President Donald Trump has signed an executive order directing the United States to withdraw from the Paris climate agreement, which is a significant blow to worldwide efforts to combat global warming. The order, signed on Trump’s first day in office after being sworn in for a second term, marks the second time the US has withdrawn from the agreement, having previously done so in 2017. The Biden administration had previously submitted a plan to cut US greenhouse gas emissions by more than 60% by 2035, but Trump’s withdrawal from the Paris Agreement has threatened to undermine these efforts.
On 20 January, The Guardian reported that the global financial sector is witnessing a significant shift away from its commitment to net zero emissions, as banks, asset managers, and industry groups move to accommodate the Trump administration’s anti-net zero stance. At the center of this shift are two key initiatives: The Glasgow Financial Alliance for Net Zero (GFANZ) and The Net Zero Asset Managers (NZAM) initiative.
GFANZ, a global coalition of financial institutions, was launched in 2021 at the COP26 climate conference in Glasgow, Scotland, with the goal of mobilizing the trillions of dollars needed to deliver the goals of the Paris Agreement. The alliance had set a goal of achieving net-zero emissions by 2050, and its members had committed to aligning their financing activities with the goals of the Paris Agreement. However, in a significant reversal, GFANZ has abandoned its requirement that members be aligned with the Paris Agreement, following a series of withdrawals by major US banks.
Read Also: 12 Cheapest Stocks with Biggest Upside Potential and Top 10 Undervalued Tech Stocks to Buy According to Hedge Funds.
The Net Zero Asset Managers (NZAM) initiative, which includes some of the world’s largest asset managers, has also been impacted by the shift in the global financial sector. NZAM was launched in 2020 with the goal of promoting net-zero investing and supporting the transition to a low-carbon economy. The initiative had gained significant momentum, with over 200 asset managers signing up to its principles and committing to align their investment portfolios with the goals of the Paris Agreement.
However, in recent weeks, NZAM has also suspended its monitoring of members’ progress towards their net-zero commitments, and has announced a review “to ensure NZAM remains fit for purpose in the new global context.” BlackRock, the world’s largest asset manager, has also quit the NZAM initiative, citing “confusion” over its membership. The departure of BlackRock, which manages over $11 trillion in assets, is seen as a significant blow to the initiative and has raised concerns about the ability of NZAM to achieve its goals.
The recent policy shifts and the wavering commitment of major financial institutions to net-zero goals represent significant setbacks in the global fight against climate change. However, sectors such as renewable energy and electric vehicles are expected to continue demonstrating resilience due to their cost-effectiveness, technology advancements, and economies of scale. With that in context, let’s take a look at the 12 most promising green stocks according to hedge funds.
Our Methodology
To compile our list of the 12 most promising green stocks according to hedge funds, we used environmental ETFs plus online rankings to compile an initial list of 25 green stocks. We then used Insider Monkey’s Hedge Fund database to rank 12 stocks according to the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
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).
12 Most Promising Green Stocks According to Hedge Funds
12. Rivian Automotive, Inc. (NASDAQ:RIVN)
Number of Hedge Fund Investors: 31
Rivian Automotive, Inc. (NASDAQ:RIVN) is an electric vehicle (EV) manufacturer specializing in adventure-focused trucks and SUVs. The company designs and produces vehicles such as the R1T (pickup truck) and R1S (SUV) and also offers fleet delivery vans for Amazon. Rivian Automotive, Inc. (NASDAQ:RIVN) generates revenue through vehicle sales and related services, including its proprietary charging network.
Rivian Automotive, Inc. (NASDAQ:RIVN) has launched its second-generation R1 platform chassis, which is equipped with three motors to provide increased power and range. The new Tri-Motor variant offers outstanding performance and efficiency and is expected to be a major contributor to the company’s sales growth. Additionally, Rivian Automotive, Inc. (NASDAQ:RIVN) is working on the development of its R2 model, set for launch in the first half of 2026. The R2 model will be produced at the company’s new Illinois plant and will include several cutting-edge technologies, such as a structural battery pack and a unique electrical architecture.
