In this article, we discuss 10 Best Environmental Stocks to Buy.
Environmental stocks have gained attention in recent times with more investors being interested in stock stability and increased regulatory focus for climate change issues and the financial markets. They are often favored for their potential to tap into environmental opportunities, as consumers, regulators, and companies seeking to meet Net-Zero targets increasingly look for new and innovative solutions to combat climate change and overcome environmental challenges.
Fund managers looking to meet their transition strategies are heavily shifting towards low-carbon solutions and projects. Potential growth projects include renewable energy projects, nuclear energy restarts and renewals, solar, battery storage projects, carbon capture and storage, and new natural gas capacity among others. The US SIF Trends Report 2024/2025 identified that 73% of surveyed investors expect the sustainable investment market to be on the rise in the next 2 years, driven by client demand, regulatory requirements, and advances in data analytics. The fund landscape is fast changing with transition investing becoming the major focus for investors, even with the potential uncertainties due to the Trump administration’s proposal to revoke EV tax credits, driven by new technologies in the sector and decreases in costs. The outlook for renewable energy is still positive. A PwC report finds that ESG-focused institutional investment will rise 84% to $33.9 trillion in 2026, comprising over 21.5% of assets under management. Environmental stocks have experienced fluctuating performance, influenced by market dynamics and investor sentiment in recent years. In 2022, U.S. ESG funds net inflows decreased significantly from $69.2 billion in 2021 to $3.1 billion, the lowest level in seven years. 2023 followed a similar trend, with ESG funds in the U.S. experiencing net outflows exceeding $5 billion in the final quarter, the most substantial quarterly withdrawal in over five years. Poor investment performance and increased political scrutiny were driving forces for the slowdown. Even with the market challenges and fluctuations, certain companies within the environmental sector have demonstrated strong resilience. In summary, while investor opinions of stronger environmental stocks performance over traditional stocks remain debatable, select firms continue to stand resilient in the ever-evolving ESG landscape.
What Are Environmental Stocks?
Several funds are focused on industry stocks for companies that provide products and services in climate solutions or green investments that work towards reducing harmful pollutants or sustainable resource use. This can either be in the area of alternative technologies, e.g. solar/wind power, or other areas of environmental solutions such as waste management. As industries that rely heavily on fossil fuels and create pollution are facing higher costs, fines, and regulatory scrutiny, the market opportunity for alternatives is on the rise. Several mutual funds and index funds are looking at these alternative investments that provide a strong potential for future returns.
The Green Economy Index Family tracks the sectors focusing on the enhancement of economic development based on the reduction of carbon usage. These sectors include energy efficiency, bio/clean fuels, and pollution mitigation. Environmental stocks form a key part of sustainable investing, and therefore, by prioritizing environmental concerns, investors can contribute to long-term sustainability and reduce the negative costs of climate change.
However, with growing fund manager attention and the potential of gains through policy benefits, the risk of greenwashing and misleading claims by companies is also becoming a significant challenge. This has led financial watchdogs to increase scrutiny and seller responsibility in several geographies that specify accurate ‘labels’ for levels of environmental and green funds. With the US Securities and Exchange Commission (SEC) ESG Disclosure Rule, stricter and more enforceable ESG regulations and disclosure requirements are on the horizon for the US markets.
Our Methodology
To come up with the best environmental stocks to buy list, we have considered all US environmental stocks that feature on different indexes and have upscale potential. To identify stocks from the environmental sector we have used the FTSE Green Revenues Classification System, to come up with the sectors that are working in the provision of green solutions, these included companies involved in alternative energy generation, water and wastewater treatments, transport solutions, and pollution control. We then used Insider Monkey’s Hedge Fund Q3 2024 database to rank 10 stocks based on the number of hedge fund holders. Our list is sorted in ascending order according to hedge fund sentiment.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
Keeping the growing outlook and potential of green investing in view, here are the 10 Best Environmental Stocks to Buy to benefit from the growing market opportunities.
A man in long sleeves looking at stock market data. Photo by Tima Miroshnichenko on Pexels
10. Aptiv PLC (NYSE:APTV)
Number of Hedge Fund Holders: 52
Aptiv PLC (NYSE:APTV) is a global technology company serving the automotive industry with green solutions. Their product offerings include a portfolio of recycled plastic products including transmission brackets, wire shields, and floor side rails and platforms for fully electrified, software-defined vehicles. Aptiv’s Smart Vehicle Architecture enables OEM partners to make energy-efficient vehicles and reduce carbon emissions. In 2023, the company launched an advanced predictive battery management software (BMS) that employs physics-based algorithms to create a digital twin of the battery. The innovative product launch will enable more efficient and predictive management of battery systems for the optimization and longevity of electric vehicles. This demonstrated the company’s commitment to continuous innovation for sustainable solutions.
