Starting in the mid-1990s, the United Nations Climate Change Conference established a formal framework for participating countries to gauge their performance in mitigating environmental impact. An increasingly popular summit given the backdrop of the Kyoto Protocol — an international treaty to reduce greenhouse gas emissions — this year’s gathering will take on greater significance, potentially affecting movement-relevant stocks to buy.
An annual event, the novel coronavirus pandemic forced the UN Climate Change Conference organizers to cancel the 2020 summit. During that year, the global health crisis wasn’t the only threat that people were worried about. In the U.S., much of the west coast burned under an unprecedented and unforgiving wildfire season. Additionally, rolling blackouts in California proved the necessity of energy diversity and resilience, which will surely affect stocks to buy in the future.
Moreover, despite the general acclimatization toward the Covid-19 pandemic, the impact of climate change continues to hit us. Earlier this year, a devastating winter storm in Texas temporarily took down infrastructure, leaving many residents to suffer the bitter cold without power. Tragically, avoidable deaths occurred, which shook people out of their slumber regarding climate change initiatives. Again, this incident will likely have a huge effect on long-term stocks to buy.
As well, we must remember that climate change is a worldwide development. In August of this year, the Washington Post reported that “Siberia’s wildfires are bigger than all the world’s other blazes combined.” Furthermore, it reported that “Smoke from the Siberian fires covered more than 2 million square miles, drifting across the Arctic and North Pole.” This serves as another reminder about the relevance of clean-energy-related stocks to buy.
Finally, for those who might think that these issues are just a fad, note that climate change enjoys a key demographic catalyst. Increasingly, the world’s youth are taking to the streets, letting their voices be heard about the future of this planet. By logical deduction, these stocks to buy can benefit tremendously from the burgeoning sentiment shift. They are:
- Clearway Energy (NYSE:CWEN)
- Atlantica Sustainable Infrastructure (NASDAQ:AY)
- American Water Works (NYSE:AWK)
- Generac (NYSE:GNRC)
- SolarEdge Technologies (NASDAQ:SEDG)
- Ormat Technologies (NYSE:ORA)
- Eguana Technologies (OTCMKTS:EGTYF)
As I’m writing this, the broader market appears (though no one is for certain obviously) to be at an inflection point. Furthermore, the China Evergrande (OTCMKTS:EGRNF) fiasco and the potential instability of China’s commercial paper could end up hurting all stocks to buy temporarily — even relevant climate-related ones. Therefore, approach these names carefully and with an eye on the news.
Stocks to Buy: Clearway Energy (CWEN)
Billed as “one of the largest developers and operators of clean energy” in the U.S., Clearway Energy commands “over 5 gigawatts of wind, solar, and energy storage in operation,” per information on its website. Breaking it down, this tally involves 1.3 GW of solar energy, 3.5 GW of wind and 320 megawatts from community and distributed solar systems.
What’s particularly relevant for the upcoming climate summit is that collectively, Clearway’s solutions facilitate its customers to offset roughly 9 million metric tons of carbon dioxide annually, making CWEN one of the top environmentally friendly stocks to buy.
To be fair, CWEN stock doesn’t exactly look great on a year-to-date (YTD) basis, with shares down about 3.4% against the its first session close of 2021. A combination of a strong December showing and the politicization of the Texas cold snap contributed to the fallout. However, over the past six months, shares are up 12%.
As well, Clearway is demonstrating positive momentum in its financials, with $380 million of revenue posted in its second quarter, up almost 16% against Q2 2020’s result.
Atlantica Sustainable Infrastructure (AY)
As a supporter of the UN Global Compact — a voluntary initiative on the part of corporate executives to drive sustainability principles in their organizations — Atlantica Sustainable Infrastructure is a perfect sentiment play on stocks to buy for the upcoming climate summit. Fortunately, though, the company is much more than just cheap words printed on a marketing brochure.
A sustainable infrastructure company with most of its exposure tied to renewable energy assets, Atlantica features a diverse portfolio that includes storage solutions, natural gas assets and transmission infrastructure assets. Furthermore, the company owns water infrastructure assets — an absolutely vital division that will only grow more relevant in the years and decades ahead.
In total, Atlantica’s portfolio features 34 assets with slightly over 2 GW of aggregate renewable energy installed generation capacity — approximately 71% of which is solar, per the company’s website.
Somewhat similar to Clearway above, AY stock isn’t off to the greatest start this year, down 9.4% YTD. Admittedly, its recent sessions have not provided much confidence either. Still, investors should note that in Q2, Atlantica posted $376 million in revenue, up over 47% from the year-ago quarter.
Stocks to Buy: American Water Works (AWK)
A public utility firm that operates in the U.S. and Canada, American Water Works specializes in the planet’s most precious resource. According to medical estimates, a human being can likely survive without food for a period between one and two months.