Rivian Automotive, Inc. (NASDAQ:RIVN) has made substantial progress in ramping up the production of its second-generation R2 platform chassis, with completion expected in 2025. This platform will be used in the R2 model as well as other upcoming models like the R3, and will also include a quad-motor variant. Rivian Automotive, Inc. (NASDAQ:RIVN) is focused on optimizing the cost of this platform, and as a result, the R2 chassis program is anticipated to benefit from significant cost reductions, driven by improvements in material costs, strengthening supply chain relationships, and more efficient manufacturing processes.
11. Array Technologies, Inc. (NASDAQ:ARRY)
Number of Hedge Fund Investors: 36
Array Technologies, Inc. (NASDAQ:ARRY) specializes in solar tracking systems designed to improve the efficiency of solar energy projects. The company’s flagship products, including the DuraTrack and OmniTrack series, are designed to optimize energy production and reduce operational risks, making them suitable for a wide range of terrains and climates. Array Technologies, Inc. (NASDAQ:ARRY) generates revenue through hardware sales and post-installation services, catering to utility-scale solar developers and independent power producers.
Array Technologies, Inc. (NASDAQ:ARRY) is dedicated to continuous innovation, as demonstrated by the recent introduction of the 77-degree tracker, which features the industry’s steepest stow angle to protect against hail damage. This product, along with the SkyLink architecture and automated snow response solutions, addresses the specific challenges faced by solar sites, such as extreme weather conditions. The company is also working on a strong pipeline of upcoming products, including the automated snow response system.
While the U.S. market remains a core focus, Array Technologies, Inc. (NASDAQ:ARRY) is actively expanding its global presence. The company has increased its investments in sales and marketing to strengthen its position and drive additional business in international regions. In Brazil, the company has achieved a leading market share in distributed generation, showcasing its ability to adapt to diverse market conditions. In Europe, despite modest demand, Array Technologies, Inc. (NASDAQ:ARRY) is confident in its targeted customer initiatives and is well-positioned for market share growth in the coming quarters.
10. Sprouts Farmers Market, Inc. (NASDAQ:SFM)
Number of Hedge Fund Investors: 37
Sprouts Farmers Market, Inc. (NASDAQ:SFM) operates a chain of grocery stores that focuses on fresh, natural, and organic products. The company’s business model prioritizes sustainably sourced foods and health-oriented offerings. The company is well-regarded for its focus on sustainable sourcing, reducing food waste, and utilizing eco-friendly packaging. Sprouts Farmers Market, Inc. (NASDAQ:SFM) operates over 440 stores across 23 states in the United States.
Sprouts Farmers Market, Inc. (NASDAQ:SFM) is focusing on expanding its unique product offerings to meet the needs of its health-conscious customers. The company is continually enhancing its selection of organic produce, protein programs, and meal solutions, positioning itself as a one-stop destination for those seeking healthy and convenient options. Sprouts Farmers Market, Inc. (NASDAQ:SFM) has also introduced new products such as grass-fed beef, stuffed peppers, and organic grass-fed meatballs to drive growth in its categories. Additionally, the company’s Innovation Center has successfully transitioned over 170 new items onto its shelves, and its foraging team is consistently exploring emerging tastes and trends from around the world.
Sprouts Farmers Market, Inc. (NASDAQ:SFM) is collaborating with influencers and celebrities to attract new customers to its stores. By doing so, the company aims to increase customer engagement and experience to build strong connections with its customers to drive loyalty and retention. Additionally, Sprouts Farmers Market, Inc. (NASDAQ:SFM) is investing in technology to establish a robust customer data foundation, which will facilitate personalized communication and tailored marketing efforts. A new loyalty program is being tested with promising early results, and plans are in place to expand the test to additional markets in 2025.
9. Enphase Energy, Inc. (NASDAQ:ENPH)
Number of Hedge Fund Investors: 38
Enphase Energy, Inc. (NASDAQ:ENPH) is a global leader in energy technology, known for its solar microinverter systems that convert solar energy into usable electricity. The company also offers energy storage solutions and monitoring software, designed for both residential and commercial solar installations. Enphase Energy, Inc. (NASDAQ:ENPH) generates revenue through a mix of product sales and subscription-based services.
