Geopolitical and macroeconomic headwinds have combined to slow down growth in the climate change sector over the past few months. However, governmental policy towards net zero emissions within the next two decades has served to balance out some capital concerns surrounding the climate change market. According to a report by consulting firm McKinsey, private investment in climate firms outpaced the broader market in 2022 even as the economy contracted, boosting climate stocks.
The global climate change market has been one of the fastest growing sectors in the world economy over the past decade. US-based publication CCBJ estimates that the climate industry in the US was worth $300 billion in 2013 and over $1.4 trillion globally. Research and advisory firm Verdantix predicts that the climate change market will grow at an annual rate of more than 29% in the coming years. This will partly be due to increased government spending towards climate, as the Inflation Reduction Act allocated over $500 billion to mitigate climate change.
Investors eager to profit from this climate boom should look into the climate change businesses of companies like General Electric Company (NYSE:GE), Tesla, Inc. (NASDAQ:TSLA), and First Solar, Inc. (NASDAQ:FSLR). Mark Widmar, the CEO of First Solar, Inc. (NASDAQ:FSLR), recently highlighted some of the future plans of his firm during the fourth quarter earnings call in late February, noting how the firm had been operating in the climate change market for more than twenty-five years, making it one of the oldest and experienced companies in the sector.
“When combined with our Alabama facility and our Ohio manufacturing footprint expansions, both of which are in progress, we expect a 2026 year-end nameplate capacity of approximately 14 gigawatts domestically with another 11 gigawatts internationally for a global nameplate capacity of approximately 25 gigawatts. We also continue to invest in our technology with our R&D innovation center and our perovskite development line, both underconstruction in Ohio. These facilities are expected to commence operations in the first half and second half of 2024, respectively. Additionally, in 2023, we acquired Evolar, a European leader in perovskite technology, and has since transitioned its laboratory in Sweden to become our first R&D facility in Europe. These and other investments in R&D allow us to accelerate the cycles of innovation, which we believe are necessary to extend our leadership in thin-film solar technology. Turning to Slide 4. As of year-end 2022, our contracted backlog totaled 61.4 gigawatts with an aggregate value of $17.7 billion or approximately $0.288 per watt. Through year-end 2023, we entered into an additional 28.3 gigawatts of contracts at an average ASP of $0.305 per watt.”
Our Methodology
The companies that offer products or services related to climate change were selected and ranked based on hedge fund sentiment. The analyst ratings of each stock are also discussed to provide readers with some context for their investment choices. The hedge fund sentiment around each stock was calculated using the data of around 900 hedge funds tracked by Insider Monkey in the fourth quarter of 2023. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
14 Best Climate Change Stocks To Buy According to Hedge Funds
A geologist collecting data in a remote location to monitor the effects of climate change.
Best Climate Change Stocks To Buy According to Hedge Funds
Canadian Solar Inc. (NASDAQ:CSIQ) designs, develops, manufactures, and sells solar ingots, wafers, cells, modules, and other solar power and battery storage products in Asia, the Americas, Europe, and internationally. On March 15, investment advisory Citigroup maintained a Neutral rating on Canadian Solar Inc. (NASDAQ:CSIQ) stock and lowered the price target to $24 from $26.
At the end of the fourth quarter of 2023, 10 hedge funds in the database of Insider Monkey held stakes worth $40 million in Canadian Solar Inc. (NASDAQ:CSIQ), the same as in the preceding quarter worth $89 million.
Just like General Electric Company (NYSE:GE), Tesla, Inc. (NASDAQ:TSLA), and First Solar, Inc. (NASDAQ:FSLR), Canadian Solar Inc. (NASDAQ:CSIQ) is one of the best climate change stocks to buy according to hedge funds.
TPI Composites, Inc. (NASDAQ:TPIC) markets wind blades and other systems used by wind energy farms. On February 23, investment advisory Piper Sandler maintained a Neutral rating on TPI Composites, Inc. (NASDAQ:TPIC) stock and lowered the price target to $3 from $4.
Among the hedge funds being tracked by Insider Monkey, California-based investment firm Oaktree Capital Management is a leading shareholder in TPI Composites, Inc. (NASDAQ:TPIC) with 4.6 million shares worth more than $19 million.
Brookfield Renewable Partners L.P. (NYSE:BEP) is a renewable power generating company. Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Select Equity Group is a leading shareholder in Brookfield Renewable Partners L.P. (NYSE:BEP) with 6.1 million shares worth more than $162 million.
