In this article, we look at the 10 Best Green Energy Penny Stocks to Buy Now.
Exploring Green Energy
Green energy comes from naturally replenished resources such as the sun, wind, and tides, and is used for various purposes including electricity generation, heating, and transportation. Unlike traditional forms of energy from finite sources such as fossil fuels, green energy is sustainable and includes several types of energy such as bioenergy, geothermal energy, hydrogen, hydropower, marine energy, solar energy, and wind energy.
According to the International Energy Agency (IEA), there has been impressive growth in green energy spending, however, it remains highly concentrated in a few regions, primarily advanced economies, and China. Green energy investments are not evenly distributed due to obstacles such as high upfront costs and macroeconomic challenges affecting broader adoption. While costs for clean technologies have risen in recent years, they remain competitive compared to fossil fuels.
Despite record global investments in energy transition technologies reaching $1.3 trillion in 2022, this amount falls short of the necessary investment to achieve the 11.2 Terawatts of green energy capacity pledged by countries. To address this, there is a need for increased and more investment in green energy, particularly in developing countries, which have received disproportionately low levels of funding despite their high energy needs. The global investment in renewable generation capacity must exceed USD 1.5 trillion annually to meet targets.
Inflation Reduction Act Spurs Investments in Green Energy
Analysts are bullish on the investment opportunities in green energy, particularly in light of the U.S. government’s recent fiscal stimulus efforts, including the Inflation Reduction Act. The Biden administration’s $370 billion investment in energy and climate incentives is expected to significantly boost various sectors within the green energy industry. Experts highlight the importance of tax credits and other incentives aimed at developing renewable energy infrastructure and supply chains, especially in the U.S. and with fair trade partners. While traditional, large-cap-weighted ETFs are popular, there’s growing interest in more diversified, equal-weighted approaches that include smaller, innovative companies in areas like battery production, solar power, and critical mineral extraction. This transition to renewable energy is seen as a global trend, offering investment opportunities beyond North America.
JP Morgan is actively investing in green energy projects by providing tax equity financing to support the development and construction of solar and storage projects in the United States. In May, the bank committed $680 million in tax equity financing to Ørsted, a leading energy developer, for the construction of two major projects: the Eleven Mile Solar Center, a 300 MW solar project in Arizona, and the Sparta Solar, a 250 MW solar project in, Texas.
This investment is one of the largest solar and storage tax equity transactions since the passage of the Inflation Reduction Act (IRA), which introduced new tax credit mechanisms, including the ability to transfer tax credits. The bank’s involvement allows it to optimize its federal tax obligations while supporting the expansion of green energy infrastructure. Additionally, this deal builds on its existing investments in 1.8 GW of Ørsted’s U.S. onshore green energy portfolio, demonstrating the bank’s interest in the energy transition.
The current level of investment in green energy falls short of what is required to transition to a sustainable energy future. A more equitable distribution of investment and a stronger commitment to overcoming barriers such as high upfront costs. With that in context let’s take a look at the 10 best green energy penny stocks to buy now.
Photo by andreas gucklhorn on Unsplash
Our Methodology
For this article, we scanned green energy ETFs plus online rankings to compile an initial list of 50 green energy stocks. From that list, we narrowed our choices to 10 stocks trading under $5 that were the most popular among hedge funds. The hedge fund sentiment was taken from our database of 912 elite hedge funds as of Q2 of 2024. We also included the market cap of these companies as of September 4. The list is sorted in ascending order of their hedge fund sentiment, as of the second quarter.
Why do we care about what hedge funds do? 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).
10 Best Green Energy Penny Stocks to Buy Now
10. FuelCell Energy (NASDAQ:FCEL)
Number of Hedge Fund Holders: 11
Market Capitalization as of September 4: $202.59 Million
FuelCell Energy (NASDAQ:FCEL) specializes in the development and commercialization of fuel cell technology, which uses the chemical energy of hydrogen or other fuels to produce electricity. The company is known for its innovative approach to generating low-carbon power through its advanced fuel cell systems, which are designed to deliver high-efficiency, reliable energy solutions. FuelCell Energy (NASDAQ:FCEL) operates a diverse portfolio of fuel cell products and services, including stationary power generation and large-scale installations.
