Fundamentally, the investment narrative of environmentally friendly businesses, particularly the renewable energy sector, is one of the easiest to understand. Primarily, the scientific community, in conjunction with international government agencies agree that climate change is real. Unless we do something about it, we all may suffer intractable consequences. While capitalizing established enterprises makes sense, should speculators even bother with so-called green penny stocks?
Of course, any professional financial advisor — for the record, that’s not me — will guide their clients as far away from penny stocks as the east is from the west. Green or not, they’re simply too risky for most people to consider. One day, you could be staring at massive profits; the next, you could be crying yourself to sleep as that position evaporates in smoke.
However, I’m also sympathetic to why investors might consider green penny stocks. Take, for example, one of the leaders in the renewable energy space, NextEra Energy (NYSE:NEE). It’s a company that I’ve discussed many times. While it’s a top portfolio idea for environmentally conscious investors, they might not appreciate the $72-plus price tag. And that’s not the most expensive equity unit in this space either.
It’s also important to realize that sustainability is a core issue for young people. According to the Pew Research Center, Generation Z and Millennials are more actively involved in climate change activism. While this is a net positive for our planet, the reality is that younger people generally don’t have as much money to invest as older folks. Therefore, green penny stocks are particularly appealing to the relevant demographics.
Nevertheless, it’s fair to point out that younger investors have time. Therefore, speculative ventures make much more sense to this demo than those just about to retire.
In that context, here are seven green penny stocks to consider:
- Aqua Metals (NASDAQ:AQMS)
- Ocean Power Technologies (NASDAQ:OPTT)
- NexGen Energy (NYSEAMERICAN:NXE)
- United States Antimony Corporation (NYSEAMERICAN:UAMY)
- Tantech Holdings (NASDAQ:TANH)
- Solar Integrated Roofing (OTCMKTS:SIRC)
- SunHydrogen (OTCMKTS:HYSR)
Before we dive into the details, please note that penny stocks have very wide bid-ask spreads, among other risky characteristics. What this means is that even if you’re profitable, you may not always find a buyer to sell your securities to. Therefore, you may have to lower your price, hence the wide spread. Please do not invest in ultra-cheap stocks without educating yourself on the myriad dangers.
Green Penny Stocks: Aqua Metals (AQMS)
Billed as the world’s only proven clean recycling technology for lead-acid batteries, Aqua Metals has exceptional implications for a possible green future. Yes, it would be nice to get rid of all lead-acid batteries in favor of cleaner and more efficient energy storage and distribution solutions. But the harsh reality is that existing energy infrastructures won’t just go away because we wish they would.
Further, it takes time and money to replace said infrastructures with new alternatives. In this context, Aqua Metals is one of the transitional players among green penny stocks. Essentially, the company offers a fresh process regarding the recycling of old batteries into usable lead, which imposes a heavy environmental footprint.
Instead, with Aqua Metals’ proprietary AquaRefining process, industrial firms can receive the same lead end product but with a much lower carbon footprint and reduction of hazardous waste materials. It’s a win-win since companies can comply with increasing regulations, thereby saving costs and helping the environment.
Earlier this year, speculators bid up AQMS stock, reaching $7.65 on Jan. 26. Two price spikes in February failed to hold, however, and since then, shares have come down substantially. Nevertheless, as societal and political winds move toward practical solutions, Aqua Metals could find itself in the discussion again, making it one of the top green penny stocks to consider.
Ocean Power Technologies (OPTT)
Although renewable energy represents a core component of next-generation energy solutions, they will always have a primary challenge: intermittency. That’s just a fancy word to denote the fact that the sun doesn’t shine when it’s night out and turbines sit motionless when the wind isn’t blowing. True, advancements in battery storage technologies could help resolve this issue but they’re also expensive.
But another angle exists to this quandary. What if we could harness the power of natural continuous energy sources? That’s the question Ocean Power Technologies seeks to answer with its wave energy system. As the name suggests, wave energy converts the ocean’s currents into usable, practical power. The main advantage is that ocean never stops moving.
Also, OPTT stock benefits from the fact that Ocean Power can hide its mechanisms from the outside world. While solar energy offers an amazing green solution for our power needs, the technology is not exactly winning beauty contests. Ditto for wind turbines, which are both ugly and kill birds who didn’t necessarily need to die.
However, this doesn’t mean that OPTT is an easy name among green penny stocks to trust. A major drawback is its cost, which may prevent widespread commercial viability. However, a favorable political environment might make OPTT worth a shot with “dumb” money.
Green Penny Stocks: NexGen Energy (NXE)
NexGen Energy is probably the most controversial name among this list of green penny stocks;ou have to do some modest digging to find out what the company is all about. On the main header for its website, the company claims that it’s delivering a generational project for Canada and the global environment.
Cool, you’re thinking — it must be a wind turbine or solar energy company. Well, not exactly.
As a uranium specialist, I can already hear the angered fervor from green advocates. But before you fire up an angry email to the editor, let me note that the Office of Nuclear Energy adamantly states that nuclear “is a zero-emission clean energy source.”