Enphase Energy, Inc. (NASDAQ:ENPH) is actively expanding its product portfolio to cater to a broader range of market needs. The company has recently launched the IQ9 microinverter, featuring Gallium Nitride (GaN) technology, which supports higher DC input currents and higher AC grid voltages, making it ideal for small commercial applications. This product line is set to be released in the second half of 2025 and aims to meet the changing demands of the market and reinforce the company’s presence in the commercial sector.
Furthermore, Enphase Energy, Inc. (NASDAQ:ENPH) is rolling out its fourth-generation battery system, designed to reduce installation costs and enhance its competitiveness in both grid-tied and backup energy solutions. The company is also expanding its presence in key international markets, including Japan, India, and Brazil by offering products tailored to local regulations and market conditions.
8. Sunrun Inc. (NASDAQ:RUN)
Number of Hedge Fund Investors: 43
Sunrun Inc. (NASDAQ:RUN) is one of the largest residential solar energy providers in the United States that offers solar panels, battery storage, and energy management services. The company plays a crucial role in reducing reliance on fossil fuels by providing homeowners with affordable and sustainable solar energy solutions. Sunrun Inc.’s (NASDAQ:RUN) customer base primarily consists of residential homeowners seeking renewable energy options and grid independence.
Sunrun Inc. (NASDAQ:RUN) is focusing on expanding its strategic partnerships to better integrate residential solar energy systems with the larger electric grid by transforming homes into smart, responsive energy resources. The company has launched 16 grid service programs nationwide, with over 20,000 customers actively participating. One of its most significant partnerships is with Orange and Rockland Utilities (O&R), a subsidiary of Consolidated Edison, Inc., which led to the activation of New York’s largest residential power plant which uses a distributed energy system powered by more than 300 solar-plus-storage units.
Sunrun Inc. (NASDAQ:RUN) continues to invest in cutting-edge technologies and services to maintain its innovation leadership. The company is advancing battery storage solutions, smart grid management tools, and integrated energy management platforms. These technologies not only enhance system efficiency and reliability but also improve the user experience by making energy management more seamless and intuitive. Sunrun Inc.’s (NASDAQ:RUN) virtual power plants utilize sophisticated software to optimize energy consumption and distribution, ensuring that stored solar power is effectively used during peak demand periods.
7. Waste Connections, Inc. (NYSE:WCN)
Number of Hedge Fund Investors: 48
Waste Connections, Inc. (NYSE:WCN) is a leading provider of waste management, recycling, and environmental services across North America. The company emphasizes sustainable waste disposal practices, recycling initiatives, and landfill gas-to-energy projects to minimize its environmental footprint. Waste Connections, Inc. (NYSE:WCN) collaborates with municipalities, commercial businesses, and industrial clients to offer customized waste management solutions.
Waste Connections, Inc. (NYSE:WCN) is concentrating on expanding its presence in key markets. The company is poised for a record year of private company acquisitions, with over $700 million in annualized private company revenue signed or closed by October 30. These acquisitions encompass solid waste franchises, new market entries, oil and natural gas waste facilities, and tuck-in operations within or near its existing service areas. A notable acquisition is Royal Waste Services, a prominent waste management company in New York City, which has positioned Waste Connections, Inc. (NYSE:WCN) as the largest and only fully integrated waste provider in the city. This strategic acquisition is expected to unlock significant growth and operational efficiencies, especially with the city’s shift to a franchise model, where the company has secured exclusive contracts with municipalities and businesses to be the primary waste collection provider.
Waste Connections, Inc. (NYSE:WCN) is dedicated to sustainable practices and has made substantial progress in achieving its long-term ESG (Environmental, Social, and Governance) goals. The company has successfully reduced emissions intensity by 40% and absolute emissions by 13% over multiple years.
6. Aptiv PLC (NYSE:APTV)
Number of Hedge Fund Investors: 52
Aptiv PLC (NYSE:APTV) is a global technology company specializing in advanced safety, electrification, and connected car solutions for the automotive industry. The company plays a pivotal role in the transition to a sustainable and electrified transportation system by offering both software and hardware solutions. Aptiv PLC (NYSE:APTV) is also recognized for its focus on sustainable manufacturing practices and energy-efficient technologies.
