Chalk it up to whatever you’d like but temperatures are rising globally. Every summer there are reports of extreme heat and this year’s reports from Death Valley highlighted extreme temperatures there. That, of course, doesn’t prove climate change is responsible. It’s simply one event in one region. This had let to the rise of stocks to buy for climate change.
However, given that global temperatures are set to reach new records in the next five years, climate change is occurring. Whether it’s a natural pattern shift or a man-made phenomenon will continue to polarize its discussion. Whatever the cause though, climate change is making ESG stocks relevant again. Let’s look at a few of them in depth.
NextEra Energy (NEE)
I’m left scratching my head when it comes to NextEra Energy (NYSE:NEE) and its stock. The company is fundamentally doing very well and is as diversified an energy firm as you’re likely to see. However, its shares have steadily moved downward throughout 2023.
NextEra Energy is part public utility, part green energy firm. Florida Power & Light provides the company with steady revenues and operations while NextEra Energy Resources (NEER) comprises a massive green energy growth business. FPL is America’s largest electric utility while NEER is the world’s largest producer of solar and wind energy.
That introduction aside, NextEra Energy is doing very well but continues to move downward. Revenues and income are improving during both the Q2 and H1 periods and the firm expects 6-8% growth in 2023. NEE shares include a dividend and there’s a lot of upside inherent in those shares even before adding the dividend into potential returns. I think it’s an easy choice as the climate gets hotter and hotter.
Array Technologies (ARRY)
Array Technologies (NYSE:ARRY) remains a screaming buy of stock even after it jumped up $4 on Aug. 9. The company provides ground-mounting systems that optimize solar panel positioning leading to greater efficiency and energy capture.
The big news was that Array Technologies’ sales reached $508 million whereas Wall Street was expecting $449 million. That led to a $52 million profit and a reversal in EPS fortunes which shited from negative 10 cents to 5 cents in the black. The news sent shares soaring from $17 to $21 immediately and set Array Technologies up to continue to prosper. Its success is intimately connected to the continued growth in demand for solar arrays and installations. All in all, this makes it one of those stocks to buy for climate change.
Even though ARRY shares now trade near $23 additional room remains for growth based on price forecasts. Increasing temperatures should correlate to greater amounts of sunshine as well. That will make solar panels more feasible in a greater range geographically. In theory, that gives investors another reason to consider investing in Array Technologies.
American Water Works (AWK)
A hotter world will favor American Water Works (NYSE:AWK) and its stock. The company provides water and wastewater services to regulated and market-based businesses comprising normal businesses and U.S. military installations.
The logic in investing in publicly-traded firms as temperatures rise is as straightforward as can be. American Water Works sw its earnings rise this year. Earnings increased on both a Q2 and first-half basis. The company increased prices which more than offset increasing costs due to inflation and rising pension obligation.
American Water Works is the largest regulated water and wastewater firm in the U.S. serving more than 14 million customers across 14 states and 18 military installations. Its size is one of the primary reasons to consider it over other water utilities. Further, it has a diverse geographic footprint due to the military installations and their distributed nature. AWK includes a modest dividend as well. It should be easy to understand that American Water Resources is at least worth considering given the signs of water insecurity that have already begun to emerge.
On the date of publication, Alex Sirois 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.