In its Q2 2023 investor letter, Emeth Value Capital, an asset management firm, highlighted a few stocks and Brookfield Renewable Partners L.P. (NYSE:BEP) was one of them. Here is what the fund said:
“Brookfield Corporation has $9.2 billion invested through Brookfield Renewable Partners L.P. (NYSE:BEP), a publicly traded permanent capital vehicle that invests in renewable power and decarbonization solutions. The partnership is Brookfield’s longest standing listed investment vehicle and over the past two decades has assembled one of the world’s largest portfolios of hydroelectric, wind, solar, and renewable storage assets. The origins of Brookfield Renewable trace back to the Great Lakes Hydro Income Fund, which owned three hydroelectric generating stations located along the Lievre River that produced an annual average of 1,400 gigawatt hours (GWh) of electricity. Following its listing, Great Lakes Hydro under the leadership of Richard Legault acquired and developed an additional thirty-nine hydroelectric generating stations from 1999 to 2010, adding more than 4,000 GWh of annual electricity production. Meanwhile, because Great Lakes Hydro was a controlled subsidiary of Brookfield, Richard Legault, alongside other executives at Brookfield, spearheaded efforts to assemble an extensive portfolio of hydroelectric power assets that were owned by Brookfield directly. By 2010, Brookfield Renewable Power Inc., a wholly-owned subsidiary of Brookfield, had acquired 128 hydroelectric generating stations that it owned in addition to the assets owned via Great Lakes Hydro. Shortly thereafter, in 2011, Brookfield opted to consolidate all its renewable power assets into one investment vehicle under what was already a unified management structure, which formed Brookfield Renewable Partners. The new entity owned and operated 170 hydroelectric generating stations in North America and Brazil that produced 15,200 GWh of annual electricity, or more than a 10x increase since inception. In addition, the partnership inherited three wind facilities, two natural gas fired power plants, and a substantial 5,000 GWh development pipeline of renewable power projects. Notably, in contrast to more recently established renewable energy platforms, Brookfield Renewable Partners remained almost entirely hydroelectric power focused until 2011, and its cash flows remained over seventy percent hydro-centric until 2020. This resulted from Brookfield’s strong value orientation and aversion to projects that relied heavily on subsidy markets. Today, Brookfield Renewable Partners owns and operates 229 hydroelectric power facilities that produce an annual average of 20,000 GWh of electricity. These hydro assets remain the bedrock of the current portfolio and account for approximately half of the partnership’s $1.4 billion in asset-level cash flows. What’s more, quality of cash flows varies greatly across the renewables sector. Hydro assets achieve the highest relative capacity factors, offer natural energy storage solutions in the form of reservoirs, and, in contrast to solar and wind assets that have a useful life of twenty-five years, are perpetual in nature. For example, the original Lievre River assets that were contributed to the Great Lakes Hydro Income Fund were constructed between 1929 and 1954. In 2022, Brookfield Renewable Partners signed a new forty year power purchase agreement (PPA) with the government of Quebec to offtake the power from these exact assets. In other words, by the end of this term the oldest of these generating stations will have been revenue producing for more than 130 years. As a result, the capital required to sustain production from hydro is seven times less than that of wind and solar, resulting in a free cash flow conversion that is nearly fifty percent greater. Nevertheless, as hydroelectric assets have become increasingly scarce and as the economics of other renewable technologies have improved in recent years, Brookfield Renewable Partners has been rapidly scaling its solar and wind portfolio. At present, the partnership owns 131 wind facilities, 156 utility scale solar facilities, and more than 6,000 distributed generation facilities, often in the form of commercial and industrial solar or community solar installations…” (Click here to read the full text)
Denison Mines Corp. (NYSE:DNN) is a uranium exploration and development firm. Uranium is an important energy source for countries as they transition away from fossil fuels towards cleaner energy sources. At the end of the fourth quarter of 2023, 19 hedge funds in the database of Insider Monkey held stakes worth $44 million in Denison Mines Corp. (NYSE:DNN), up from 17 in the preceding quarter worth $34 million.
Plug Power Inc. (NASDAQ:PLUG) markets hydrogen fuel cell solutions. On March 5, investment advisory HSBC maintained a Buy rating on Plug Power Inc. (NASDAQ:PLUG) stock and lowered the price target to $8.5 from $9.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Plug Power Inc. (NASDAQ:PLUG) with 115 million shares worth more than $119 million.
Clearway Energy, Inc. (NYSE:CWEN) is a New Jersey-based renewable energy firm. On March 1, investment advisory Morgan Stanley maintained an Equal Weight rating on Clearway Energy, Inc. (NYSE:CWEN) stock and raised the price target to $25 from $23.
At the end of the fourth quarter of 2023, 22 hedge funds in the database of Insider Monkey held stakes worth $136 million in Clearway Energy, Inc. (NYSE:CWEN), compared to 23 in the previous quarter worth $111 million.
Green Plains Inc. (NASDAQ:GPRE) is a diversified energy company. On March 4, investment advisory UBS maintained a Buy rating on Green Plains Inc. (NASDAQ:GPRE) stock and lowered the price target to $31 from $33.5.
Among the hedge funds being tracked by Insider Monkey, Ohio-based investment firm Ancora Advisors is a leading shareholder in Green Plains Inc. (NASDAQ:GPRE) with 4 million shares worth more than $101 million.
In its Q4 2023 investor letter, White Brook Capital Partners, an asset management firm, highlighted a few stocks and Green Plains Inc. (NASDAQ:GPRE) was one of them. Here is what the fund said:
“Mosaic (MOS) and Green Plains Inc. (NASDAQ:GPRE), our commodity-sensitive investments, remain substantial positions in the portfolio. The companies are a natural hedge to each other in some ways, as the price of corn is a feedstock for Green Plains while it bolsters the purchasing power of Mosaic’s customers. On the other hand, higher oil prices are a positive for Green Plains, while the opposite is true for Mosaic.
SolarEdge Technologies, Inc. (NASDAQ:SEDG) markets semiconductor equipment for the solar industry. On March 11, investment advisory Piper Sandler maintained a Neutral rating on SolarEdge Technologies, Inc. (NASDAQ:SEDG) stock and lowered the price target to $73 from $77.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Impax Asset Management is a leading shareholder in SolarEdge Technologies, Inc. (NASDAQ:SEDG) with 954,264 shares worth more than $88 million.
Suncor Energy Inc. (NYSE:SU) is a Canada-based integrated energy firm. At the end of the fourth quarter of 2023, 37 hedge funds in the database of Insider Monkey held stakes worth $1.5 billion in Suncor Energy Inc. (NYSE:SU), compared to 34 in the previous quarter worth $1 billion.
In addition to General Electric Company (NYSE:GE), Tesla, Inc. (NASDAQ:TSLA), and First Solar, Inc. (NASDAQ:FSLR), Suncor Energy Inc. (NYSE:SU) is one of the best climate change stocks to buy according to hedge funds.
