10 ESG Stocks to Buy for a Brighter
Future
ESG investing is both the socially
responsible thing and the profitable thing to do today
September 25, 2020 -- InvestorsHub NewsWire -- via By Luke Lango, InvestorPlace Markets
Analyst Sep 24, 2020, 1:39 pm EDT
Source: Shutterstock
We all have a role to play in saving our planet, and as
investors, that role is super simple: Embrace ESG investing.
What on Earth does that mean?
ESG stands for environmental, social and corporate governance,
and ESG stocks broadly represent investments in companies that are
doing good by those three factors.
These companies are promoting the adoption of clean energy to
reduce our carbon footprint. They are driving us forward on a path
toward ubiquitous electric vehicle adoption. They are bringing us
into a new era of plant-based foods where we do not subject animals
to harsh living conditions.
All in all, these are the companies which are helping us create
a brighter future for ourselves, our children and their
children.
They are good companies.
And they also happen to be great investment opportunities. ESG
investing will outperform in a huge way over the next decade for
two big reasons:
- Rising investor interest. The percentage of
institutional and retail investors who considered ESG impacts in
their investment decisions rose from 48% in 2017 to 75% in 2019, while ESG
funds saw record inflows in
2019. The more investors buy ESG stocks, the higher those stocks
will go.
- Shifting consumer demand. Millennial and Gen Z
consumers will substantially increase their purchasing power in the
2020s, and these consumers are aligning their purchasing
decisions with socially and environmentally positive
products and services. The more young consumers buy ESG-positive
products and services, the higher profits at ESG companies will
go.
To that end, ESG investing is both the socially responsible
thing and the profitable thing to do today.
With that in mind, here is a list of my favorite 10 ESG stocks
to buy for a brighter future:
ESG Investing Picks: Tesla (TSLA)
The first stock on this list is also the most well-known.
Often considered the “poster boy” for the ESG investing
megatrend, Tesla is pioneering a much more sustainable world built
on the back of electric vehicles and solar energy.
Demand for both electric cars and solar panels will soar over
the next decade. By 2030, most passenger cars on the road will be
electric and most homes in developed nations will be powered by
solar.
Tesla has a compelling opportunity to lean into its technology,
branding, first-mover, distribution and production advantages to
emerge as a leader in both EVs and solar energy. If the company
does, the sky really is the limit for how high TSLA stock can
go.
Beyond Meat (BYND)
The second stock on this list is the second most well-known.
Much like Tesla is pioneering the way for a world of gas-free
cars, Beyond Meat is pioneering a future of animal-free meat.
Over the years, consumers globally have developed huge demand
for meat. This demand surge has prompted a meat supply surge, which
has led to a rapid increase in the number of cows in the world.
That seems all fine and dandy until you realize that your
average cow releases between 70 and 120 kilograms of
methane per year. There are over 1.5 billion cows and
bulls in the world. Add it all up, and the unnatural surge in
animal-based meat supply is a huge contributor to global
warming.
Not to mention, maintenance of this farm land is responsible for
2.8 billion metrics tons of carbon dioxide (CO2) emissions every
year.
The fix? Beyond Meat’s plant-based meat, which tastes just as
good as animal-based meat and requires no cows. Just plants and a
cool scientific process.
Demand for these plant-based meat products is soaring today, and
will continue to soar over the next several years as
environmentally friendly consumers continue to opt for
environmentally friendly plant-based meat over animal-based
meat.
As that happens, Beyond Meat will fundamentally alter the $1.4
trillion global meat landscape. In the process, it will turn into a
hugely valuable company. This, of course, means BYND stock will
soar.
ESG Investing Picks: Nio
(NIO)
Often considered the Tesla of China, Nio is another way to get into
ESG investing.
Nio is doing in China today exactly what Tesla was doing in the
U.S. a few years back.
Create a few premium electric vehicles with superior performance
and strong demand. Cultivate exceptionally strong brand equity and
customer loyalty around the Nio name. Sell those cars like crazy to
rich folks.
Because the premium goods market in China is very strong, Nio
has a compelling opportunity to turn into a dominant player in
China’s booming premium EV market over the next several years.
As the company does that, revenues, profits and the NIO stock
price will all soar.
NextEra Energy (NEE)
Leading renewable energy and battery storage company NextEra
Energy is another strong stock to buy to play the ESG
investment theme of the 2020s.
In a nutshell, the renewable energy space is positioned for huge
growth over the next decade. Demand for renewable energy will grow
exponentially, because: 1) consumers will increasingly want to
shift toward clean energy as they become more aware of ESG impacts,
2) governments globally will help support that growing demand with
subsidies, 3) the costs of renewable energy will come down with
scale and 4) the efficiency of renewables will go up with
technological improvements.
At the same time, supply will adjust to shifting demand, and
companies will pour more and more money into clean energy
projects.
That is great news for NextEra Energy, which is widely
considered America’s leading clean energy company. It has a huge
footprint in solar and wind power, as well as battery storage. This
leading position in a secular growth market is why NextEra’s stock
price is up a whopping 180% over the past five years.
It’s also why the stock will stay hot for the next decade.
Demand for renewable energy will grow exponentially in the 2020s.
As it does, renewable energy companies like NextEra will see their
revenues, profits and stock prices all move way higher.
ESG Investing Picks: Workhorse
(WKHS)
According to a report from the World Economic Forum,
delivery trucks pump about 19 million tons of CO2 emissions every
year. Given the surge in e-commerce and delivery demand, that
number is projected to rise by 32% over the next decade.
But only if nothing changes.
