By now, we’re all well aware of the world’s desire to go green. The U.S. wants to cut emissions by 52%. The European Union wants to cut emissions by 55%. China says it’ll stop releasing CO2 over the next 40 years. To help, we now have President Biden’s Inflation Reduction Act, which will pump about $370 billion into renewable energy and create a big opportunity for green energy stocks.
Better, according to the International Energy Agency (IEA), “renewable energy sources such as solar and wind power, together with nuclear, will on average meet more than 90% of the increase in global demand by 2025,” as noted by the World Economic Forum.
With substantial long-term catalysts, it just makes sense to invest in green projects. Some of the top ones to consider include:
Green Energy Stocks: Lithium Americas (LAC)
A broader shift to renewable energy can only happen with the use of lithium. Not only is it key for greener transportation, but it’s also key for most other renewable sources. It’s why there’s such a rush to secure far more lithium supply around the world, especially from automakers, including General Motors (NYSE:GM) and Ford Motor (NYSE:F). Look at Lithium Americas (NYSE:LAC), for example.
For one, it just received a $650 million investment from General Motors to push forward with its Thacker Pass lithium project. Two, the company is expected to start making lithium deliveries by 2026, which could produce a sizable windfall for the company. In addition, the company is splitting in two, which includes its North American and Argentinian units. Even better, the company just produced its first lower-than-battery-quality lithium carbonate as part of commissioning at its Caucharí Olaroz project. With time, I’d like to see Lithium Americas double, if not triple, as investors wake up to the opportunity.
Green Energy Stocks: Plug Power (PLUG)
Or, take a look at Plug Power (NASDAQ:PLUG). After being left for dead, the hydrogen stock is showing big signs of life. Since May, the stock exploded from a low of $7.39 to $11.78 – and could eventually see higher highs. In fact, if PLUG can break above $12 resistance, it could test $15 again soon, thanks to a recent deal with Energy Vault Holdings (NYSE:NRGV). In fact, as I mentioned on June 15, the two provide hydrogen fuel cells to replace the generators in Calistoga, California.
Helping, analysts at Truist just raised their price target on the PLUG stock to $12 from $9, as well. Oppenheimer also reiterated an outperform rating on the stock. Plus, Plug Power reaffirmed its 2023 forecast, which includes revenue of $1.4 billion revenue, with a gross profit of about $140 million. If the company can achieve those numbers, it would represent massive growth over 2022 revenue of $701.4 million.
Green Energy Stocks: ALPS Clean Energy ETF (ACES)
We can also look into green energy ETFs, which allow us to diversify among dozens of top names at a lower cost. Look at the ALPS Clean Energy ETF (NYSEARCA:ACES), for example. The last time I mentioned ACES, it traded at $42 a share on April 26. Today, with a good deal of investor attention on everything green, the ACES ETF is up to $45.55. From here, if it can break above the prior resistance at $47, it could run back to our target price of $53 a share.
With an expense ratio of 0.55%, the ACES ETF tries to replicate the CIBC Atlas Clean Energy Index. Top holdings here include Tesla (NASDAQ:TSLA), Plug Power, Albemarle (NYSE:ALB), Enphase Energy (NASDAQ:ENPH), and First Solar (NASDAQ:FSLR), to name a few.
First Trust NASDAQ Clean Edge Clean Energy Index Fund (QCLN)
Another hot fund to consider is the First Trust NASDAQ Clean Edge Clean Energy Index Fund (NASDAQ:QCLN). With an expense ratio of 0.58%, the fund invests in advanced materials, such as lithium, energy intelligence, renewable energy generation, and fuels, as well as energy storage. Some of its top holdings include Albemarle, Tesla, Enphase Energy, SolarEdge (NASDAQ:SEDG), Brookfield Renewable (NYSE:BEP), and Lucid Group (NASDAQ:LCID), to name a few. Since May, the QCLN fund ran from a low of about $44 to $52. From here, if it can break above the $52 resistance, it could potentially test $58.
NextEra Energy (NEE)
Next up is NextEra Energy (NYSE:NEE). The last time I highlighted an opportunity in NEE, it traded at around $73 on April 30. Today, it’s up to $75.59 and still attractive, with a yield of 2.47%. Helping, Goldman Sachs has a buy rating on the stock with a price target of $90.
Even better, NEE announced it wanted to become a renewable pure play and would sell its natural gas pipeline assets to do so. All in an effort to unlock even more long-term value and reach Real Zero carbon emissions by the time 2025 rolls around.
In fact, according to a May 8 press release, “Upon successfully completing the sales of the natural gas pipeline assets, NextEra Energy Partners is expected to achieve Real Zero carbon emissions in 2025 and become the leading 100% renewables pure-play investment opportunity. The partnership believes these changes could potentially invite a new class of investors looking for a carbon-free, pure-play option to participate in the energy transition.”
First Solar (FSLR)
With some bumps and bruises along the way, First Solar has been hot this year. Out of the gate in Jan., the solar stock soared from a low of about $142 to $188.89. While insiders have been selling lately, including its CEO and Director, analysts love the stock. Piper Sandler, for example, recently raised its price target to $260 from $225. GLJ Research upgraded FSLR to a hold rating from a sell.
We also have to consider that solar power has become one of the fastest-growing resources in the U.S. According to the U.S. Energy Information Administration, “Developers plan to add 54.5 gigawatts (GW) of new utility-scale electric-generating capacity to the U.S. power grid in 2023, according to our Preliminary Monthly Electric Generator Inventory.” Also, according to the International Energy Agency, “Worldwide solar generation could surpass natural gas by 2026 and coal by 2027.” All of which is great news for solar stocks like First Solar.
Enbridge (ENB)
Or, take a look at Enbridge (NYSE:ENB).
With a yield of just under 7%, Enbridge is a high-yielding opportunity with substantial exposure to renewable energy. In fact, the company is one of the biggest renewable energy companies in Canada, with a good deal of projects. So far, that includes 23 wind farms with 4,870 MW gross capacity, 16 solar energy firms, five waste heat recovery facilities, a geothermal project, and a power transmission project.
According to the company, “Collectively, those renewable energy projects in operation or under construction (and their 2,173 MW net generation capacity) are enough to meet the electricity needs of about 966,000 homes.”
Even better, the company has a strong history of dividend growth. For the last 28 years, the company has raised its payouts. Most recently, it announced a payout of $0.8875 per common share, payable June 1 to shareholders of record as of May 15. We also have to consider that the company’s growing cash flow will allow it to increase its yield down the line. In short, ENB is a smart place to park your investment — especially if you want a piece of the green energy boom.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
