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.
7. NextEra Energy (NYSE:NEE)
Short Interest as % of Shares Outstanding: 1.71%
Number of Hedge Fund Investors in Q2 2024: 73
NextEra Energy (NYSE:NEE) is the leading global producer of wind and solar energy and battery storage technology. Through its subsidiaries, NextEra Energy (NYSE:NEE) serves millions of customers and plays a crucial role in advancing the shift to a low-carbon economy with its extensive green energy investments.
NextEra Energy (NYSE:NEE) operates primarily through two divisions: Florida Power & Light (FPL), an electric utility, and NextEra Energy Resources (NEER), a major green energy producer and battery storage leader. NEER specializes in developing, constructing, and managing long-term green energy assets, mainly across the U.S. and Canada.
With over 20 years of experience in green energy, NextEra Energy (NYSE:NEE) holds a significant competitive edge. In 2022 the company generated 56% of the total wind energy and 38% of the overall green energy generated in the United States between 2019 and 2022. NEER’s green energy portfolio includes approximately 34 gigawatts (GW) of capacity, comprising 24 GW from wind, 7 GW from solar, and 2 GW from nuclear power. Additionally, NEER operates 1 GW of battery storage across 16 states in the United States
About 93% of NEER’s revenue comes from long-term Power Purchase Agreements with data centers and technology firms, ensuring a stable and predictable revenue stream. The company’s financial performance is robust, with adjusted earnings increasing by 10.8% in Q2 2024, driven by strategic investments and a growing green energy portfolio. Looking forward, NEER projects its earnings per share (EPS) to grow by 6-8% annually through 2027 and plans to boost its dividend payments by 10% per year.
NextEra Energy’s (NYSE:NEE) business is poised to expand significantly due to its dominant position. A short interest of 1.71% in NextEra Energy’s (NYSE:NEE) stock indicates a high level of confidence among investors in the company’s future. As of the second quarter, the company’s stock is held by 81 hedge funds with stakes worth $2.10 billion. GQG Partners is the largest shareholder in the company and has stocks worth $884.56 million as of June 30.
6. Constellation Energy (NASDAQ:CEG)
Short Interest as % of Shares Outstanding: 1.65%
Number of Hedge Fund Investors in Q2 2024: 71
Constellation Energy (NASDAQ:CEG) is a provider of natural gas, energy products, and related services across North America. The company is renowned for its role in nuclear energy and generates 10% of the United States’ carbon-free electricity.
In Q1, Constellation Energy (NASDAQ:CEG) issued a $900 million, 30-year corporate green bond aimed at funding upgrades to its nuclear plants, clean hydrogen production, and energy storage systems. The company has secured long-term sustainable energy contracts with major tech firms, including Microsoft and Google which ensure a stable revenue stream. Additionally, Constellation Energy (NASDAQ:CEG) is investing $800 million to enhance equipment at its Byron and Braidwood nuclear plants in Illinois, which will increase their energy output by 158 megawatts. Another $350 million is being allocated to upgrade the Criterion wind project in Maryland, which will add 79,000 megawatt-hours (MWh) of green energy capacity.
At 1.65%, Constellation Energy’s (NASDAQ:CEG) short interest is negligible, the company is projected to grow its earnings by 45.84% this year. Analysts have a consensus Buy rating on the stock, with an average price target of $225.03, indicating a 16% potential upside from current levels. As of the second quarter, Constellation Energy’s stock is held by 71 hedge funds, with a total investment of $3.78 billion. Coatue Management is the largest shareholder, holding stocks valued at $982.90 million as of June 30.
5. DTE Energy (NYSE:DTE)
Short Interest as % of Shares Outstanding: 1.63%
Number of Hedge Fund Investors in Q2 2024: 25
DTE Energy (NYSE:DTE) has a history of 175 years and is Michigan’s largest utility provider.. The company serves approximately 2.3 million electric customers and 1.3 million natural gas customers across the state.