Aptiv PLC (NYSE:APTV) also displays strong environmental stewardship with its ambitious carbon footprint reduction targets. They aim to reduce their environmental footprint by 25% by 2025 from a 2021 baseline. It has set up robust strategies to employ energy efficiency measures and increased the adoption of renewable energy across its global facilities to achieve its targets. More than 30% of Aptiv’s global energy consumption is sourced from renewable energy currently. The company has installed solar panel projects at 14 sites worldwide, generating over 17 million kWh of electricity and eliminating nearly 9,800 tons of CO₂ equivalent emissions. With its strong commitment to building sustainability and climate resilience within its own operations and the crucial solutions it is providing to the EV industry, the company qualifies as an environmental stock to watch.
Looking at financial performance, Aptiv PLC (NYSE:APTV) recorded a revenue of $19.7 billion in 2024, with $4.9 billion being recorded in Q4. Record operating cash flow was delivered and a strong earnings growth with 140 basis points of operating margin expansion year-over-year was driven by cost discipline and solid execution. Overall, the company demonstrated resilience and growth in its financial performance. In the stock market, however, the company has experienced some fluctuations with its stocks declining by 24.6% over the year, compared to the broader-market growth. That said, in 2025, the stock scenario projects more hopeful trends as the year-to-date increase of 5% indicates a stock recovery.
Aptiv PLC (NYSE:APTV) has recently also announced the separation of their Electrical Distribution Systems business owing to strategic decisions to create better segmentation, which will possibly drive future long-term and more stable growth. The strategic move aligns with the broader trend among companies to streamline operations and enhance focus on core competencies.
9. Johnson Controls International plc (NYSE:JCI)
Number of Hedge Fund Holders: 52
Johnson Controls International PLC (NYSE:JCI) is considered one of the best environmental stocks to buy due to its strong focus on creating energy-efficient buildings and HVAC systems. The company creates environmental benefits through SMART buildings, HVAC equipment, including air handling and distribution and building automation systems, and HVAC control systems.
The cooling systems company has majorly benefitted from investment crank-ups in data centers with the artificial intelligence push nudging the demand for data center cooling requirement in recent times. Over the past year, data center revenue for Johnson Controls International PLC (NYSE:JCI) is said to have doubled, which suggests a continuing rise in infrastructure building by data center owners and AI giants. There had been growing market concerns previously with the release of the Chinese AI app DeepSeek, creating cost concerns for existing players, as the cutting-edge app is said to have been built at a fraction of the cost of its predecessors. With Google announcing that it will be spending $75 million for capital building in 2025, investors are starting to realize that AI giants are still looking to invest in infrastructure.
Johnson Controls International PLC (NYSE:JCI) is considered an environmental stock due to its commitment to sustainability and energy-efficient solutions. The company has set an ambitious net-zero Scope 1 and Scope 2 carbon emissions by 2040, a decade ahead of the Paris Climate Agreement’s target. It aims to reduce emissions by 55% by 2039 and has already achieved a 43.8% reduction from a 2017 baseline. Notably, 90% of its new product research and development investments are directed toward climate-related innovations.
In its Q1 of 2025, Johnson Controls International PLC (NYSE:JCI) reported promising financial results, with a net income of $419 million. The performance surpassed analyst expectations of projected earnings of 60 cents per share on $5.28 billion in sales by registering 63 cents per share, on revenues of $5.43 billion. Keeping up with the positive results, the company raised its full-year adjusted earnings per share guidance to a range of $3.50 to $3.60, anticipating a growth of 9% to 12%. On February 5, 2025, the company announced the appointment of Joakim Weidemanis, a former executive from Danaher, as the new CEO. To ensure a smooth transition, leaving CEO George Oliver will remain in an advisory capacity until the end of the year.
8. Waste Management, Inc. (NYSE:WM)
Number of Hedge Fund Holders: 54
Headquartered in Texas, Waste Management, Inc. (NYSE:WM) specializes in waste management and comprehensive waste as an essential environmental service. As an integrated waste company, it is involved in waste collecting, recycling, and managing landfills.
