The election of Joe Biden bodes well for renewable energy investments as the President-Elect calls climate change the greatest threat facing the human race. How can investors position themselves to take advantage of the coming emphasis on green energy? Is a focus on ESG investing sufficient or should you drill down and find specific investment opportunities? Here are a few thoughts on renewable energy investment in the Joe Biden presidency.
Alternative Energy Investments
Investopedia published a useful article about alternative energy stocks for late 2020.
The alternative energy sector is comprised of companies that engage in the generation, distribution, and sale of renewable and clean energy, as well as related products and services. Examples of alternative energy sources include solar, wind, hydroelectric, and geothermal.
They cite a few examples of promising renewable energy investments.
The growing list of names in the sector includes companies like Israel-based SolarEdge Technologies Inc. (SEDG), Brazil-based Companhia Energetica de Minas Gerais CEMIG (CIG), and First Solar Inc. (FSLR).
And, they note that you can buy shares of ETFs that track renewable energy investments as well.
Alternative energy stocks, as represented by the iShares Global Clean Energy ETF (ICLN), have dramatically outperformed the broader market, posting a total return of 47.4% compared to the Russell 1000’s total return of 12.6% over the past 12 months.
Even before Biden won the 2020 presidential election, this sector has done well. We expect that with a green energy-friendly president in the White House that the sector will do even better in the coming years.
Renewable Energy Investment Opportunities
US News provides us with their list of the seven best renewable energy stocks and ETFs. Their list includes the following:
Invesco Solar ETF
iShares Global Clean Energy ETF
NextEra Energy (NEE)
Vestas Wind Systems (VWDRY)
Brookfield Renewable Partners (BEP)
ALPS Clean Energy ETF (ACES)
This list of investment opportunities in the renewable energy sector gives investors the opportunity to invest in green energy and make money. The sector did well this last year during the Trump administration but is likely to thrive under Biden.
Mixing and Matching Energy Investments
As the climate warms up, the world will transition to renewable energy, reduced carbon emissions, and energy conservation. However, oil and natural gas are not going away in a hurry. We wrote recently about Exxon as an investment. The smartest energy investors may well be the ones who hedge their bets by maintaining positions in the traditional oil and natural gas sector while adding targeted renewable energy investments for the future.
The geopolitical benefit of US energy independence is huge. As such, even a green Biden administration is unlikely to undercut the ability of the nation to extract petroleum products and avoid going back to dependence on oil from the Middle East. And, as the Covid-19 pandemic is brought under control, the world economy will improve. Energy requirements will go up. And, all well-managed energy companies are likely to see the benefit, not just renewable energy investments.
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