 85% of solar panels with recycling providers. In its 2022 ESG report, the California-based firm said that it offered more than $1 billion in energy savings to customers since 2007. It also rolled out Sunrun Empowered Giving, a $3 million corporate giving and employee charitable program. In Q3, the company deployed 258 megawatts of solar capacity and anticipates to deploy 220 megawatts to 245 megawatts of solar capacity in Q4.

Insider Monkey took a look at hedge fund portfolios for Sunrun Inc. (NASDAQ:RUN)’s second quarter of 2023 investments and concluded that 24 had stakes in the firm. William B. Gray's Orbis Investment Management was Sunrun Inc. (NASDAQ:RUN)’s largest stakeholder which owned 14 million shares of the firm that were valued at about $250 million.

12. Li Auto Inc. (NASDAQ:LI)

Number of Hedge Fund Holders: 25

Li Auto Inc. (NASDAQ:LI) ranks 12th in our list of the best environmental stocks to invest in. The company designs, manufactures, and sells EVs in China. Li Auto Inc. (NASDAQ:LI) offers Li ONE and Li L series smart EVs through online and offline channels. To mitigate operating impacts on the environment, Li Auto Inc. (NASDAQ:LI) collaborated with Michelin to buy its new low-carbon tires that cut carbon emissions by 67% in the production stage and 3% in the use stage. Recently, Barclays raised its price target on Li Auto Inc. (NASDAQ:LI) to $50 from $48. The Chinese EV manufacturing firm debuted its listing on the Nasdaq in July 2020. In Q3, it posted earnings of $1.34 per share and revenue of about $4.8 billion.

Out of 910 hedge funds profiled by Insider Monkey at the end of June 30, 25 had stakes in Li Auto Inc. (NASDAQ:LI). The largest stakeholder was Israel Englander's Millennium Management which owned about 100.8 million shares of the firm that were valued at $139.4 million.

Along with Tesla, Inc. (NASDAQ:TSLA), NextEra Energy, Inc. (NYSE:NEE), and First Solar, Inc. (NASDAQ:FSLR), Li Auto Inc. (NASDAQ:LI) is one of the best environmental stocks to invest in.

11. Clean Harbors, Inc. (NYSE:CLH)

Number of Hedge Fund Holders: 26

Clean Harbors, Inc. (NYSE:CLH) offers environmental and industrial services globally under its The Environmental Services and The Safety-Kleen Sustainability Solutions segments. In 2021, the company had a net climate benefit factor of more than two times which divides avoided emissions with total emissions. In March this year, Clean Harbors, Inc. (NYSE:CLH) appointed Eric Dugas as CFO, succeeding Michael Battles. In Q3, it reported EPS of $1.68 and revenue of $1.4 billion. The Massachusetts-based firm introduced its Vision 2027 sustainability program this year.

Out of 910 hedge funds profiled by Insider Monkey at the end of Q2 2023, 26 had stakes in Clean Harbors, Inc. (NYSE:CLH). The largest stakeholder was Robert Joseph Caruso's Select Equity Group which owned about 2 million shares of the firm that were valued at $337 million.

10. Enbridge Inc. (NYSE:ENB)

Number of Hedge Fund Holders: 28

Enbridge Inc. (NYSE:ENB) is as an energy infrastructure firm in the US and Canada. Founded in 1949 and headquartered in Calgary, Canada, Enbridge Inc. (NYSE:ENB) operates under its Liquids Pipelines, Gas Transmission and Midstream, Gas Distribution and Storage, Renewable Power Generation, and Energy Services segments. As one of the best Canadian environmental stocks to invest in, Enbridge Inc. (NYSE:ENB) signed an agreement with FortisBC Holdings Inc. to buy FortisBC Midstream Inc., which holds a 93.8% interest in Aitken Creek Gas Storage facility and a 100% interest in Aitken Creek North Gas Storage facility.

At the end of Q2 this year, Enbridge Inc. (NYSE:ENB) had 28 hedge funds investors out of 910 profiled by Insider Monkey database. The largest stakeholder was Rajiv Jain's GQG Partners which had 6.4 million shares of Enbridge Inc. (NYSE:ENB) that were valued at around $237.4 million.

9. Clearway Energy, Inc. (NYSE:CWEN)

Number of Hedge Fund Holders: 29

Clearway Energy, Inc. (NYSE:CWEN) ranks 9th in our list of the best environmental stocks to invest in. The company provides renewable energy solutions in the US under its Conventional, Renewables, and Thermal segments. Clearway Energy, Inc. (NYSE:CWEN) manages wind and solar generation projects, as well as natural gas generation facilities. Last year, it signed an agreement to buy a portfolio of operating wind projects from Capistrano Wind Partners for $255 million.