Waste Management, Inc. (NYSE:WM) has a continued interest in continuously investing in recycling and renewable energy growth projects, with the latest one being a newly set up $40 million, 57,860-square-foot material recovery facility (MRF) in Philadelphia that looks to handle the recycling needs of the region and other areas of the suburban counties. The legacy business continues to focus on expansion with its mergers and acquisitions strategy and has recently completed a $7.2 billion acquisition of Stericycle, Inc., a company specializing in collecting and disposing of medical waste. This strategic move strengthens WM’s comprehensive environmental solutions and is a step into the growing healthcare market. The merger will also help advance the company’s sustainability commitments, solidifying its position as an environmental solutions company.
Waste Management, Inc. (NYSE:WM) presented a strong outlook in 2024, ending with a total revenue of $21.39 billion and a $5.89 billion revenue for Q4, reaching a year-on-year Quarterly Revenue Growth of 7.90%. In December 2024, WM announced a raise in its quarterly dividend rate for 2025 from $0.75 to $0.825 per share, registering a 10% increase. This cranked up the annual dividend to $3.30 per share, marking the company’s twenty-second consecutive year of dividend increases. In Q4 of 2024, the company reported business growth in solid waste, enabling a company-best full-year operating EBITDA. The success was driven by the optimization of operational costs and a strong execution of price programs.
Waste Management’s (NYSE:WM) strong legacy and continued investment in sustainability make it a lucrative environmental stock to invest in. The commitment to environmental sustainability is evident through its significant investments in renewable energy. Between 2022 and 2026, the company plans to invest $3 billion, with $1.6 billion directed toward building 20 natural gas plants at its landfills and $1.4 billion to enhance its recycling facilities. The strong focus on renewable energy aligns with the rising energy demand driven by transportation and artificial intelligence data centers.
Overall, through strategic acquisitions, financial growth, and a strong commitment to sustainability, Waste Management (NYSE:WM) continues to position itself as a strong environmental stock candidate.
7. First Solar, Inc. (NASDAQ:FSLR)
Number of Hedge Fund Holders: 59
First Solar, Inc. (NASDAQ:FSLR) manufactures solar panels, develops utility-scale solar projects, and provides ancillary services such as finance and end-of-life recycling. The company specializes in thin-film photovoltaic (PV) modules, which is an innovative energy-efficient alternative to traditional crystalline silicon (c-Si) PV panels.
Recent times have seen a surge in demands for solar energy driven by declining costs of PV systems with innovation and technological advancements. In 2023, the Solar Energy Market was valued at $140.32 billion which is projected to reach $310.73 billion by 2031, a significant compound annual growth rate (CAGR) of 10.17% during the forecast period. With First Solar, Inc. (NASDAQ:FSLR) recently announcing its stand against the use of deep-sea minerals, investors are likely to look upon the solar manufacturer stocks more favorably amidst the growing concerns over ESG in the US market. The company is also set to serve the U.S. distributed generation (DG) market soon, after announcing a partnership with Guided Path Solar.
First Solar, Inc. (NASDAQ:FSLR) announced plans to release its Q4 and full-year 2024 financial results on February 25, 2025. The company reported a significant 16.6% increase in Q3 net profit in 2024, touching a whopping $313 million, or $2.91 per share. This growth was driven by higher prices following new tariffs on foreign-made solar panels imposed by the Biden administration in May. The company has adjusted its full-year sales forecast to between $4.10 billion and $4.25 billion, against a previously expected $4.4 billion to $4.6 billion. This was in anticipation of market challenges such as a decline in residential installations and delays in utility-scale projects.
Analysts expect First Solar, Inc. (NASDAQ:FSLR) to post earnings of $4.69 per share in its forthcoming Earning Report, touching a year-on-year growth of 44.31%. The revenue is predicted to increase by a significant 26.91% to $1.47 billion compared to the previous year’s quarter performance. Analysts’ forecasts for the company’s stock price are varied. While some predict it could reach $202 by December 2025, others estimate higher targets, due to the company’s strong position in the renewable energy sector.
As an environmental stock, First Solar, Inc. (NASDAQ:FSLR)’s focus on developing and deploying solar technology plays a crucial role in advancing clean energy solutions. By investing in research and development, the company spurs innovation in the field of renewable energy, contributing to a sustainable future.
6. Trane Technologies plc (NYSE:TT)
Number of Hedge Fund Holders: 62
Yet another manufacturer of HVAC systems and climate solutions, Trane Technologies plc (NYSE:TT) is known as a climate innovations leader in the sustainability solutions space. The company produces efficient solutions for buildings and transportation under its two brands, Trane and Thermo King. The company was recently recognized in the Top 10 of JUST 100 2025, by JUST Capital solidifying its position as a climate solutions leader.
