Clean energy stocks are the next frontier in tech investing. Solar, hydrogen fuel cells, biodiesels and even natural gas have soared as governments look to roll out clean energy policies worldwide. Many of these companies will win big. But many of these technologies also have checkered histories. Investors buying clean energy stocks will need to pick the right ones to profit in the long term.
Frequently Asked Questions
How Do I Invest in 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.
Are Clean Energy Stocks Good Investments?
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.
How Will Biden Affect Clean Energy Stocks?
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.