At the end of Q2 this year, Clearway Energy, Inc. (NYSE:CWEN) had 29 hedge funds investors out of 910 profiled by Insider Monkey database. The largest stakeholder was Israel Englander's Millennium Management which had 1.1 million shares of Clearway Energy, Inc. (NYSE:CWEN) that were valued at $29.2 million.

8. Republic Services, Inc. (NYSE:RSG)

Number of Hedge Fund Holders: 37

Republic Services, Inc. (NYSE:RSG) provides environmental service offering in the US. It collects and processes recyclable, solid waste, and industrial waste materials. In Q3, it posted earnings of $1.54 per share that beat analysts' expectation of $1.41. Recently, Republic Services, Inc. (NYSE:RSG) entered into an agreement with Blue Polymers, LLC to construct the first plastics recycling complex in the US. The site is expected to be operative next year.

At the end of Q2 this year, Republic Services, Inc. (NYSE:RSG) had 37 hedge funds investors out of 910 profiled by Insider Monkey database. The largest stakeholder was Ian Simm's Impax Asset Management which had 1.4 million shares of Republic Services, Inc. (NYSE:RSG) that were valued at $360.5 million.

7. Waste Management, Inc. (NYSE:WM)

Number of Hedge Fund Holders: 39

Waste Management, Inc. (NYSE:WM) is a Texas-based firm that offers environmental solutions in the US and Canada including picking up and shifting waste and recyclable materials from where it was generated to a transfer station, material recovery facility, or disposal site. As one of the best environmental stocks to invest in, Waste Management, Inc. (NYSE:WM) communicated its plans last year to invest roughly $1.6 billion in environmental, social, and governance projects including $550 million on recycling initiatives. In its third quarter this year, it posted adjusted earnings of $1.63 per share and revenue of $5.2 billion. Its stock was recently upgraded to buy from neutral at UBS.

Insider Monkey took a look at Q2 hedge fund portfolios for Waste Management, Inc. (NYSE:WM) and found that 39 had stakes in the firm. Michael Larson's Bill & Melinda Gates Foundation Trust was the largest stakeholder of Waste Management, Inc. (NYSE:WM) which bout 35.2 million shares of the firm that were valued at $6.1 billion.

6. SolarEdge Technologies, Inc. (NASDAQ:SEDG)

Number of Hedge Fund Holders: 43

SolarEdge Technologies, Inc. (NASDAQ:SEDG) produces and sells direct current optimized inverter systems for solar photovoltaic installations globally under its Solar and All Other segments. In its 2022 ESG report, SolarEdge Technologies, Inc. (NASDAQ:SEDG) said it recycled over 88% of generated waste last year and equipped more than 2.7 million homes with its SolarEdge photovoltaic system. It recently rolled out high-power, three-phase SolarEdge 330kW Inverter and its complementing H1300 Power Optimizer in the US. In Q3, it generated revenue of $725.3 million.

Out of 910 hedge funds profiled by Insider Monkey at the end of Q2, 43 had stakes in SolarEdge Technologies, Inc. (NASDAQ:SEDG). The largest stakeholder was David E. Shaw's D E Shaw which owned about 1.5 million shares of the firm that were valued at $404.7 million.

Along with Tesla, Inc. (NASDAQ:TSLA), NextEra Energy, Inc. (NYSE:NEE), and First Solar, Inc. (NASDAQ:FSLR), SolarEdge Technologies, Inc. (NASDAQ:SEDG) is one of the best environmental stocks to invest in.

5. Target Corporation (NYSE:TGT)

Number of Hedge Fund Holders: 45

Target Corporation (NYSE:TGT) is one of the biggest merchandize retailers in the US. With a market capitalization of $60 billion, Target Corporation (NYSE:TGT) offers apparel for women, men, boys, girls, toddlers, and infants and newborns, as well as jewelry, accessories. Recently, JPMorgan raised Target Corporation (NYSE:TGT)’s price target to $125 from $113, while Wells Fargo upgraded the firm’s stock to overweight from equalweight. The company expects to reach net-zero emissions by 2040.

“We want our guests to turn to Target first when they think about sustainability. We know that the only way to make that possible is by putting both people and the planet at the center of our efforts, as we co-create with our guests, our partners and the communities we serve,” Senior Vice President of Corporate Responsibility Amanda Nusz said.