Aptiv PLC (NYSE:APTV) is making significant investments in the development of cutting-edge technologies, including high-voltage electrical architecture solutions, battery management systems, and electric motor control systems for the electric vehicle (EV) market. The company is also dedicated to creating cost-effective solutions for EVs, such as its modular electrical distribution systems, which aim to lower the overall cost of EV production. In addition, Aptiv PLC (NYSE:APTV) is collaborating closely with its OEM customers to support the development of new EV platforms and models by incorporating advanced safety features and user experience enhancements. The company also focusing on its Gen 6 ADAS platform, which offers a high-performance, scalable solution at a competitive cost.
Aptiv PLC (NYSE:APTV) is prioritizing investments in emerging EV technologies, such as battery management and electric motor control systems. The company has made strategic investments in several EV-related startups and has formed partnerships with leading EV manufacturers to develop and produce advanced EV components.
5. Waste Management, Inc. (NYSE:WM)
Number of Hedge Fund Investors: 54
Waste Management, Inc. (NYSE:WM) is a leader in waste collection, disposal, and recycling services in North America. The company focuses on landfill gas-to-energy projects, recycling initiatives, and innovative waste reduction strategies. Waste Management, Inc. (NYSE:WM) plays a key role in minimizing environmental impact and promoting recycling.
Waste Management, Inc. (NYSE:WM) is making substantial investments in sustainability and renewable energy projects to drive growth and lessen its environmental impact. The company has pledged to invest approximately $3 billion in sustainability-related projects, including the development of renewable natural gas (RNG) projects, recycling facilities, and other initiatives. These investments are expected to contribute to significant earnings growth and free cash flow, with the company forecasting $800 million in EBITDA from these initiatives by 2027.
Waste Management, Inc. (NYSE:WM) is also leveraging technology and automation to enhance its operations, improve efficiency, and lower costs. The company has integrated various technologies, such as automated routing systems, scheduling and planning tools, and advanced mapping systems, to optimize its collection and disposal processes. Additionally, Waste Management, Inc. (NYSE:WM) has automated over 800 routes in its residential fleet to reduce labor reliance and boost performance. These technological investments are expected to drive margin growth and operational efficiency, with the company aiming to significantly lower operating expenses as a percentage of revenue.
Waste Management, Inc. (NYSE:WM) is also pursuing strategic acquisitions to broaden its service offerings and expand its market presence. On November 4, the company completed the acquisition of Stericycle, a leading provider of medical waste management services. This acquisition is anticipated to enhance the company’s business portfolio, generate synergies, and promote growth through expanded service offerings.
4. First Solar, Inc. (NASDAQ:FSLR)
Number of Hedge Fund Investors: 59
First Solar, Inc. (NASDAQ:FSLR) is a prominent provider of solar energy solutions, specializing in thin-film photovoltaic (PV) technology. The company designs, manufactures, and installs large-scale solar power systems globally that serve utility-scale project developers, independent power producers, and energy companies, First Solar, Inc. (NASDAQ:FSLR) plays a vital role in advancing the worldwide transition to renewable energy.
First Solar, Inc. (NASDAQ:FSLR) has achieved significant milestones in expanding its manufacturing capacity and enhancing its technological capabilities. The company recently inaugurated its $1.1 billion manufacturing facility in Alabama, which is projected to add 3.5 gigawatts of vertically integrated solar production capacity upon reaching full operation. Additionally, First Solar, Inc. (NASDAQ:FSLR) plans to begin operations at its Louisiana facility in the second half of 2025, aligning with its goal of exceeding 14 gigawatts of annual U.S. capacity and over 25 gigawatts of global capacity by 2026.
First Solar, Inc. (NASDAQ:FSLR) is also preparing to introduce CuRe production at its Ohio facility, with plans to deliver approximately 0.4 gigawatts of CuRe products by the first quarter of 2025. Moreover, First Solar, Inc. (NASDAQ:FSLR) is advancing perovskite technology through a dedicated development line in Perrysburg, Ohio, designed to simulate in-line manufacturing conditions and accelerate innovation in this promising field.
3. NextEra Energy, Inc. (NYSE:NEE)
Number of Hedge Fund Holders: 69
NextEra Energy, Inc. (NYSE:NEE) is a prominent leader in the renewable energy and utility sectors. Based in Juno Beach, Florida, the company operates through its subsidiaries, Florida Power & Light Company (FPL) and NextEra Energy Resources, to provide low-cost, reliable, and green electricity to millions of customers across the United States.