In May, FuelCell Energy (NASDAQ:FCEL) secured a significant seven-year contract with Gyeonggi Green Energy in South Korea, valued at $160 million to provide fuel cell modules. The service agreement in South Korea is expected to generate significant future revenue for the company and will contribute to a stable and predictable cash flow. This contract, along with the company’s other ongoing projects and service agreements, highlights FuelCell Energy’s (NASDAQ:FCEL) ability to secure long-term revenue opportunities, which are crucial for supporting its growth trajectory.
FuelCell Energy’s (NASDAQ:FCEL) strategic expansion into key markets such as South Korea, combined with its competitive fuel cell technology and focus on green energy innovation, makes it a compelling investment opportunity. Industry analysts have a consensus on the stock’s Buy rating, setting an average share price target at $1.27, which represents a 137% upside potential from its current level. As of the second quarter, the stock is held by 11 hedge funds and the stakes amount to $3.28 million. Two Sigma Advisors is the largest shareholder in the company with stocks worth $2.44 million as of June 30.
9. Altus Power (NYSE:AMPS)
Number of Hedge Fund Holders: 11
Market Capitalization as of September 4: $494.36 Million
Altus Power (NYSE:AMPS) is a prominent player in the green energy sector and specializes in community solar power solutions by leveraging underutilized rooftop spaces to generate solar electricity and capture excess energy from commercial and industrial properties. Altus Power (NYSE:AMPS) provides cost-effective solar power to residential customers. The company serves over 25,000 subscribers nationwide through its Community Solar program and offers green energy savings without requiring customers to install their own solar panels.
The company operates a robust portfolio of solar assets, including both operational facilities and those under development. On August 20, Altus Power (NYSE:AMPS) announced that it completed two new community solar projects in Maine, totaling 12.6 MW. The projects will benefit over 2,600 local households by generating clean electric power and reducing nearly 12,000 metric tons of carbon emissions.
Altus Power (NYSE:AMPS) has partnerships with industry leaders such as Blackstone and CBRE, which enhances its market presence, and positions the company as a leading player in the green energy landscape. Altus Power’s (NYSE:AMPS) strategic approach to acquiring and managing large-scale solar projects has positioned the company as a prominent player in green energy.
Altus Power (NYSE:AMPS) is well-positioned to benefit from the growing demand for green energy solutions. Analysts expect the company’s earnings to grow by 100% this year. Industry analysts have a consensus on the stock’s Buy rating, setting an average share price target at $5.56, which represents a 56% upside potential from its current level. As of the second quarter, the stock is held by 11 hedge funds and the stakes amount to $28.10 million.
8. Maxeon Solar (NASDAQ:MAXN)
Number of Hedge Fund Holders: 12
Market Capitalization as of September 4: $137.60 Million
Maxeon Solar (NASDAQ:MAXN) is headquartered in Singapore and is a global leader in solar energy with over 35 years of experience and innovation. The company has over 3.5 GW manufacturing capacity, holds more than 1,900 patents, and designs cutting-edge solar panels and energy solutions tailored for residential, commercial, and power plant use. Maxeon Solar’s (NASDAQ:MAXN) integrated home energy management system offers a versatile range of products and services and is known for Maxeon and SunPower solar panels. Maxeon Solar (NASDAQ:MAXN) has a vast network of over 1,700 trusted partners and distributors and a customer base exceeding one million worldwide.
On July 24, Maxeon Solar (NASDAQ:MAXN) announced a partnership with Solaris Renewables, a Massachusetts-based provider of premium solar and energy storage technologies with over 2,100 solar installations. Solaris Renewables will use Maxeon Solar’s (NASDAQ:MAXN) Interdigitated Back Contact (IBC) solar panels in their installations due to their strong performance, reliability, and aesthetics as reported by their customers.