Out of 910 hedge funds profiled by Insider Monkey, 45 held stakes in Target Corporation (NYSE:TGT). The largest stakeholder was Ken Griffin’s Citadel Investment Group which owned roughly 3 million shares of Target Corporation (NYSE:TGT) that were valued at $111.8 million.

4. Enphase Energy, Inc. (NASDAQ:ENPH)

Number of Hedge Fund Holders: 50

Enphase Energy, Inc. (NASDAQ:ENPH) develops and sells home energy solutions for the solar photovoltaic sector globally. Ranked 4th in our list of the best environmental stocks to invest in, Enphase Energy, Inc. (NASDAQ:ENPH) expects to attain a 30% reduction in its economic emissions intensity by 2030. In 2022, Enphase Energy, Inc. (NASDAQ:ENPH) reported 100% of the recycling of harmful materials. In Q3, it reported earnings of $1.02 per share and revenue of $551.1 million.

Insider Monkey took a look at hedge fund portfolios for Enphase Energy, Inc. (NASDAQ:ENPH)’s second quarter of 2023 investments and concluded that 50 had stakes in the firm. Ken Griffin’s Citadel Investment Group was the largest stakeholder that owned 1.5 million shares of Enphase Energy, Inc. (NASDAQ:ENPH) that were valued at $259.5 million.

3. First Solar, Inc. (NASDAQ:FSLR)

Number of Hedge Fund Holders: 51

Tempe, Arizona-based First Solar, Inc. (NASDAQ:FSLR) offers photovoltaic solar energy solutions around the globe. Ranked 3rd in our list of the best environmental stocks to invest in, First Solar, Inc. (NASDAQ:FSLR) said last year it planned to invest roughly $1.2 billion in America’s clean energy future by constructing a vertically-integrated manufacturing site in the country which it expects to be operational by 2025. In its 2023 ESG report, the company expects to reach net-zero emissions by 2050.

Out of 910 hedge funds profiled by Insider Monkey at the end of June 30, 51 had stakes in First Solar, Inc. (NASDAQ:FSLR). The largest stakeholder was Ken Griffin’s Citadel Investment Group which owned about 2.8 million shares of the firm that were valued at $538.7 million.

2. NextEra Energy, Inc. (NYSE:NEE)

Number of Hedge Fund Holders: 59

NextEra Energy, Inc. (NYSE:NEE) was founded in 1925 and is headquartered in Florida. As one of the largest electric utility companies in the US, NextEra Energy, Inc. (NYSE:NEE) generates, transmits, distributes, and sells electric power to retail and wholesale clients in Canada, Mexico, and the US. By no later than 2045, the company expects to completely eliminate its carbon emissions. In September, NextEra Energy, Inc. (NYSE:NEE)’s Florida Power & Light Company unit signed an agreement to sell Florida City Gas Chesapeake Utilities Corporation (NYSE: CPK) for $923 million.

“Producing electricity at Real Zero would be a game-changer – for our customers, the U.S. electric power sector and the entire U.S. economy,” Chairman and CEO John Ketchum said during the company’s 2023 ESG report.

Out of 910 hedge funds profiled by Insider Monkey at the end of June 30, 59 had stakes in NextEra Energy, Inc. (NYSE:NEE). The largest stakeholder was Citadel Investment Group which owned about 2.8 million shares of the firm that were valued at $207.2 million.

1. Tesla, Inc. (NASDAQ:TSLA)

Number of Hedge Fund Holders: 79

As one of the largest electric vehicle manufacturers globally, Tesla, Inc. (NASDAQ:TSLA) tops our list of the best environmental stocks to invest in. With a market capitalization of around $740 billion, Tesla, Inc. (NASDAQ:TSLA) produces, leases, and sells EVs, and energy generation and storage systems mainly in the US, China and the European market. In 2022, Tesla, Inc. (NASDAQ:TSLA) developed and sold more than 1.3 million EVs around the world. In Q3, it manufactured more than 430,000 EVs and said that energy storage deployment jumped 90% year-over-year. For the September quarter, the Elon Musk-led EV manufacturing giant reported non-GAAP earnings of $0.66 per diluted share and total revenue of $21.5 billion.

Insider Monkey took a look at Q2 hedge fund portfolios for Tesla, Inc. (NASDAQ:TSLA) and found that 79 had stakes in the firm. Ken Griffin’s Citadel Investment Group was the largest stakeholder of Tesla, Inc. (NASDAQ:TSLA) which bought about 63.5 million shares of the firm that were valued at $16.6 billion.

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