In a world grappling with climate extremes, the impacts of climate change are becoming increasingly tangible. Amidst this environmental upheaval, companies globally are stepping up, focusing on mitigating these changes. This shift has spotlighted climate change stocks, particularly those aiding in reducing our reliance on fossil fuels. Equally in demand are stocks related to EVs and their infrastructure.
As we navigate these changing tides, let’s delve into three climate change stocks likely to capitalize on the mushrooming eco-trends. These stocks represent a critical, albeit contentious, theme for investors. Interestingly, despite 2022’s market downturn, investment in this sector saw an uptick, evident in deal activity, capital injections, and fund investments. Moreover, with the stock market expected to rally in 2024, propelled by anticipated Federal Reserve rate cuts, these stocks are not just a smart choice but a nod towards a sustainable future.
NextEra Energy (NEE)
NextEra Energy (NYSE:NEE) stands out as an enticing addition to any investment portfolio, especially considering its glowing financial performance this year. Demonstrating remarkable EPS growth in the first three quarters, the company has surpassed earnings estimates in the past 15 consecutive quarters. While there have been concerns over high interest rates and funding issues, these shouldn’t dampen NextEra Energy’s growth trajectory.
The energy giant uniquely combines the stability of a regulated utility company with the innovation of a renewable energy provider. As the largest electric utility in the U.S., it consistently churns out reliable sales. Simultaneously, its involvement in renewable sources, including solar and wind, positions it at the forefront of the energy transition. Ambitiously, NextEra Energy aims for a 6% to 8% earnings growth up to 2026. Moreover, with regular dividends and an above-average forward quarterly dividend of $1.87, yielding 3.04%, it remains an investor’s delight. Targeting a 10% dividend growth at least through 2024, the company’s strategy for sustainable long-term growth remains clear.
First Solar (FSLR)
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First Solar (NASDAQ:FSLR), a trailblazer in the solar industry, epitomizes the massive growth potential in the clean energy sector. Despite a turbulent year, the firm’s impressive bookings backlog of 81.8GW, sustaining it until 2030 with an additional 65.9GW in prospective bookings, underscores its appeal. The imminent launch of its Louisiana and Alabama factories promises a significant production ramp-up, adding new layers to its illustrious growth story.
The company’s recent quarter performance, with a net income of $2.50 per share, exceeding expectations, reflects its robust financial health. First Solar’s edge lies in its advanced thin-film photovoltaic (PV) panels, featuring cost-effective Cadmium Telluride semiconductor technology, lower carbon footprint, and high recyclability. Moreover, analysts are keen on First Solar, citing its impressive market presence and promising future. With the planned capacity expansion, including a new Louisiana facility boosting production by over 30%, First Solar is well on its way to doubling its capacity by 2026, comfortably aiming to meet its 2023 revenue guidance of $3.4 billion to $3.6 billion.
Albemarle (NYSE:ALB) stock has plummeted year-to-date by more than 50%, presenting an intriguing investment opportunity. The anticipated lithium shortage by 2025 shines a spotlight on its stock, which currently trades at under two times forward sales estimates. Lithium, crucial for battery production, is expected to witness a significant price bump in the next 12 to 24 months, positioning ALB for a strong rebound financially.
Moreover, the company is not only navigating current challenges but is also scaling up ambitiously. From a lithium conversion capacity of 200ktpa in 2022, Albemarle is targeting a massive increase to 600ktpa by 2027. This growth strategy places Albemarle at the forefront of the fast-growing battery market, ready to capitalize on the burgeoning demand. Furthermore, this optimistic outlook is echoed by Goldman Sachs, which recently ranked Albemarle among the top third of S&P 500 stocks for expected sales growth in 2025.
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Louisiana-Pacific (NYSE:LPX) remains a key player in the production of engineered wood products for the construction industry and stands as an attractively priced stock. The firm’s commitment to sustainability is evident, with 100% of the wood fiber in its products sourced from certified standard forests and 80% of the thermal energy used in production coming from renewable sources. This eco-conscious approach is complemented by strong financials, as demonstrated in its third-quarter results, with revenues touching a remarkable $728 million, surpassing estimates by $3.6 million. Additionally, Louisiana-Pacific’s non-GAAP EPS of $1.62 during the quarter exceeded expectations by nine cents per share.
However, the company’s dependence on home construction as a primary business driver has led to a recent slump in sales, mainly attributable to the current downturn and higher interest rates. Nevertheless, in anticipation of the forthcoming rate reduction next year, expect the stock’s long-term value to rise significantly.
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BP (NYSE:BP) is a diversified giant in the energy sector and presents a compelling investment opportunity, especially considering its strides in hydrogen energy development. Renowned mainly for its oil drilling operations, the company distinguishes itself from its peers by committing to a net zero goal by 2050. The company aims to capture about 10% of the hydrogen market in its key areas, a goal that promises substantial long-term growth prospects.
While BP is still in the early stages of realizing its hydrogen potential, its ongoing projects in various hydrogen production facilities remain mighty promising. Notably, BP’s management has indicated that its UK-based plants could contribute up to 15% of the region’s hydrogen target by 2030. BP’s dual focus on leveraging the current strong oil market and progressively moving towards climate-friendly initiatives makes its shares particularly attractive. The company is on track to reduce its carbon emissions by 10% to 15% from its 2019 baseline by 2025 and aims for a reduction of up to 30% by 2030, resulting in achieving net zero by 2050.
Toyota Motor Corporation (TM)
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Toyota Motor Corporation (NYSE:TM) is demonstrating a powerful commitment to sustainability, evident in the dynamic shift towards electric vehicles (EVs) and advanced battery technology. This pivot from its traditional automotive roots is marked by a massive investments, as it ushers in a new era of growth.
Toyota responded to criticism for its slow adoption of EVs by overhauling its strategy in June, emphasizing improved driving range and cost reduction. Despite this shift, hybrids, typically more affordable than pure battery-powered EVs, still account for over 90% of Toyota’s electrified vehicle sales. In the quarter ending in September, the company saw a significant 41% increase in hybrid sales, totaling 888,000 vehicles. As we advance, Toyota is targeting sales of 1.5 million EVs a year by 2026 and 3.5 million by the conclusion of the current decade. Coupled with Toyota’s aggressive push into the EV and battery sectors, suggests a promising long-term future.
Array Technologies (ARRY)
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Array Technologies (NASDAQ:ARRY) is a notable player in the renewable energy sphere, providing cutting-edge tracking systems and software for utility-scale solar farms. What sets Array Technologies apart in the competitive field of solar tracking is its powerful engineering and tailored installation processes that significantly enhance efficiency. With a solid track record spanning three decades, the company has effectively evolved with the industry’s changing dynamics. Looking ahead, Array Technologies is gearing up to break ground on a new production facility in Albuquerque, NM, in 2025, signaling a major expansion and commitment towards innovation.
Despite a recent dip in its stock, prompted by a modest downward revision in its 2023 revenue guidance, the hiccup is expected to be short-lived. Moreover, sales growth is anticipated to pick up pace again in the first or second quarter of 2024. Importantly, Array Technologies continues to be a profitable venture reporting a substantial net income of $10.1 million, excluding certain items, in the last quarter. This financial resilience, coupled with its strategic expansions and industry reputation, positions ARRY as a compelling choice for investors.
On the date of publication, Muslim Farooque 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
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