By partnering with Solaris Renewables, Maxeon will expand its presence in the New England region in the United States which will lead to significant growth in the customer base of its products. By building a network of trusted partners such as Solaris Renewables, Maxeon Solar (NASDAQ:MAXN) can ensure sustained growth. These partners help drive the adoption of Maxeon’s solar technologies in local communities, leading to broader market penetration and long-term profitability.
Industry analysts have a consensus on the stock’s Buy rating, setting an average share price target at $2.09, which represents around 185% upside potential from its current level. As of the second quarter, the stock is held by 12 hedge funds and the stakes amount to $26.73 million. Graham Capital Management is the largest shareholder in the company with stocks worth $16.10 million as of June 30.
7. Gevo (NASDAQ:GEVO)
Number of Hedge Fund Holders: 13
Market Capitalization as of September 4: $176.73 Million
Gevo (NASDAQ:GEVO) develops and sells renewable fuels, including gasoline, jet fuel, and diesel. The company primarily focuses on sustainable aviation fuel (SAF) and is also exploring commercial opportunities in renewable natural gas (RNG) including hydrocarbons for gasoline and diesel fuel along with other sustainable chemicals and materials such as polyester. Gevo (NASDAQ:GEVO) also possesses intellectual property designed for large-scale deployment of net-zero hydrocarbon fuels and chemicals.
In Q2, Gevo’s (NASDAQ:GEVO) RNG project reached record production levels, with annualized output hitting approximately 400,000 million British thermal units (MMBtu) per year, marking a 22% increase compared to the same period in 2023. Gevo’s (NASDAQ:GEVO) subsidiary, Verity is collaborating with Google to speed up the use of artificial intelligence (AI), which is expected to enhance customer experience and improve carbon intensity tracking and optimization.
Additionally, Verity has partnered with Landus Cooperative to create a comprehensive supply chain tracking solution aimed at increasing the profitability for renewable fuel producers, including ethanol, bio/renewable diesel, and SAF. Verity is also working with ClearFlame Engine Technologies to develop a decarbonization tracking system for the U.S. road freight transportation sector, which uses around 29 billion gallons of fuel annually. By the end of the second quarter, Verity had retained 100% of the farmers in its grower program, covering approximately 76,000 acres, which is a 17% increase from the previously reported 65,000 acres.
On August 21, Gevo (NASDAQ:GEVO) entered into a purchase agreement with Shell Deutschland to supply low-carbon intensity fuel blendstock for motorsports. This renewable blendstock, derived from sustainable feedstocks like agricultural waste is designed to meet the demanding performance standards of racing while significantly reducing carbon emissions.
With record production levels in its RNG project and strategic partnerships driving growth in various segments, Gevo (NASDAQ:GEVO) is poised for significant upside potential. Industry analysts have a consensus on the stock’s Buy rating, setting an average share price target at $5.15, which represents a 150% upside potential from its current level. As of the second quarter, the stock is held by 13 hedge funds and the stakes amount to $5.21 million. Millennium Management is the largest shareholder in the company with stocks worth $2.88 million as of June 30.
6. Montauk Renewables (NASDAQ:MNTK)
Number of Hedge Fund Holders: 13
Market Capitalization as of September 4: $646.25 Million
Montauk Renewables (NASDAQ:MNTK) is a leader in the green energy sector and specializes in the conversion and delivery of green energy from waste sources. With over 30 years of experience, Montauk Renewables (NASDAQ:MNTK) has established itself as a pioneer in the landfill gas-to-energy industry, converting biogas from landfills into renewable natural gas (RNG) and electricity. The company has expanded its operations into the agricultural sector, focusing on anaerobic digestion (AD) technologies that convert waste from dairy and swine farms into RNG.
