Investors Flock Green Energy Before Election: Top ETFs, Stocks
Ahead of the 2020 election, now less than a month away, investors are pushing for greener stocks. This is especially true given that former Vice President Joe Biden, who suggested building green and clean infrastructure, leads Donald Trump in the polls. Additionally, interest in environmental, social and governance investments has grown rapidly as companies around the world invest in clean tech businesses.
In the midst of the industry rally, the world's largest provider of wind and solar energy NextEra Energy NEE outperformed the over a hundred-year-old giant ExxonMobil XOM as the largest energy or utility company by market capitalization.
Biden plans to go greener
The Democratic presidential candidate plans to pump $ 2 trillion into green energy within four years to build solar panels, charging stations and more. A presidency in Biden is set to spur tens of thousands of new wind turbines and millions of new solar panels in the United States to rapidly achieve low carbon energy. The plan will eliminate carbon emissions from the electricity grid by 2035 and accelerate the uptake of electric vehicles. Biden also aims to put the United States on the path to a 100% clean energy economy with net zero emissions by 2050 at the latest (see: Winning / Losing Sector ETFs If Biden Wins Elections).
Increase in demand for renewable energies
Global renewable energy consumption has grown exponentially over the past decade at an average annual rate of 13.7%. It is the only energy category that has seen double-digit growth worldwide over the past ten years. Consumption increased by 12.2% annually in 2019. Falling costs for the generation of renewable energies have led to strong growth. Over the past 10 years, the cost of solar panels has decreased by 82%, the cost of onshore wind has decreased by 39%, and the cost of offshore wind has decreased by 29% according to the International Renewable Energy Agency.
The latest data from the US Energy Information Administration showed that 18% of US electricity generation was from alternative energy in 2019, up from 10% in 2009.
Although COVID-19 has caused a slowdown in the uptake of renewable energy projects, the International Energy Agency (IEA) estimates that renewable energy production will increase by 5% this year - the only power generation source with an upward trend. The world currently gets around a third of its energy from renewable sources.
Goldman Sachs plans renewable energy spending to overtake oil and gas drilling for the first time next year. The investment bank sees opportunities for clean energy by 2030 (see: Why Clean Energy ETFs Shine Brightly).
Companies around the world have been spending more on clean energy, with China, the United States and Europe leading the way. China is responsible for around 70% of all photovoltaic solar modules. According to Clean Energy Wire, Germany gets almost half of its energy from renewable energies. BP plc (BP) plans to cut oil production by 40% over the next decade and invest $ 5 billion in clean technologies by 2030.
Given the uptrend, clean energy stocks and ETFs are soaring this year. Below we've highlighted the top five from each corner:
Invesco Solar ETF TAN - Plus 144.1%
This ETF provides global exposure to the solar industry by tracking the MAC Global Solar Energy Index and holding 32 stocks in the cart. It is moderately focused on components, each making up no more than 10.5% of the assets. US companies dominate the fund's portfolio with a share of almost 49.4%, followed by China (23.5%) and Germany (5.5%). The product has an asset base of $ 1.5 billion and trades at a solid volume of around 882,000 shares per day. It charges investors 71 basis points in fees per year and has a Zacks ETF Rank 2 (Buy) with a high risk outlook (see: Best Performing ETFs of the Third Quarter).
ALPS Clean Energy ETF ACES - Plus 82.8%
This fund seeks to track the performance of an index comprised of companies based in the US and Canada that are primarily active in the clean energy sector. The company has amassed an asset base of $ 391.3 million and charges investors at a rate of 65 basis points per year. The company trades with a moderate average daily volume of around 66,000 shares and has 33 securities in its shopping cart, none of which account for more than 9.1%.
SPDR S & P Kensho Clean Power ETF CNRG - Plus 80.8%
This ETF provides exposure to companies whose products and services drive innovation behind the clean energy sector, which includes solar, wind, geothermal and hydropower. It follows the S&P Kensho Clean Power Index and holds 40 stocks in its basket, with each unit accounting for less than 8.5%. The product has $ 62.3 million worth of assets under management in its asset base while trading an average daily volume of 20,000 shares. Annual fees of 45 basis points are charged.
iShares Global Clean Energy ETF ICLN - Plus 80.2%
This fund provides global exposure to 30 companies that generate energy from solar, wind and other renewable sources by tracking the S&P Global Clean Energy Index. Each company accounts for no more than 9.1% of the assets. The fortune has amassed $ 1.5 billion, while the volume is also moderate with around 2.2 million shares. The United States and China rank first two in terms of country engagement with 44% and 13.5% respectively. The ETF has 46 basis points of annual fees and expenses (see: Why Clean Energy ETFs Are Outstanding In 2020).
Invesco Global Clean Energy ETF PBD - Plus 70.3%
This product follows the WilderHill New Energy Global Innovation Index and offers exposures to companies engaged in the promotion of clean energy and the environment. It holds 99 securities in its shopping cart, each share being no more than 2.2%. American firms account for the largest share at 25.4%, while China and Canada rounded off the next two places. PBD has an AUM of $ 105.1 million and trades an average daily volume of 49,000 shares. It charges annual fees of 75 basis points and has a Zacks ETF Rank 3 (Hold) with a high risk outlook.
Pacific Ethanol Inc.PEIX - Up 1206.1%
The company manufactures and markets low-carbon renewable fuels and alcohol products in the United States. With a market capitalization of $ 483.8 million, it has a Zacks ranked 2 and growth value of A.
Vivint Solar Inc. VSLR - Plus 495%
The company is a provider of solar systems for private households in the USA and deals with the planning, installation and maintenance of low-cost solar systems. The stock has a market capitalization of USD 5.4 billion and a Zacks Rank 3 (see: Clean Energy ETFs in the focus of the Sunrun-Vivint Solar Deal).
SolarEdge Technologies Inc. SEDG - up 185.9%
The company designs, develops and sells DC-optimized inverter systems for solar photovoltaic systems worldwide. With a market cap of $ 13.6 billion, it has a Zacks ranked 2 and growth value of B.
Bloom Energy Corporation BE - up 161.4%
This company produces and sells renewable energies. It supplies electricity to the residential, commercial and industrial sectors. The stock, with a market cap of $ 2.6 billion, has a Zacks rank of 3 and a score of A.
Azure Power Global Ltd. AZRE - plus 155.2%
With a market capitalization of $ 1.5 billion, Azure Power is a producer and developer of solar energy. The stock has a Zacks rank 2.
The story goes on
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