Best shares to buy now: 2 clean energy stocks

These clean energy shares could be some of the best stocks to buy now, says Rupert Hargreaves, who’s considering acquiring both.

| More on:

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.

Windmills for electric power production.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

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 think the clean energy industry is currently one of the most exciting sectors. I also think some of the best shares to buy now are located here. 

However, before I go on, I should note that many of these companies are incredibly speculative. Therefore, while I’d buy both of the clean energy stocks outlined below, they may not be suitable for all investors.

If they can commercialise their technology, the companies could revolutionise the energy market. 

If they can’t commercialise the technology, both companies could fail. In this situation, investors may be left with nothing. 

Best shares to buy now for clean energy

I’ve focused my efforts on the hydrogen sector. I believe hydrogen can help decarbonise the global energy system. 

As such, I’d buy ITM Power (LSE: ITM) as my first clean energy stock. The firm develops polymer electrolyte membrane electrolysers for hydrogen production via electro-chemical splitting water into hydrogen and oxygen. The goal here is to lower the cost of hydrogen production.

I think this is one of the best shares to buy now as the group has already made substantial progress. 

At the beginning of July, the company announced that its joint venture with Shell to develop the most significant green hydrogen electrolyser in Europe had started production. Plans are underway to expand the capacity of the electrolyser from 10mw to 100mw at the Rheinland site, near Cologne.

While this is just one of the projects ITM’s pursuing, it’s notable for its scale. Having a substantial partner like Shell on board is also encouraging. The oil major is looking to reduce emissions, and hydrogen projects are likely to play a significant part in its transition. 

As ITM continues to prove and develop its technology, I expect further projects to be announced in the months and years ahead. 

New technology 

The other hydrogen stock I’d buy is Ceres Power (LSE: CWR). This is one of the best shares to buy now because its growth is taking off.

Ceres produces hydrogen fuel cells, and demand for these products is expanding. Revenues for the six months ended 30 June came in at £17m compared to £8.9m in the prior period. It’s planning to generate revenues of £31.5m for the full year. 

I’m encouraged by the company’s growth so far as well as its research and development initiatives. It’s currently working on a first-of-a-kind solid oxide electrolyser (SOEC) one megawatt-scale demonstrator. This will allow hydrogen production from a solid oxide which can have higher electrical efficiency and lower costs than other methods.  

Unfortunately, there’s no guarantee this technology will take off. This is a challenge both Ceres and ITM face. They may end up spending a lot of money developing technology that never gets used. And they are not the only companies in the sector. There are larger firms out there with deeper pockets trying to break the same market. Thanks to these risks and challenges, both are perilous investments. 

Still, I think they’re some of the best shares to buy now in the clean energy sector, which is why I’d acquire both today.

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 no position in any of the shares mentioned. 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

Passive income text with pin graph chart on business table
Investing Articles

Yields of up to 7%! I’d consider boosting my income with these FTSE dividend stocks

The London market has some decent-looking dividend stocks right now, and I’m tempted by these two for growing income streams.

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

I’d put £20K in an ISA now to target a £1,900 monthly second income in future!

Christopher Ruane shares why he thinks a long-term approach to investing and careful selection of shares could help him build…

Read more »

Mature couple at the beach
Investing Articles

6 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »