4 Green Investments Under the Biden Administration’s Renewal Energy Push
Go green and make some green in the process
During his campaign, Joe Biden addressed many issues. One of the biggest issues he mentioned was creating green energy.
It wasn’t just a plan to go greener, it was a resolution to go all-in on green energy.
Biden’s plan includes overhauling the US energy sector and investing in sustainable infrastructure. Part of his plan was to make the United States a carbon-free power sector by 2035 and “to achieve net-zero emissions, economy-wide, by no later than 2050.” This is great for the Earth and will supposedly create 10 million clean jobs.
Amazing.
Even better, the $2 trillion “investment over [Biden’s] first four years in office in green energy and infrastructure to combat the threat of climate change.”
We may lose sight of how much $2 trillion is due to the recent price tags of stimulus packages. But that is A LOT of money. So as always, there’s a way to invest and benefit from this outpour of money.
A stock that looks expensive right now might turn out to be a bargain in the future, as this is a long-term investment; it will take decades to implement this change in energy dependence.
Stocks to Invest In
Aptiv ($APTV)
Electric vehicles have gotten plenty of attention in 2020. And rightfully so, as Tesla’s stock was up 700% last year. ‘But Tesla is only a small part of the auto market,’ you say.
GM, the United States’ biggest automaker, plans to go all-electric by 2035.
You could invest in different auto companies’ stocks and hope you pick whoever the winner of this industry is in 15 years. But wouldn’t it be easier picking a stock that is involved with almost all-electric vehicles?
Enter Aptiv.
I am a (biased) big fan of this company. Aptiv’s electrical components help power electric vehicles and distribute data throughout the vehicle. Their major customers include Hyundai, GM, Volkswagen, and Fiat, and probably others as well.
Aptiv had revenues of over $14 billion in 2019.
And electric passenger cars, which account for 3% of global auto sales currently, are expected to hit 7% in 2023 and 31% by 2040, according to BloombergNEF.
This stock has had steady, yet also explosive growth, over the last 12 months (I realize those are opposites.) But their chart supports my statement,
The stock has almost tripled in the last year, but done so by growing more linearly than exponentially. The stock has lost some momentum the past two months and traded choppily, similar to most of the market.
NextEra Energy ($NEE)
This company is no hidden gem. NextEra Energy has the biggest market cap of any US utility company.
NextEra is unique in that it is part electric and part green growth.
They produce and sell more retail electricity than any other company. They are also betting on other green energy sectors. NextEra has a growing portfolio of wind, solar, and battery storage projects.
As an established, large player in the industry, they already have a head start — and the resources — over many other companies in the renewable energy space.
NextEra Energy had revenues of over $19 billion in 2019.
The chart for this stock is amazing.
The stock has had solid growth over the last five years, better than other large companies in the energy sector. They took a stumble during the start of the pandemic. And are stumbling right now as well, but some may view the pullback as a good buying opportunity.
Xylem ($XYL)
Xylem is a feel-good stock. You can invest in it (hopefully make profits) and know you are helping others by doing so.
Their vision is simple: to advance the smarter use of water and look to a future where global water issues do not exist.
The company is focused on fighting water scarcity by upgrading infrastructures to deliver clean water to people in over 150 countries.
Xylem had revenues of over $5 billion in 2019.
Their stock’s performance has been a little bumpier than the previous two, whether looking at the five-year or one-year chart. But it has still done extremely well, offering a 159% return over five years and 57% the past 12 months.
Avangrid ($AGR)
Avangrid is a gas and electric utility, with a growing wind energy portfolio. They have over 3 million customers in the Northeast.
Avangrid is investing in two big renewable energy projects that should help its revenue. Tim Winter, a portfolio manager specializing in utilities, said “Avangrid has the potential to replicate [NextEra’s success]”
Avangrid doesn’t have the customer base or revenue as large as NextEra but there is a belief it can grow and be the next darling of the energy sector.
Avangrid had revenues of over $6 billion in 2019.
This stock is the choppiest of them all. It doesn’t matter if you’re looking at its five-year or one-year chart. This stock has potential — the company doesn’t seem to be as established as the others. More risks mean more can go wrong. It can also mean there more upside potential. Choose wisely.
ETFs
Not listed, but not forgotten are ETFs. There are plenty of ETFs that focus on “renewable energy” and “going green.”
ETFs are considered less risk, less reward. But there are plenty in this space worth considering.
Invest in the Earth
Besides investing in the market, invest in the Earth. We only get one and need to take care of it! Don’t litter, recycle, and enjoy nature any chance you get!
Final Thoughts
I want to like the energy industry. If I can help the Earth and make money, that’s a win-win. But, it’s worth noting the energy industry has been the worst-performing sector (out of 12) each of the last three years.
There have been some hidden gems in the sector that have performed well though.
Most of these stocks listed above would likely be long-term investments. The shift to green energy is still decades away. It’s not going to change society overnight, like Zoom.
Another thing to consider is the politics involved. The current administration wants to invest in green energy. But the focus right now is on the pandemic and helping the economy recover. When that’s finally done, how much time will Biden have left in this term before he has to focus on re-election?
Also important to note, the shift to green energy will be very costly. Trillions of dollars need to be invested. The government will have a hard time getting support for trillions of more spending after passing trillions for stimulus from the pandemic.
The above references an opinion and is for information purposes only. It is not investment advice. Seek a duly licensed professional for investment advice. The author is long in both $NEE and $APTV.
If you enjoyed this article check out my thoughts on other industries worth investing in
