In this article, we look at the 10 Best Green Stocks To Buy According to Short Sellers.
The Future of Green Energy Market
According to a report by the International Energy Agency (IEA), global energy investment is projected to surpass $3 trillion for the first time in 2024, with $2 trillion dedicated to green energy technologies and infrastructure. Since 2020, investment in green energy has surged, surpassing total spending on oil, gas, and coal. In the United States, green energy investment is expected to exceed $300 billion in 2024, 1.6 times the 2020 level, and significantly surpassing fossil fuel investment. The European Union is investing $370 billion in green energy, while China is set to invest nearly $680 billion in 2024. In 2024, green energy investments in emerging markets and developing economies outside China are expected to constitute around 15% of the global total.
Investment in solar photovoltaic (PV) technology is anticipated to exceed $500 billion in 2024, surpassing all other generation sources combined. Although growth may slightly slow in 2024 due to falling PV module prices, solar remains central to the power sector’s transformation. Solar panel costs have dropped by 30% over the past two years. In 2023, each dollar invested in wind and solar PV produced 2.5 times more energy output than a dollar spent on these technologies a decade ago.
Investment in nuclear power is projected to rise in 2024, with its share of clean power investments increasing to 9% after two years of decline. Total investment in nuclear is expected to reach $80 billion in 2024, nearly double the 2018 level.
The rise in green energy spending is driven by emissions reduction goals, technological advancements, energy security needs (particularly in the European Union), and strategic industrial policies aimed at boosting green energy manufacturing and strengthening market positions. These policies can offer local benefits, but balancing costs and benefits is essential to enhance the resilience of green energy supply chains while maintaining trade advantages.
BlackRock is demonstrating a strong bullish stance on the green energy sector. The firm sees a growth potential and anticipates that the renewable energy industry will require an estimated $4.8 trillion in investments by 2040. To capitalize on this opportunity, the company has invested over $5 billion already in more than 250 wind and solar investments. In January, the company invested $500 million in Recurrent Energy. This move reflects its confidence in the growth potential of solar and energy storage. It has 9 GWp of solar and 3 GWh of battery storage projects worldwide, manages over 3.7 GW of operational projects, and has 2.3 GW of contracted projects in the pipeline. The company’s investment in Recurrent Energy signals its strong confidence in the future of green energy.
The investments in green energy reflect a shift towards a more sustainable and resilient future. As the world navigates this transition, a balanced approach will be crucial in ensuring that the momentum in green energy investment continues. With that in context let’s take a look at the 10 best green stocks to buy according to short sellers.
Photo by Jason Blackeye on Unsplash
Our Methodology
For this article, we used green energy ETFs plus online rankings to compile an initial list of 40 green energy stocks. From that list, we shortlisted companies that have the lowest percentage of shares outstanding that were sold short as of September 10 and also examined the hedge fund sentiment around each company. The list is sorted in ascending order of the stocks’ short interest, as of September 10.
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 Stocks To Buy According to Short Sellers
10. Vistra (NYSE:VST)
Short Interest as % of Shares Outstanding: 3.14%
Number of Hedge Fund Investors in Q2 2024: 93
Vistra (NYSE:VST) is involved in electricity generation, wholesale energy sales, fuel production, and logistics, and provides natural gas and electricity. The company also manages battery energy storage facilities and utilizes its nuclear assets to support artificial intelligence (AI) applications.
In March, Vistra (NYSE:VST) completed the acquisition of Energy Harbor, which significantly increased its nuclear capacity by 4,000 megawatts and expanded its customer base by approximately 1 million retail clients. The company has integrated AI into its operations to boost power plant efficiency, enhance thermal performance, and reduce carbon emissions. For example, the deployment of the Heat Rate Optimizer (HRO) across nearly 67 power-generation units in 26 plants resulted in an average efficiency improvement of 1%, saving millions in operational costs. With the rising demand for green energy, particularly driven by AI and data centers, Vistra is well-positioned to capitalize on this trend.
Vistra’s (NYSE:VST) stock has a short interest of 3.14%. Earnings are expected to grow by 40.17% this year. As of the second quarter, 93 hedge funds hold Vistra’s stock with a total value of $4.03 billion. Lone Pine Capital is the largest shareholder, holding stocks worth $587.93 million as of June 30.
9. Chevron (NYSE:CVX)
Short Interest as % of Shares Outstanding: 2.77%
Number of Hedge Fund Investors in Q2 2024: 66
Chevron (NYSE:CVX) is a vertically integrated company engaged in global oil and gas exploration, production, and refining. Beyond its traditional operations, Chevron (NYSE:CVX) also invests in green energy technologies and services, including wind, solar, and biofuels. The company operates a 16.5 MW wind farm in Wyoming, which supplies power to 13,000 homes annually, and a 49 MW geothermal facility in California that powers 40,000 homes each year. Additionally, Chevron (NYSE:CVX) distributes renewable diesel made from sources such as vegetable oils and animal fats at California terminals, offering diesel blends containing 6-20% renewable content.
In May, Chevron (NYSE:CVX) achieved a significant milestone by running a gas turbine on a 60% hydrogen fuel blend for several days. The turbine is located adjacent to Chevron’s (NYSE:CVX) Pipeline & Power Business Unit facility in California and delivers power and steam for nearby oil fields. This advancement is crucial for reducing carbon emissions in industrial processes, such as manufacturing and data centers, and could accelerate the adoption of hydrogen technologies.
Chevron (NYSE:CVX) has a short interest of 2.77%. As of the second quarter, the stock is held by 66 hedge funds with a total value of $122.40 billion. Berkshire Hathaway is the largest shareholder, holding $18.55 billion in Chevron (NYSE:CVX) stocks as of June 30.
8. PG&E Corporation (NYSE:PCG)
Short Interest as % of Shares Outstanding: 1.81%
Number of Hedge Fund Investors in Q2 2024: 46
PG&E (NYSE:PCG) is a major energy provider in Northern and Central California and provides services to over 16 million people through its subsidiary, Pacific Gas & Electric Company. In 2023, PG&E achieved 100% clean electricity generation, sourced from a mix of 53% nuclear power, 34% renewable resources (including solar and wind), and 13% large hydroelectric power. The company has also made significant investments in battery storage, adding over 2,100 megawatts to its capacity.
PG&E (NYSE:PCG) has a strong presence in California, particularly in Silicon Valley, where its advanced fiber network and predominantly renewable-powered grid make it a crucial player for regional data centers. According to PG&E’s CEO, Patti Pope, the company’s grid is currently operating at 45% capacity, but advancements in technology are expected to increase grid utilization to 80% by 2040, with power demand potentially doubling in that time frame. California also has the highest per capita electric vehicle (EV) ownership in the country, with over 1.1 million EVs and more than 15,000 charging stations. This trend makes PG&E (NYSE:PCG) well-positioned to meet the growing energy demands of California’s tech-driven economy.
The stock is currently undervalued trading at a forward P/E ratio of 14.52, which is a 15.75% discount compared to its sector. Analysts forecast nearly 10% growth in earnings this year. PG&E’s (NYSE:PCG) short interest of just 1.81% reflects strong investor confidence, analysts have a consensus Buy rating on the stock, with an average price target of $21.75, indicating an 8.6% potential upside from its current price. The stock is held by 46 hedge funds, with total stakes worth $2.00 billion, as of the second quarter. Third Point is the largest shareholder, holding stocks valued at $938.47 million as of June 30.