The demand for RNG is expected to rise and the regulatory environment is increasingly favorable for RNG producers. The California Low Carbon Fuel Standard (LCFS), alongside similar programs in states like Oregon, Washington, and New Mexico, provides incentives for low-carbon fuel production. Montauk Renewables’ (NASDAQ:MNTK) dairy and swine RNG projects have exceptionally low carbon intensity (CI) scores, with dairy RNG averaging -340 gCO2e/MJ and swine RNG at -347 gCO2e/MJ.
The U.S. Environmental Protection Agency (EPA) estimates that there are over 8,000 farms in the U.S. that could be viable candidates for biogas recovery systems, offering an energy potential of over 170 million MMBtu per year. Montauk Renewables (NASDAQ:MNTK) is well-positioned to capture a significant share of this market, particularly in dairy and swine farm RNG production as only a small fraction of existing farms currently produce RNG.
Over the next 5-10 years, Montauk Renewables (NASDAQ:MNTK) is expected to capture an increasing share of the RNG market, driven by its low-CI projects and favorable regulatory environment. The company’s focus on high-return projects further support its long-term growth prospects, with potential cash paybacks on capital investments ranging from 2-5 years.
Analysts expect the company’s earnings to grow by 58% this year and have a consensus on the stock’s Buy rating, setting an average share price target at $6.31, which represents an almost 35% upside potential from its current level. As of the second quarter, the stock is held by 13 hedge funds and the stakes amount to $15.87 million. Hosking Partners is the largest shareholder in the company with stocks worth $4.40 million as of June 30.
5. OPAL Fuels (NASDAQ:OPAL)
Number of Hedge Fund Holders: 14
Market Capitalization as of September 4: $608.33 Million
OPAL Fuels (NASDAQ:OPAL) is a leading player in the renewable natural gas (RNG) industry and focuses on RNG as a green energy solution for vehicle fuel, particularly for heavy and medium-duty trucks. The company holds the position of the second-largest RNG station operator in the United States. In addition to RNG, OPAL is involved in hydrogen fueling infrastructure development, which diversifies its green energy portfolio. The company is uniquely positioned in the supply chain, with access to key resources such as landfill emissions, animal waste, and wastewater for RNG production.
OPAL Fuels’ (NASDAQ:OPAL) involvement in RNG supply from landfills, wastewater, and animal waste ensures a steady stream of renewable feedstocks. The market for RNG is poised for robust growth, driven by increasing demand for cleaner energy solutions and government incentives, such as those provided by the Environmental Protection Agency (EPA) and the Inflation Reduction Act (IRA). These incentives, including an $8 credit for landfill gas, enhance the company’s revenue-generating potential. OPAL Fuels’ (NASDAQ:OPAL) ability to capitalize on these trends will support its long-term growth trajectory.
While RNG remains OPAL Fuels’ (NASDAQ:OPAL) primary business, the company also has exposure to the hydrogen fueling market and is involved in hydrogen fuel infrastructure development. This strategic diversification positions OPAL Fuels (NASDAQ:OPAL) to benefit from the growing interest in hydrogen as a green energy solution.
Industry analysts have a consensus on the stock’s Buy rating, setting an average share price target at $7.67, which represents a 74% upside potential from its current level. As of the second quarter, the stock is held by 14 hedge funds and the stakes amount to $21.54 million.
4. TPI Composites (NASDAQ:TPIC)
Number of Hedge Fund Holders: 15
Market Capitalization as of September 4: $183.75 Million
TPI Composites (NASDAQ:TPIC) is an industrial machinery development company and a leading manufacturer of composite wind blades for the wind energy market. TPI Composites (NASDAQ:TPIC) has long-term relationships with major original equipment manufacturers (OEMs) in the wind industry and has a global presence with factories in the U.S., Mexico, Turkey, and India. The company also operates engineering centers in Denmark and Germany and training centers in the U.S. and Spain.
