As countries throughout the world work to make (or keep) climate change top of mind in policy initiatives, some investors are paying more attention to a company’s environmental, social and governance score. An ESG score measures how well a company performs regarding issues like sustainability and gender equality. Because of their environmental focus, clean energy stocks are often presumed to have high ESG scores.
In many cases they do, but not always. ESG is still relatively new. As such, some companies have learned to “greenwash” their metrics. Other companies, such as Chevron (NYSE:CVX) will have a negative ESG score despite taking a leadership in the promotion and distribution of renewable fuels worldwide.
This is creating an investing environment in which ESG is a politically charged concept. In fact, BlackRock (NYSE:BLK), a company that has promoted ESG standards saw their assets under management decline by $4 billion as investors rejected the company’s stance on ESG.
What you decide is up to you. But ESG is not going away and, in any event, it’s only one reason to own a stock. The most important still remains its ability to help you make a profit. Here are three clean energy stocks that do both.
Tesla (TSLA)
Putting aside any feelings you have for Tesla (NASDAQ:TSLA) founder Elon Musk, his “other” company, or the Cybertruck, it’s impossible to ignore the impact Tesla is making in the electric vehicle (EV) revolution. That effort is not going unnoticed by ESG activists. The company has one of the highest score among ESG companies at 42.7%.
Tesla is an unquestioned leader in the EV sector, but you shouldn’t forget that it’s also a renewable energy company in its own right. And with the company’s decision to make its EV charging solution (and charging stations) available to all EV manufacturers, the company will be one of the leading players in the renewable energy space.
TSLA stock is volatile and many funds love to short its stock. However, if you bought the stock prior to 2021, you’ve been rewarded with a solid gain. And as one of the leaders in the clean energy space, there will be more growth to come.
NextEra Energy (NEE)
Despite its name, NextEra Energy (NYSE:NEE) is not a pure-play among clean energy stocks. In fact, the company is the largest electric utility in the United States. However, NextEra was an early adopter of green energy sources like wind and solar. Today, approximately 60% of the company’s 58 GW load is produced by clean, green energy sources. And one of the country’s largest service areas is Florida, which is also one of the fastest growing areas in the country.
It’s not surprising then that NextEra has an Impact score of 16.4% and has been recognized for its ESG practices. And right now, investors can buy NEE stock near its three-year low. And even if you’ve been a shareholder as the stock price fell as part of the broader market sell-off in September and October, you still got the benefit of a growing dividend that currently has a 3.20% yield.
Of the 20 analysts that have issued a rating on NEE stock in the last three months, 15 give the stock a Strong Buy or Buy rating.
Bloom Energy (BE)
When you’re talking about clean energy stocks, it doesn’t get much cleaner than hydrogen. Many companies in this space have a positive ESG score, and Bloom Energy (NYSE:BE) is no exception with a positive ESG score of 8.8%. However, Bloom Energy also has the benefit of being favored by analysts. Of 24 analysts that have issued a rating on BE stock in the past 3 months, three give it a Strong Buy or Buy rating.
At a time when many hydrogen companies have yet to turn a profit, Bloom just delivered a quarter with earnings per share (EPS) of five cents. The company is not consistently profitable, but with revenue growing year-over-year, that time may be coming.
However, the recent announcement by Plug Power (NYSE:PLUG) has some investors wondering if hydrogen will ever be a viable clean energy source.
Specifically, Plug Power issued a “going concern” warning. This means that the company may have trouble meeting its financial obligations. It’s a reminder that many hydrogen companies have been building out with interest rates at or near zero. A “normal” rate of 5% will make future borrowing prohibitive since many of these companies are not yet profitable.
On the date of publication, Chris Markoch held a LONG position in CVS stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