NextEra Energy Inc. (NYSE:NEE) is leveraging its renewable energy expertise to collaborate with other utility companies and expand its reach to meet the increasing demand for clean power. Recently, the company partnered with Salt River Project (SRP), a leading Arizona utility, to complete the Babbitt Ranch Energy Center. This 161-megawatt (MW) wind project, located in Coconino County, Arizona, will supply clean energy exclusively to Google’s future data center in Mesa, Arizona, supporting the tech giant’s 24/7 carbon-free energy goals.
NextEra Energy Inc. (NYSE:NEE) is also growing its renewable energy portfolio through a partnership with Phillips 66 to power its Rodeo refinery in California using a new solar facility. The 30.2-megawatt solar plant is being constructed on 88 acres of land adjacent to Phillips 66’s renewable fuels facility in the San Francisco Bay Area. Looking ahead, NextEra Energy Inc. (NYSE:NEE) has announced additional framework agreements with two Fortune 50 companies to develop renewable energy and storage projects with a combined capacity of up to 10.5 gigawatts by 2030.
2. Constellation Energy Corporation (NASDAQ:CEG)
Number of Hedge Fund Investors: 78
Constellation Energy Corporation (NASDAQ:CEG) is a leading energy provider in the United States, specializing in power generation, wholesale energy sales, and retail energy supply. The company operates one of the nation’s largest solar power facilities, with a generation capacity of 242 megawatts, alongside 27 wind projects across 10 states with a total capacity of approximately 1,400 MW.
Constellation Energy Corporation (NASDAQ:CEG) is leveraging its renewable energy expertise to provide innovative solutions that enable data centers and other businesses to operate with clean and reliable energy. One of the company’s most popular offerings is its offsite renewables product, CORe, which facilitates location-specific renewable energy purchases and provides renewable energy certificates (RECs) tailored to meet customers’ specific energy consumption needs. The company recently partnered with W. L. Gore & Associates on a 55-megawatt (MW) renewable energy project. Under a 20-year agreement, W. L. Gore & Associates will procure around 110,000 MWh of energy annually and receive energy and RECs from Constellation Energy Corporation’s (NASDAQ:CEG) Glover Creek Solar Project in Metcalfe County, Kentucky.
By offering long-term agreements to businesses, Constellation Energy Corporation (NASDAQ:CEG) ensures a stable revenue stream while supporting its clients in achieving their carbon reduction goals. Additionally, the CORe products help the company foster strategic partnerships and collaborations to accelerate the growth and deployment of solar energy projects in collaboration with utilities, state governments, and other organizations.
1. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Investors: 99
Tesla, Inc. (NASDAQ:TSLA) is a global leader in electric vehicle manufacturing that has transformed the automotive industry with its innovative electric cars. Beyond vehicles, Tesla (NASDAQ:TSLA) is pushing boundaries in robotics and autonomous driving with its advanced Full Self-Driving (FSD) software.
Tesla, Inc. (NASDAQ:TSLA) is focusing on ramping up its vehicle production and intends to introduce more affordable models in the first half of 2025. This initiative is aimed at making electric vehicles accessible to a broader audience. Additionally, the company is on track to begin volume production of the Cybercab in 2026, with a goal of manufacturing at least 2 million units annually and potentially scaling up to 4 million units in the future. This production expansion is designed to meet the rising demand for electric vehicles while supporting the company’s long-term vision of becoming a fully autonomous and sustainable transportation leader.
Tesla, Inc. (NASDAQ:TSLA) is also focusing on autonomous driving technologies, the company has recently introduced Full Self-Driving version 13.0. This version is expected to increase the distance driven between driver interventions by 5 to 6 times compared to the previous version. The company aims to achieve full autonomy by the third quarter of 2025, with capabilities expected to surpass human driving by the end of 2025. Tesla, Inc. (NASDAQ:TSLA) also plans to launch self-driving electric vehicles for ride-hailing in California and Texas by mid-2025, as these states offer a more streamlined regulatory approval process. Currently, the company is piloting this service by providing ride-hailing options to its employees in the Bay Area.
While we acknowledge the potential of Tesla, Inc. (NASDAQ:TSLA) 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 TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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