In Q2, TPI Composites (NASDAQ:TPIC) reported a revenue of $309.8 million, representing a 19% decline compared to the same quarter in 2023. However, the company managed to narrow its net loss by 24%, reducing it to $61.5 million from the previous year’s second quarter due to the increased average sales price per wind blade, which rose from $179,000 in 2023 to $208,000 in 2024. The company anticipates full-year revenue of $1.3 billion to $1.4 billion, which, along with cost-saving initiatives, positions it for a return to positive adjusted EBITDA by the end of 2024.
According to Precedence Research, the global wind energy market size was $98.74 billion in 2024 and is expected to reach around $260.81 billion by 2034, expanding at a CAGR of 10.2%. As the global wind energy market continues to expand, TPI Composites (NASDAQ:TPIC) is well-positioned to capitalize on this trend. The company has ten manufacturing lines in startup or transition phases which will boost production capacity. The company is expecting utilization to improve to between 75% and 80% in 2024 which reflects higher demand for its products.
TPI Composites (NASDAQ:TPIC) is streamlining its operations, including the reorganization of production lines and the ramp-up of operations at previously idle facilities. These efforts are expected to boost operational efficiency and profitability. Industry analysts have a consensus on the stock’s Buy rating, setting an average share price target at $5.20, which represents a 28% upside potential from its current level. As of the second quarter, the stock is held by 15 hedge funds and the stakes amount to $34.14 million. Monarch Alternative Capital is the largest shareholder in the company with stocks worth $23.18 million as of June 30.
3. Plug Power (NASDAQ:PLUG)
Number of Hedge Fund Holders: 15
Market Capitalization as of September 4: $1.56 Billion
Plug Power (NASDAQ:PLUG) specializes in green hydrogen production and fuel cell solutions. The company has an integrated product portfolio that includes electrolyzers, hydrogen fuel cells, and hydrogen infrastructure solutions. Plug Power (NASDAQ:PLUG) has signed agreements with major players such as Nikola Corporation and has already deployed 72 hydrogen-powered trucks.
Plug Power (NASDAQ:PLUG) is expanding its green hydrogen production capabilities and is constructing a new hydrogen plant in Louisiana which is expected to be completed by the end of 2024. The company also plans to construct two additional plants in Texas and New York, and aims to become one of the largest green hydrogen producers in the United States. The company’s new facilities are supported by a $1.6 billion loan from the U.S. Department of Energy, which enhances the company’s ability to scale production and improve margins.
Plug Power (NASDAQ:PLUG) was recognized for the new green hydrogen production tax credit of $2.60 per kilogram for green hydrogen. As of Q2, the company produces green hydrogen at a cost of $4 to $5 per kilogram and sells it for $6 to $7 per kilogram. The new tax credit would lower the company’s cost by up to $3 per kilogram.
In addition to hydrogen fuel production, Plug Power (NASDAQ:PLUG) has seen substantial growth in its electrolyzer business. In Q2, the company generated $15 million in revenue from electrolyzers, a significant increase from $7 million in the same period the previous year. Management estimates $320 million in revenue from electrolyzer sales over the next two years.
Plug Power’s (NASDAQ:PLUG) cryogenic equipment is critical for hydrogen storage and transportation. Plug Power (NASDAQ:PLUG) expects to generate $72 million in revenue from cryogenic equipment and other related technologies in the next year.
Plug Power’s (NASDAQ:PLUG) expansion into green hydrogen production, supported by growing demand, favorable government policies, and strong growth in its electrolyzer business, positions the company for long-term success. Industry analysts have a consensus on the stock’s Buy rating, setting an average share price target at $4.25, which represents an 85% upside potential from its current level. As of the second quarter, the stock is held by 15 hedge funds and the stakes amount to $10.78 million.
