5 green energy stocks to buy

This Fool explains why he believes these five green energy stocks could be the best selection of investments for the energy revolution.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

happy senior couple using a laptop in their living room to look at their financial budgets

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

I firmly believe the world is in the early stages of a tectonic shift away from fossil fuels towards green energy. It might take several decades for this transition to take hold, but I reckon this could be one of the best investment themes to buy into right now. 

And there are a couple of green energy stocks I’d buy right now to invest in this theme. 

Green energy stocks 

One of the exciting things about the green energy revolution is there are so many different ways investors can take part. I want to own companies involved in all stages of the process. This way, my portfolio should benefit no matter what the outcome. 

At the bottom of the pyramid, I’d own mining giant BHP.

As the world moves away from hydrocarbons and focuses on clean, green energy, electricity transmission and production will increase. This could translate into higher demand for copper. That should benefit BHP, which is one of the world’s largest producers.

That said, while copper will play a significant role in the green energy revolution, as one of the world’s largest miners, BHP has a pretty poor environmental record. This could hurt the company’s growth if it has to pay to clean up its act. 

Another company I’d be buying in electricity space is XP Power. I think this enterprise stands one stage above BHP as it produces critical power components for the power network.

Management reckons demand for the company’s products will increase in line with growing global electricity production and demand. That’s why I’d buy the stock, although I’m also aware this is a highly competitive industry. XP Power is a market leader today, but it might not remain so indefinitely. 

Generation and storage 

Moving further up the pyramid, I’d own power producers SSE and Greencoat Wind. Both of these companies are investing heavily in renewable energy generation. Greencoat owns wind farms, while SSE has a more diversified asset base. Some investors might be more attracted to this organisation for that reason.

However, I’d own SSE for its growth. The firm has set out plans to triple its renewable energy generation by 2030. Key challenges these companies might face include overinvestment and overproduction, which may cause return on assets to decline and make it harder for them to earn a profit. 

The final green energy stock I’d buy for my portfolio is Ceres Power. This company is highly speculative, but it’s making progress and has enormous potential.

It’s developing hydrogen power cells, which will help solve a growing problem for the renewables industry to store energy. The firm has deep-pocketed backers on board with engineering giant Bosch and Chinese engine-maker Weichai Power, both providing funding recently to help the business move forward. 

However, the enterprise is still losing money, and it could only be a matter of time before a competitor establishes a similar, if not better, product. This is a potentially high-risk but also a high-reward investment opportunity.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Greencoat UK Wind and XP Power. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Fans of Warren Buffett taking his photo
Investing Articles

I’m building my wealth by copying Warren Buffett

Warren Buffett has built a fortune that many investors dream of. This Fool plans to build his wealth by copying…

Read more »

Light bulb with growing tree.
Investing Articles

This FTSE share has tripled in five years. Could it move higher?

The price of this FTSE AIM share has been heading downwards, but is still much higher than five years ago.…

Read more »

Investing Articles

Nvidia shares could reach $1,000 in 2024

Up 100 times since 2016 and yet Nvidia shares still might be cheap! Read on to find out whether our…

Read more »

Investing Articles

Should I take advantage of the rising easyJet share price to buy it in an ISA today?

The easyJet share price has jetted back into the FTS 100 as it recovers from the pandemic and Harvey Jones…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

2 FTSE 100 stocks to buy for a ‘technical recession’

Not all stocks are well suited to a recessionary environment, but here are two FTSE 100 titans that our writer…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

Here’s why the Haleon share price jumped 6% higher today

As the Haleon share price rises, our writer considers whether he should add this consumer healthcare stock to his portfolio.

Read more »

Smart young brown businesswoman working from home on a laptop
Investing Articles

Last-minute ISA buys! 2 dirt-cheap dividend stocks I’d grab before April’s deadline

Aviva and Greencoat UK Wind shares look stunningly cheap at current prices. Here Royston Wild explains why he's looking to…

Read more »

Young happy white woman loading groceries into the back of her car
Investing Articles

Should I buy, as the Ocado share price perks up on FY results?

The Ocado share price is steady, as the online retail giant reports a big fall in 2023 losses. Is it…

Read more »