Trane Technologies plc (NYSE:TT) constantly works towards expanding its sustainable activities and has invested $470 million in 2024 in mergers and acquisitions aimed at building AI servicing capabilities. The most recent is a critical expansion in its thermal management systems capabilities that will cater to mission-critical infrastructure and environments, and the launch of its new liquid cooling Trane Coolant Distribution Unit (CDU) providing cooling solutions for the IT racks and data centers. Trane Technologies plc (NYSE:TT) saw a 12% year-over-year increase in revenue in 2024, touching a $19.3 billion mark, and a revenue of $4.8 billion in Q4. The company is looking at its commercial HVAC segments in data centers, education, healthcare, and services to continue to drive revenue growth in 2025. However, the stock still seems to be grappling with the DeepSeek news in its AI systems and looming market concerns. However, leadership changes and the onboarding of Xylem’s CEO as the new President might be indicative of interesting updates and expertise in sustainability, in its position as an environmental stock.
5. Linde plc (NASDAQ:LIN)
Number of Hedge Fund Holders: 63
Linde plc (NASDAQ:LIN) is an industrial gas engineering company offering hydrogen, carbon capture, and carbon sequestration solutions. With its clean energy segments and global operations, the company is providing a critical solution for the global energy transition and decarbonization agenda. The company announced a significant investment of $2 billion to establish a clean hydrogen production facility in Alberta, Canada. The facility, to be completed in 2028, is set to become the largest one in Canada, supplying clean hydrogen to customers. Underlining Linde’s commitment to greenhouse gas emissions reduction, the project includes capturing over 2 million metric tons of carbon dioxide annually for sequestration.
Linde plc (NASDAQ:LIN) displayed a strong performance in 2024, with over 59 small on-site wins for clean energy supply, and a $2 billion investment for DOW (Canada) project to supply low-carbon (blue) hydrogen. The company made $4.8 billion in business investments. The sales for 2024 were at $33 million compared to $32 million in 2023, operating margin was up 29.5%, a 190 base points increase over the previous year.
With the number of agreements signed, and pushed by clean energy demands led by expansions in electronics and EV battery markets, Linde plc (NASDAQ:LIN) projects a strong outlook as an environmental stock and clean energy provider for varied industries. In summary, the company demonstrates a strong commitment to environmental sustainability through substantial investments in clean energy and decarbonization projects. With its solid financial performance and positive market outlook, Linde continues to be a leading player in the industrial gas sector.
4. Autodesk, Inc. (NASDAQ:ADSK)
Number of Hedge Fund Holders: 70
Autodesk, Inc. (NASDAQ:ADSK) is a world-leading software developer for construction, building design, and production teams that offers software enabling the production of sustainable products. Their products enable customers to use automation to develop net-zero energy buildings, smart cities, and efficient manufacturing. The company is a player in tech-enabled sustainability solutions, positioning it as a unique environmental stock, and as demand for automation and AI is ever-rising, it is an interesting stock to keep a watch on. Autodesk has been increasingly integrating AI into its products.
With a close to 50% 5-year return rate, the stock is quite favorably looked upon by analysts. The predicted sales for 2025 are close to 11%, and Autodesk, Inc. (NASDAQ:ADSK) has seen recent upgrades by both Piper Sandler and Mizhuho. In 2025 Q2, the company reported a $1.5 billion in revenue, a 12% increase. In view of the strong performance, the company also raised its fiscal 2025 earnings per share guidance to a range of $8.18 to $8.31, up from the previous $7.99 to $8.21.
As profits are expected to grow by 57% for this stock in the next few years, Autodesk, Inc. (NASDAQ:ADSK) is an interesting candidate to keep an eye on with strong stock potential. As analysts maintain a positive outlook on the environmental stock, it is predictive of potential growth. The average 12-month price target stands at $333.17. The company’s focus on sustainability and innovation continues to resonate with investors, reinforcing its position as a leader in environmental stewardship within the technology sector.
3. Constellation Energy Corporation (NASDAQ:CEG)
Number of Hedge Fund Holders: 78
As the largest producer of emissions-free energy, and product offerings in natural gas and energy management services, Constellation Energy Corporation (NASDAQ:CEG) is a strong candidate for environmental stock. The recent $26.6 billion acquisition of Calpine, a leading electricity generator using natural gas and geothermal sources, has further solidified its position as a national leader in clean energy. It opens up opportunities for Constellation to cater to a wider customer base.