2. Stem (NYSE:STEM)
Number of Hedge Fund Holders: 16
Market Capitalization as of September 4: $84.97 Million
Stem (NYSE:STEM) is a leading player in the green energy sector and specializes in AI-enabled software for energy storage and green energy solutions. The company has positioned itself as a pioneer in managing energy resources with its software, Athena, which optimizes battery storage and green energy operations for businesses and utility companies. Stem (NYSE:STEM) has also expanded its suite of software products, introducing PowerTrack, a performance management tool aimed at streamlining the monitoring of solar and energy storage.
The company’s recurring revenues from its software make Stem (NYSE:STEM) a compelling investment opportunity in the green energy space. The company has consistently grown its Contracted Annual Recurring Revenue (CARR) from $52 million in Q1 2022 to $91 million by Q4 2023. Despite a slight setback in Q1 2024, the company is poised to continue expanding its software and services segment, which offers high-margin and long-term contracts. This shift will reduce revenue volatility, making the business more predictable and less reliant on hardware sales.
Stem’s (NYSE:STEM) flagship software, Athena, is widely regarded as an industry leader in energy storage optimization. Athena uses AI to forecast energy needs, optimize storage usage, and improve overall energy management efficiency for clients. Additionally, the launch of PowerTrack, a tool for monitoring solar and hybrid energy assets, is expected to expand the company’s customer base and generate further high-margin software revenue. These products enhance the company’s competitive edge and positions Stem (NYSE:STEM) to capitalize on the growing demand for advanced energy management solutions.
Stem (NYSE:STEM) has made significant strides towards profitability, In Q1 2024, the company nearly broke even in operating cash flow and reduced its capital-intensive project backlog by canceling lower-margin contracts worth approximately $257 million. This allows Stem (NYSE:STEM) to focus on more profitable, high-margin opportunities. Management projects positive operating cash flow in 2024 for the first time in its history.
Industry analysts have a consensus on the stock’s Buy rating, setting an average share price target at $2.31, which represents a 134% upside potential from its current level. As of the second quarter, the stock is held by 16 hedge funds and the stakes amount to $7.81 million. Ardsley Partners is the largest shareholder in the company with stocks worth $1.94 million as of June 30.
1. Clean Energy Fuels (NASDAQ:CLNE)
Number of Hedge Fund Holders: 24
Market Capitalization as of September 4: $670.28 Million
Clean Energy Fuels (NASDAQ:CLNE) specializes in Renewable Natural Gas (RNG) and is the largest provider of RNG in North America. The RNG sector is experiencing increasing demand due to its environmental benefits and is seen as a practical solution for decarbonizing the trucking industry, which is a significant source of emissions. The company leverages organic waste to produce RNG, which reduces the environmental impact associated with fossil fuels.
The demand for RNG is expected to rise as more industries and governments commit to reducing carbon footprints. According to a report by Business Research Insights, the global RNG market size was valued at $7.35 billion in 2024 and is forecasted to reach $148.7 billion by 2032, exhibiting a CAGR of 45.6%. This growing acceptance and adoption could drive substantial revenue growth for Clean Energy Fuels (NASDAQ:CLNE).
In Q2, Clean Energy Fuels (NASDAQ:CLNE) reported an adjusted EBITDA of $18.9 million, an increase from $12.1 million in the previous quarter. The company generated $21.4 million in operating cash flow in the first half of 2024, a significant turnaround from the $7 million outflow during the same period in 2023. As of June 30, 2024, Clean Energy Fuels holds over $250 million in cash and equivalents, alongside $308 million in working capital.
Clean Energy Fuels (NASDAQ:CLNE) presents a compelling investment opportunity due to its leadership in RNG. Industry analysts have a consensus on the stock’s Buy rating, setting an average share price target at $7.22, which represents an 89.66% upside potential from its current level. As of the second quarter, Clean Energy Fuels (NASDAQ:CLNE) stock is held by 24 hedge funds and the stakes amount to $47.54 million. Arosa Capital Management is the largest shareholder in the company with stocks worth $8.57 million as of June 30.
While we acknowledge the potential of Clean Energy Fuels (NASDAQ:CLNE) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than the stocks on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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