In Q4 2023, DTE Energy (NYSE:DTE) announced its $25 billion capital investment plan focused on enhancing the reliability of its electric and natural gas utility systems by modernizing infrastructure to better withstand extreme weather and facilitate the transition to green energy. The allocation of these funds includes $9 billion dedicated to upgrading electric distribution systems to improve reliability and service quality. Another $6 billion will be directed towards green energy projects, including solar and wind. Additionally, $5 billion is earmarked for enhancing natural gas infrastructure. As part of its long-term strategy, DTE Energy (NYSE:DTE) aims to phase out its 3,000 MW of coal-fired power plants by 2032 and achieve net-zero carbon emissions for its electric and gas utility operations by 2050. DTE Energy (NYSE:DTE) plans to invest over $4 billion in just 2024.
In Q1, DTE Energy (NYSE:DTE) reported a 25.6% increase in EPS and plans to grow its EPS annually by 6% to 8%. The company has increased its dividend by 6.1% annually over the past decade, outperforming the sector median of 5.2%.
As of the second quarter, 25 hedge funds hold stakes in DTE Energy (NYSE:DTE), with a total investment of $322.14 million. Soroban Capital Partners is the largest shareholder, with holdings valued at $840.74 million as of June 30. Analysts expect the company to increase its earnings by almost 15.45% this year. DTE Energy (NYSE:DTE) has a low short interest of 1.63%.
4. GE Vernova (NYSE:GEV)
Short Interest as % of Shares Outstanding: 1.41%
Number of Hedge Fund Investors in Q2 2024: 92
GE Vernova (NYSE:GEV) has a legacy of over 130 years in manufacturing electrical equipment, natural gas turbines, wind turbines, hydropower turbines, and high-voltage electrical transmission products. The company is a key player in the green energy sector and its technology is utilized in approximately 55,000 wind turbines and 7,000 gas turbines across more than 100 countries which generate around 25% of the world’s electricity.
GE Vernova (NYSE:GEV) is strategically positioned to benefit from several global trends, including rising demand for electricity, natural gas, and green energy solutions. The International Energy Agency (IEA) projects global electricity demand will increase by 4% in 2024 and 2025, up from 2.5% in 2023. This growth is driven by the electrification of transportation, such as the adoption of electric vehicles, and the need for power-intensive technologies like AI systems.
In Q2, GE Vernova reported a net income of $1.3 billion in Q2, a significant turnaround from a $100 million loss in the same period the previous year. This $1.4 billion increase highlights the company’s improving profitability. The net income margin for GE Vernova (NYSE:GEV) also grew by 17.4% year-over-year, reflecting enhanced operational efficiency. Notably, the company’s Power unit, which includes gas and steam turbines, saw a 30% increase in orders compared to Q2 2023, and the backlog for its electrification business expanded by 35% year-over-year.
The Business Research Company forecasts that the electrical equipment market is expected to grow at a CAGR of 6.1% from 2024 to 2028. Additionally, the IEA forecasts that installed wind power capacity will double between 2023 and 2029 which will boost demand for GE Vernova’s (NYSE:GEV) wind turbines and related products. As of the second quarter, the stock is held by 92 hedge funds, with a total investment of $5.70 billion.
3. American Electric Power (NASDAQ:AEP)
Short Interest as % of Shares Outstanding: 1.36%
Number of Hedge Fund Investors in Q2 2024: 35
American Electric Power (NASDAQ:AEP) is one of the largest electric utilities in the United States and operates an extensive network of power plants, transmission, and distribution lines to over 5 million customers across 11 states.
American Electric Power’s (NASDAQ:AEP) focus on green energy investments has positioned it as a significant player in the evolving energy landscape, particularly with the growing electricity demands driven by generative AI and data centers. The International Energy Agency (IEA) forecasts that the global electricity demand will increase by 4% in 2025, up from 2.5% in 2023. Tech companies such as Amazon, Microsoft, Google, and Meta are expected to collectively invest $150 billion annually in data center infrastructure. This surge in demand is anticipated to result in data centers accounting for nearly 30% of electricity growth. Blackstone estimates that investments in generative AI-related data centers could reach $2 trillion over the next five years.