Without water? That window falls to a shockingly low three days. It bears reminding considering the number of people that have gone missing in national parks recently that you’ve got to prepare yourself if you’re planning a trip to the outdoors: a personal locator beacon and plenty of water are two must-have survival items.
One of the oldest companies in this country with a history dating back to 1886, American Water Works “is the largest and most geographically diverse U.S. publicly traded water and wastewater utility company.” Per its website, the company provides services to 15 million people in 46 states.
According to the World Wildlife Fund, by 2025, “two-thirds of the world’s population may be facing water shortages.” That includes powerhouse regions in this country such as southern California, which presents both societal and economic challenges.
Overall, one thing’s for certain — stocks to buy in the water infrastructure business like AWK will be hugely relevant in the years ahead.
Although the upcoming climate summit will undoubtedly promote ambitious mitigation goals given the radical changes to the environment that we’ve seen, we’re past the point where pure idealism is a tangible solution. With so much of our world interconnected through digitalization, a disruption to our core energy consumption will leave a devastating fallout.
For instance, weather-related power outages have contributed to average annual losses ranging from $18 billion to $33 billion, an obviously considerable sum. And because of our rising dependence to technology, it wouldn’t surprise me in the least for this figure to have increased in recent years. All this to say that climate-related solutions cannot occur in a vacuum.
That’s why Generac is an appealing idea among stocks to buy. Thanks to the company’s smart-grid solutions, it’s possible for both residential communities and commercial enterprises to augment existing power infrastructures and provide insulation during outages.
Additionally, Generac features a solar energy and battery storage system business, levering clean renewable solutions to bolster current power networks. It’s part of a broader initiative to promote both environmentally sustainable protocols while keeping economic impact to a minimum.
Stocks to Buy: SolarEdge Technologies (SEDG)
As one of the top producers of photovoltaic inverters, SolarEdge Technologies is crucial to the advancement and integration of solar energy solutions. While solar panels represent the front-facing image of renewable solutions, the reality is that the process of extracting practical power from sunlight is a complex process.
Among the biggest considerations is the conversion of direct current (DC) output into alternating current (AC). The standard for all commercial appliances, AC dictates the viability of solar-based systems. Basically, without inverters, solar infrastructures become a so-close-but-yet-so-far dilemma.
Following the trend of other stocks to buy in the sustainable energy segment, SEDG hasn’t had a great time so far this year, down almost 18%. However, shares have picked up considerable momentum between the May 13 and Sept. 29 sessions, registering a rise of 26%.
Investors ought to keep a close eye on SolarEdge, especially heading into the climate summit as its financial performance has been outstanding. In Q2, the company generated revenue of $480.1 million, up nearly 45% from the year-ago comparison. Also, on a trailing-12-month (TTM) basis, sales are up over 8% from 2020’s tally.
Ormat Technologies (ORA)
While most stocks to buy in the sustainable energy industry are tied to solutions that are looking up so to speak, Ormat Technologies looks decidedly downward. As a geothermal energy specialist, the company is at the forefront of a compelling innovation that can help address climate change.
As the U.S. Energy Information Administration explains, geothermal energy is heat within the earth. Better yet, it’s a renewable source because the core of our planet continuously produces heat. Furthermore, the organization notes that people are already using geothermal energy to heat buildings and generate electricity — this isn’t a purely aspirational concept with no real-world applications.
Though an enticing opportunity, investors are probably best served with a careful approach with ORA. True, geothermal solutions are intriguing because they provide reliable sources of power. In addition, they have a small land footprint. At the same time, such powerplants are location dependent, typically near tectonically active regions. Furthermore, geothermal facilities can actually contribute to seismic activities.
Perhaps the biggest challenge is the steep upfront cost to build geothermal plants. However, over the long run, such costs may be considered a necessity, which might put ORA stock in an advantageous situation.
Stocks to Buy: Eguana Technologies (EGTYF)
Climate change is serious business, which is why the prior stocks to buy are tied to companies with a strong track record. However, if you want to dial up the risk-reward profile in your clean energy investments, you might want to take a look at Eguana Technologies.
Before we dive into it, let’s keep my hind end out of hot legal waters. As an over-the-counter stock, you’re not dealing with an exchange-traded equity unit but one that’s transacted over broker-dealer networks. In short, the bid-ask spreads tend to be super wide with OTC securities because of the inherent risks with penny stocks.
Thus, in addition to market volatility, you will need to see a significant ramp up in share price before you are truly net profitable. Don’t buy EGTYF stock until you understand both the administrative, technical and fundamental risks.
Now, Eguana does have an appealing narrative in that it manufactures high-performance residential and small commercial energy storage systems. During the blackouts that occurred in several cities last year, many residents found themselves having to bear the brutal summer heat without power — an uncomfortable situation at the least and fatal at the worst.
For small businesses, some studies revealed that a one-hour power outage duration costs on average $100,000. Another round of blackouts could convince many companies to consider Eguana’s battery storage solutions. Just keep in mind the tight competition and gamble responsibly.
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.