Best Clean Energy Stocks of 2021

Broadly speaking, there are two ways to play clean energy stocks:

The first is a “basket” approach, in which an investor buys multiple stocks across the industry. A basket might include names like industry supplier Emerson Electric (NYSE:EMR), solar play Enphase Energy (NASDAQ:ENPH), hydrogen-leader Plug Power (NASDAQ:PLUG) and liquefied-natural-gas-provider Cheniere Energy (NYSEAMERICAN:LNG). Even if one (or more) technology surpasses the others, the overall basket should do well as long as broader momentum toward clean energy solutions remains intact.

A more aggressive investor, however, could choose the technology she believes will be most viable, increasing both risk and reward.

When it comes to clean energy investments, timing is everything. Solar cells have been around since the 19th century, but it’s only recently that the technology reached a commercially viable tipping point. Even Tesla (NASDAQ:TSLA) struggled for years with its solar business.

But when change starts, it can snowball quickly. It took Plug Power two decades to turn a profit even on an adjusted basis, but its shares have since risen over 2,500%. Fellow hydrogen play FuelCell Energy (NASDAQ:FCEL) and Ceres Power (OTCMKTS:CPWHF) could be next in reaching profitability.

If passed, President Joe Biden’s proposed $2 trillion climate change plan will have a significant impact across the industry. To start, General Electric (NYSE:GE) will see increased demand for its wind turbine business, even as demand for coal-fired turbines declines. Biodiesel also looks set to win, which is good news for companies like Renewable Energy Group (NASDAQ:REGI).

Solar stocks like ENPH and inverter-producer SolarEdge Technologies (NASDAQ:SEDG) could also get a boost, as could Canadian Solar (NASDAQ:CSIQ). And if the federal government can accelerate growth in the energy-storage business, multiple companies can be winners. That list includes Tesla and battery-developer QuantumScape (NYSE:QS).

The U.S. political climate clearly has been a catalyst for clean energy stocks. Investors are betting that government support can finally get the entire industry to the promised land of consistent profits and sustainable shareholder returns. They may well be betting correctly.