Electric delivery trucks are looking to rewrite that future. The
company that is pioneering this potential planet-saving change is
Workhorse.
Workhorse has developed a series of market-leading electric
delivery trucks that are 100% clean, hyper-efficient,
cost-effective, powerful and multi-purpose. These trucks have
scored a big deal with the United Parcel
Service (NYSE:UPS),
and appear to be on the cusp of scoring another big deal with the
U.S. Postal Service. Plus, these trucks also have advanced drone
delivery technology.
All in all, Workhorse is a pure play on the EV disruption in the
last-mile delivery market. And as such, WKHS stock is an ESG
investing opportunity with compelling long-term upside.
First Solar (FSLR)
The stars have finally aligned for the solar energy megatrend to
come to life, and over the next decade, solar power will become
globally ubiquitous, powering everything from your home to your
office. You can thank:
- Government support. Almost every country in
the world has a “100% clean energy” target for 2030, 2040 or
2050.
- Falling costs. Solar energy costs have dropped
70% over the past 10 years to reach near grid parity.
- Improving technology. Nearly 26%
of solar systems will be paired with energy storage capability by
2025, versus just 4% in 2019.
- Rising consumer demand. Roughly 46% of U.S.
homeowners are seriously thinking about adding solar panels to
their homes, up from 40% in 2016.
All of this means that some of the best ESG investing
opportunities for the next decade are solar stocks. In that solar
industry, the top pick is probably First Solar — one of the largest
and most qualified solar energy companies.
Over the next decade, as solar energy installs grow
exponentially and solar becomes the largest energy source in the
world, First Solar’s volumes, revenues and profits will soar. Of
course, this will lead to a soaring FSLR stock price, too.
ESG Investing Picks: Else
Nutrition (BABYF)
Else Nutrition is one of the most interesting ESG stocks to buy for
the next decade because it is an explosive, micro-cap pure-play on
plant-based food adoption in the highly specialized infant
nutrition vertical.
The story here is pretty simple.
The whole world is pivoting from animal-based foods to
plant-based foods. Infant nutrition has lagged in this transition.
But Else Nutrition has finally brought to market the first
plant-based milk formula for toddlers, based on a novel mix of
almonds, buckwheat and tapioca.
This first-of-its-kind formula — which will be accompanied by a
newborn milk formula in the coming months — has a unique
opportunity to leverage first-mover advantage. Else Nutrition can
disrupt the highly specialized, always-necessary $80 billion infant
nutrition market.
If management successfully executes against this opportunity,
this tiny food company could turn into a multibillion-dollar
giant.
Forum Merger II Corporation
(FMCI)
Another small-cap ESG stock to buy to play the plant-based food
megatrend is Forum Merger II Corporation. This is just a SPAC that
is set to acquire Tattooed Chef.
Tattooed Chef specializes in making pre-prepared, plant-based
frozen foods that are GMO-free, organic and protein-rich. Its
best-selling products include organic acai bowls, cauliflower
pizza, Mexican street corn, cauliflower stir-fry and zucchini
spirals.
The company’s product portfolio is basically the dream freezer
of your typical health-conscious, eco-sensitive, time-constrained
millennial and Gen Z consumer — a person who is already eating
plant-based foods once a month. They are increasing their intake of
plant-based proteins and rapidly pivoting to pre-prepped frozen
foods to save time.
To that extent, adoption of these products has soared over the
past few years. In 2019, the company’s sales rose 77%. And they
will continue to soar over the next few years as plant-based foods
only become more and more ubiquitous.
Against the backdrop of this supercharged growth, FMCI stock
will keep flying higher.
ESG Investing Picks: Gores
Metropoulos (GMHI)
Car accidents are a big problem.
Every day, more than more than 90 people die
in car accidents, and a big portion of those accidents are due to
distracted driving. While we will never eliminate all accidents, we
can significantly reduce the number of distracted driving accidents
by enabling a new era of advanced, partially autonomous cars.
The key to unlocking this new era of semi-autonomous cars is
LiDAR — or advanced laser sensors that help a car dynamically
recognize and respond to objects around it.
Luminar Technologies — which is set to go public via Gores
Metropoulos — is the best LiDAR company in the world, having built
the only viable independent long-range LiDAR sensors that are set
to start appearing
in Volvo (OTCMKTS:VLVLY)
cars in 2022.
Those Volvo cars represent just the beginning of what will be a
decade long growth ramp for Luminar, wherein the company’s leading
LiDAR sensors will be deployed on millions of vehicles every year
and help save dozens of lives every day.
In this sense, GMHI stock is a winning investment, both in terms
of money and lives.
Amazon (AMZN)
Last, but certainly not least, on this list of ESG stocks to buy is
Amazon.
Amazon’s enormous cross-industry presence means the company is a
huge contributor to CO2 emissions. Think of all the deliveries
Amazon has to fulfill every day. Or all the energy that Amazon Web
Services uses every day to power over 30% of the world’s public
cloud computing capacity.
Fortunately, Amazon knows this, and is committed to reducing its
CO2 footprint. By the end of the decade, I think it is very likely
that all of Amazon’s delivery trucks are electric, and that all AWS
servers are powered by clean energy.
In embarking on this disruptive transition, Amazon will
dramatically advance the ESG movement while still sustaining huge
growth in its core businesses.
And, for that reason, AMZN stock is a winning investment — both
from a “making money” perspective and a “saving the planet”
perspective.
On the date of publication, Luke Lango did
not have (either directly or indirectly) any positions in the
securities mentioned in this article.
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SOURCE: Luke Lango, InvestorPlace
Markets Analyst
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