American Electric Power (NASDAQ:AEP) is well-positioned to capitalize on this trend and plans to expand its green energy business at an annual growth rate of 15-20%. The company has increased its dividend by an average of 5.6% over the past five years and aims to achieve an 8% growth rate in the coming years. As of the second quarter, 35 hedge funds hold stakes in AEP, with a total investment of $1.57 billion. GQG Partners is the largest shareholder, with holdings valued at $840.74 million as of June 30. American Electric Power (NASDAQ:AEP) has a low short interest of 1.36%, indicating that investors are confident in the company’s future prospects.
2. Edison International (NYSE:EIX)
Short Interest as % of Shares Outstanding: 1.32%
Number of Hedge Fund Investors in Q2 2024: 32
Edison International (NYSE:EIX) is the parent company of Southern California Edison, one of the largest electric utilities in the United States. The company delivers electricity to approximately 15 million residents across a 50,000-square-mile area in Central, Coastal, and Southern California. The company is deeply integrated into California’s energy landscape, serving a region that has experienced consistent growth in electricity demand. The company has substantial investments in green energy sources, as of 2022, Southern California Edison’s electricity sources included 33.2% renewable power. The company has a long-term goal of achieving 100% carbon-free power distribution by 2045.
In Q2, Edison International’s (NYSE:EIX) revenue reached $4.324 billion, marking a 9.5% increase year-over-year. Net income surged by 27.4% to $572 million. The company is well-positioned to meet growing energy demands through its planned load expansion. Edison International (NYSE:EIX) is projected to grow its load capacity by 2% to 3% annually through 2028, and a 35% growth over the next decade.
Edison International’s (NYSE:EIX) focus on integrating artificial intelligence (AI) into its infrastructure aims to improve grid performance and predict power loads more accurately. Moreover, in 2023, Edison International (NYSE:EIX) filed a General Rate Case (GRC) application with the California Public Utilities Commission (CPUC) to increase its base revenue increase from $8.4 billion to $10.27 billion, the company anticipates a proposed decision by the first quarter of 2025, with the new rates expected to take effect on January 2025 and will support the company to invest in infrastructure and load growth, further strengthening its market position.
Edison International’s (NYSE:EIX) low percentage of short interest at only 1.32% indicates that investors have confidence in the company’s prospects. Analysts expect the company to increase its earnings by almost 4% this year and have a consensus Buy rating on the stock, with an average price target of $87.58 which indicates a potential 4% upside from current levels. As of the second quarter, Edison International’s (NYSE:EIX) stock is held by 32 hedge funds, with a total stake valued at $1.39 billion. Pzena Investment Management is the largest shareholder in the company and owns shares worth $924.57 million as of June 30.
1. Eversource Energy (NYSE:ES)
Short Interest as % of Shares Outstanding: 1.13%
Number of Hedge Fund Investors in Q2 2024: 26
Eversource Energy (NYSE:ES) is a leading energy provider in the New England region in the United States and serves over 4 million customers through its subsidiaries, including Connecticut Light and Power (CL&P), NSTAR Electric, Public Service Company of New Hampshire (PSNH), and Aquarion Company. The company offers electric, gas, and water utility services and is committed to advancing green energy solutions. Eversource Energy (NYSE:ES) is making significant investments in wind and geothermal projects to support its transition toward more sustainable energy sources.
Eversource Energy (NYSE:ES) has investments in key offshore wind projects, such as South Fork Wind, Revolution Wind, and Sunrise Wind. The Sunrise Wind project is expected to be the largest offshore wind initiative in the United States by 2026 and will generate 924 megawatts of power. Eversource has sold a 50% stake in this project to Ørsted, a deal anticipated to bring in $1.5 billion by the third quarter of 2024.
Eversource Energy (NYSE:ES) has a relatively low percentage of short interest at only 1.13% indicating that investors have confidence in the company’s prospects. Analysts have a consensus Buy rating on the stock, with an average price target of $72.82 which indicates a potential 6.6% upside from current levels. As of the second quarter, Eversource’s stock is held by 26 hedge funds, with a total stake valued at $622.20 million. Zimmer Partners is the largest shareholder, owning shares worth $303.36 million as of June 30.
While we acknowledge the potential of Eversource Energy (NYSE:ES) 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 ES but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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