Still not convinced? The agency provides some impressive statistics. “According to the Nuclear Energy Institute (NEI), the United States avoided more than 476 million metric tons of carbon dioxide emissions in 2019. That’s the equivalent of removing 100 million cars from the road and more than all other clean energy sources combined.”
Another factor that works favorably for NXE stock is energy density. When you compare how much output you can get from nuclear versus other forms of power, it’s really no contest. Outside of the thankfully rare disasters, nuclear is part of the clean energy discussion, as uncomfortable as that might be.
United States Antimony Corporation (UAMY)
On surface level, United States Antimony Corporation doesn’t immediately strike you as one of the green penny stocks to consider. That’s because it’s a resource firm specializing in the mining, transportation, smelting and distribution aspect of the commodities business. Such practices lever an environmental impact, something that will drive ecofriendly folks nuts.
However, it’s also important for environmental advocates to realize that green energy isn’t an all-or-nothing affair. Sometimes, as is the case with electric vehicles, you must factor in the greater good argument. Sure, the core businesses of UAMY stock, which include antimony smelter and zeolite exploration, are not ecologically friendly. However, antimony is one of the leading alloys used in battery production.
You can see where I’m going with this. As the U.S. competes with China on EVs, we’re going to need greater access to materials used for EV batteries. That’s where UAMY stock enters the frame. Without question, the mining business has a negative impact on the environment. But longer term, antimony production can help replace gas-guzzling and carbon-emitting combustion cars with EVs.
Therefore, the price might be worth it. This is one of the green penny stocks to check out if you don’t have moral qualms over its business.
Green Penny Stocks: Tantech Holdings (TANH)
Possibly one of the most distinct green penny stocks available in the market, Tantech Holdings’ flagship brand is Zhejiang Tantech Bamboo Technology Co., Ltd. According to the company’s website, Tantech “is a leading high-tech enterprise, specializing in the R&D, manufacturing and sales of bamboo charcoal products for industrial energy applications and household cooking, heating, purification, agricultural and cleaning uses.”
If that wasn’t enough green cred, in 2017, “Tantech acquired a controlling equity interest in Suzhou E-Motors , which became known as Shangchi Automobile in 2019.”
Now, most of you are probably thinking that converting bamboo into green power sounds like pseudoscience. But according to North Carolina State University, “Bamboo can be used as an energy source by converting it into solid, liquid, and gaseous fuels.”
But before you go all-in on TANH stock, you should be aware of the drawbacks. As NC State further declares, “However, to utilize bamboo as a high promise energy crop resource for biofuels, a secure and stable supply is required. Therefore, additional information on the availability, cultivation, and harvesting operations of bamboo is vital to ensure the practicability of the idea.”
Certainly, it’s one of the most intriguing concepts among green penny stocks, but that’s also why it’s volatile. I can’t say anything more beyond proceed with caution if you’re interested.
Solar Integrated Roofing (SIRC)
As a solar energy company, Solar Integrated Roofing is one of the most relevant ideas among green penny stocks. Indeed, it was also one of the best performing. Back in early November 2020, you could have bought SIRC stock for around a nickel. By Feb. 5, shares hit a high of $3, an astounding 60X return in a matter of months.
It’s no wonder why so many people are interested in Solar Integrated Roofing despite its collapse. And collapse it did. Currently, shares are trading hands at a bit over 50 cents, which means that they lost over 80% of their value. While no one can be for certain, it’s likely that the underlying company was a victim of an unfortunate narrative.
Of course, earlier this February, the Texas winter storm devastated the region. It also contributed to mainstream media pundits putting the blame on renewable energy infrastructure, which did no favors for SIRC.
However, there is another side to consider. Solar energy is particularly viable for the Sun Belt region. With millennials moving to this area, it’s possible that over time, we could see a ramp up for solar roofing solutions. That would help lift SIRC, making this company something to put on your radar.
Green Penny Stocks: SunHydrogen (HYSR)
Hydrogen energy has long attracted scientists and engineers for its groundbreaking potential to bring our infrastructure to the 21st century. As you may know, hydrogen is the most abundant element in the universe. Because it’s everywhere, at least on paper, it’s the most renewable energy source around. So why hasn’t it caught on?
As with every innovative proposal in this space, economics is a huge factor. Also, science gets in the way. Here’s what Paul Ronney, a USC Viterbi School of Engineering professor of aerospace and mechanical engineering, had to say about the challenges of hydrogen energy:
“There’s virtually no pure hydrogen on Earth because it’s so reactive. Most hydrogen is made from methane [natural gas] in a process that produces carbon dioxide and other greenhouse gases. Hydrogen can also be made from water using electrolysis, but that requires electrical energy. To get that, we’re back to burning fossil fuels.”
In other words, to extract hydrogen, we need to expend energy. But this is also where SunHydrogen proposes a revolutionary solution: use sunlight through a proprietary process to make renewable hydrogen.
You can review the science behind the proposal on SunHydrogen’s website. Needless to say, not every investor is convinced, hence the volatility in HYSR stock. As well, this is the riskiest of the green penny stocks on this list. However, if you want to take a gamble with dumb money, this might work out for you if the stars happen to align.
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On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.