The company recorded a Q3 earning of $6.5 billion. The 1-year return for the company was an impressive 138.38%. The stock has demonstrated impressive growth with a surge of 35% in January 2025, making it the top performer in the broader market for the month. The accelerators were Calpine acquisition and substantial contracts with the U.S. government. The company secured a 10-year, $840 million agreement to supply over one million megawatt-hours of clean electricity annually to federal operations starting in 2025. Additionally, it was also awarded a $172 million Energy Savings Performance Contract to implement energy efficiency measures in five government buildings. The significant winds further solidify its role as a sustainable energy solutions player.
Despite stock values for Constellation Energy Corporation (NASDAQ:CEG) being recently affected by the DeepSeek news, it still holds as an environmental stock with potential.
2. Eaton Corporation plc (NYSE:ETN)
Number of Hedge Fund Holders: 90
Eaton Corporation plc (NYSE:ETN) is a power-management company with energy-efficient product offerings. It provides power management solutions to accelerate energy transition through electrification and digitalization.
Eaton Corporation plc (NYSE:ETN)’s strong focus on innovation has led it to be considered one of the most admired companies by FORTUNE. This shows in its recent shift to focus on the AI market, with its new product SmartRack Modular Data Center, a cutting-edge AI deployment modular solution that rapidly configures and deploys in various edge locations. The offering is set to revolutionize data infrastructure management. Eaton’s commitment to environmental sustainability is displayed through its ambitious 2030 targets. The company sets a target to reduce carbon emissions from its operations by 50%, achieve carbon-neutral operations, and certify all manufacturing sites as zero waste to landfill. As of 2024, the company has already reduced greenhouse gas emissions by 31% since 2018 and certified 79% of its manufacturing sites as zero waste to landfill, progressing robustly toward its 2030 goals. Further cementing its sustainability objectives, Eaton Corporation plc (NYSE:ETN) is undertaking clean energy projects across its global operations. New solar deployments are being set up to power innovation and manufacturing, significantly reducing the company’s carbon footprint and energy costs. These initiatives not only further the company’s environmental commitments but also solidify its position as a major player in the clean energy sector.
Eaton Corporation plc (NYSE:ETN) registered a record quarterly adjusted earnings per share of $2.84, a 15% rise over 2023. The 2024 revenue stands at $24.9 billion, with $6 billion being recorded in Q4, a year-on-year increase of 4.6%. Record segment margins were at 24.3%, 70 basis points over Q3 2023.
Overall, Eaton Corporation plc (NYSE:ETN)’s recent developments underscore its robust financial performance and strong commitment to environmental sustainability. The company is underway to meet its ambitious goals and contribute significantly to a sustainable energy landscape through strategic initiatives and innovative solutions.
1. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 99
As a global leader in the electric vehicles (EV) market, Tesla, Inc. (NASDAQ:TSLA) is known to revolutionize the sustainable transport sector, through constant innovation in clean energy transport offerings. The company produces electric cars and energy storage solutions that are the need of the hour to overhaul the currently fuel dependent transport industry. In 2024, Tesla’s Model Y achieved a significant milestone by becoming the best-selling car globally, positioning it as a leader in eco-friendly vehicles. The company unveiled the new Model 3 Performance, which leverages the company’s latest manufacturing and engineering capabilities to provide a high-performance yet sustainable daily driving experience.
The Tesla, Inc. (NASDAQ:TSLA) stock has constantly been on watchlists and has shown a 100% increase in 1-year value. Though the recent 60% revenue plummets in Germany are causing concern, the announcements for the launch of Robotaxi’s or unsupervised full self-driving (FSD) as a paid service in the US market will likely cause some interesting variations in the EV market. CEO Elon Musk’s Q4 Earnings call has indicated an exciting 2026 and 2027 for the company. As the company is expanding beyond the EV market and tapping into AI and robotics, the market expansion still keeps it on the list watch, despite recent stock slowdowns. 2024 revenue has met the $97 billion mark as expected.
Looking ahead, analysts predict that Tesla, Inc. (NASDAQ:TSLA)’s performance in the autonomous vehicle sector, particularly its robotaxi initiative, will drive the company’s stock in 2025. Even with the ongoing challenges in its core automotive business, involvement in AI presents significant opportunities for growth
Tesla, Inc. (NASDAQ:TSLA)’s energetic strategy and constant focus on innovations make it one of the most sought-after environment segment companies, and the best environmental stock to buy.
Overall Tesla, Inc. (NASDAQ:TSLA) ranks first on our list of the best environmental stocks. While we acknowledge the potential for TSLA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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