Environmental concerns are now a global subject for discussion because a range of companies, several governments, along with regulatory bodies continue to be highly concerned regarding global warming and higher carbon footprints. Globally, the companies are formulating strategies to reduce carbon emissions and prefer favourable methods which includes switching their day-to-day operations to renewable and electric energies. As the result, the new-age market enthusiasts are now focused on best environmental stocks for investors to buy now and hold for lifetime.
As the time has passed, a range of companies continue to focus on their respective environmental, social, and governance practices which are being implemented as they have started allocating some portion of their budgets to mandatory ESG activities. Environmental stocks means shares of the companies which are focused on sustainable environment, renewable energy, energy-efficient products, and several other green initiatives.
Of all the approaches focused on sustainability and tackling environmental hazards, electric vehicles (EVs), and renewable energy are the factors which continue to offer a way out. Since manufacturing of EVs has been increasing globally, some of the below-mentioned firms have made it to our list of Best environmental stocks for investors to buy now and hold for lifetime. In this space, there are several Chinese companies which have earned huge name in the EV industry since they put a significant amount of capital in production of electric cars.
It goes without saying that EV market continues to grow exponentially. According to the International Energy Agency, total of ~14% of automobiles which were sold globally in the previous year were EVs, which exhibits a rise from ~9% in the past year. In 1Q of this year, over ~2.3 million EVs were sold globally, with the agency expecting ~14 million of sales by 2023 end.
With this in mind, let us now have a look at best environmental stocks for investors to buy now and hold for lifetime.
1. NIO Inc.
The company carries out operations in China’s premium EV market. It designs and manufactures, and sells smart and connected premium EVs globally.
It has announced its financial results for 2Q ended June 30, 2023. Vehicle deliveries of the company came in at ~23,520 in 2Q23, which consists of ~10,492 premium smart electric SUVs and ~13,028 premium smart electric sedans. This exhibits a decline of ~6.1% from 2Q22, and a fall of ~24.2% from 1Q23. Vehicle sales of the company came in at ~RMB7,185.2 million (US$990.9 million) in 2Q23, representing a 24.9% fall from 2Q22 and a decline of ~22.1% from 1Q23.
Total revenues of the company was RMB 8,771.7 million (US$1,209.7 million) in 2Q23, representing decrease of 14.8% from 2Q22 and a decline of ~17.8 % from 1Q23. Gross profit of the company was RMB87.0 million (US$12.0 million) in 2Q23. Cash and cash equivalents, restricted cash, short-term investment and long-term time deposits came at RMB 31.5 billion (US$4.3 billion) as at June 30, 2023.
The company saw the delivery ~16,074 vehicles in Oct 2023, exhibiting a rise of ~59.8% year-over-year. Deliveries included ~11,086 premium smart electric SUVs, and ~4,988 premium smart electric sedans. As the result, the cumulative deliveries of the company’s touched ~415,623 as of October 31, 2023.
For 3Q, it total revenues to come in the range of RMB 18,898 million (US$2,606 million) – RMB 19,520 million (US$2,692 million). This exhibits a rise of ~45.3% – 50.1% from same quarter of 2022.
2. Plug Power, Inc.
The company is building end-to-end green hydrogen ecosystem i.e., from production, storage and delivery to energy generation.
Revenue of the company came in at $199 million in 3Q in comparison to $189 million for 3Q22, exhibiting a rise of 5% year-over-year. Overall, the company’s gross margin came in negative 69%, in comparison to negative 24% for 3Q22. Equipment line item now includes the blended margin from established fuel cell applications in material handling sector along with the company’s rapidly expanding new product lines including electrolyzers, on-road mobility solutions, etc.
Liquid hydrogen market in North America was significantly constrained as a result of multiple frequent force majeure events, resulting to volume constraints which impacted the company’s service margin improvements. It continues to organise through historically-difficult hydrogen supply environment. This was done by leveraging its logistics assets and team members to send hydrogen throughout US to help customer operations.
As the company manages through hydrogen supply disruption in the short-term, the company is focused on operational scale and in-house hydrogen generation to improve its position as global leader in green hydrogen industry.
The company is focused on building global green hydrogen ecosystem and on achieving its growth objectives, margin enhancement and achieving profitability.
3. Clean Harbors, Inc.
The company provides environmental and industrial services globally and it operates under 2 segments: The Environmental Services, and 2) The Safety-Kleen Sustainability Solutions.
In 3Q, the company saw revenues of $1.37 billion as a result of growth in environmental services, and it saw net income of $91.3 million, or EPS of $1.68. Adjusted EBITDA of the company came in at $255.0 million, with underlying business conditions remaining favourable.
Environmental Services (ES) business of the company saw an increase of 11% in adjusted EBITDA and 120-basis point margin improvement year-over-year as a result of 6% revenue growth. Within the company’s service businesses, Safety-Kleen Environmental Services revenue saw an increase of ~14%, while Field Services revenue grew by ~3%.
In 4Q, Clean Harbors expects adjusted EBITDA to increase by ~15% year-over-year.
In today’s world, the fund managers are quite keen on investing best environmental stocks for investors and, therefore, these stocks are now expected to see some strong gains in the months ahead. Sustainable investing is the high-priority for global asset managers. This is because they believe that ESG and shareholder value are directly related. As per Bloomberg, by 2025, ESG assets should touch the mark of $50 trillion in value.
While above are some best environmental stocks for investors to buy now and hold for lifetime, there are other stocks such as Sunrun Inc., Li Auto Inc., and Enbridge Inc. which are expected to do well.