In this article, we discuss the 5 best environmental stocks to invest in. If you want to read our detailed analysis of these environmental-friendly stocks, go directly to the 12 Best Environmental Stocks to Invest In.
5. Target Corporation (NYSE: TGT)
Number of Hedge Fund Holders: 60
Target Corporation (NYSE: TGT) ranks 5th on the 12 best environmental stocks to invest in. The Minneapolis-based general merchandise retailer offers everything from perishable and frozen goods, dry grocery to electronics, home improvement products, and household products. Target Corporation (NYSE: TGT) currently pays shareholders an annual dividend of $3.60 per share with a 1.50% dividend yield. TGT stock has offered more than 103% returns to investors in the past twelve months. Shares of TGT are also up 21% in the past three months.
Target Corporation is one of the giant retailers that offers solid recycling solutions to help the environment. In 2010, the company introduced a recycling kiosk in Target stores, which has prevented thousands of tons of recyclable plastic from ending up in landfills. Target Corporation installed solar rooftops in more than 500 stores and distribution centers in 2019, clearly set a goal of having solar rooftops in each Target store in 2015.
The company has a market cap of $119 billion. The company’s first-quarter revenue grew 23.4% year over year to $24.5 billion. In 2021, the company’s first-quarter operating income margin rate was 9.8%, up from 2.4% in 2020. As of July 2, Target Corporation (NYSE: TGT) shares traded at $246.58 and have a P/E ratio of 20.13. On June 23rd, Argus Research maintained a Buy rating on Target Corporation, with a price target of $265 per share.
At the end of the first quarter of 2021, 60 hedge funds in the database of Insider Monkey held stakes worth $4.76 billion in Target Corporation (NYSE: TGT), down from 78 the preceding quarter worth $4.06 billion.
In its Q1 2021 investor letter, investment management firm LRT Capital Management mentioned Target Corporation (NYSE: TGT) and shared their insights on the company. Here is what the fund said:
“Target, the Minneapolis-based retailer, continues to fire on all cylinders as the company has reported two quarters in a row of +20% revenue growth (5% traffic growth + 15% average basket size6 ), coupled with the strongest EBITDA margins in over four years. The company has successfully navigated the Covid-19 pandemic, with online sales growing by 155% and 118% during Q3 2020 and Q4, respectively.
On March 2nd, the company reported another stellar quarter, with same-store sales growing by over 20%, and both earnings (+57% YoY) and revenues (+21% YoY) beating estimates. The shares are up 14.11% year-to-date. We believe the shares are a bargain 23x trailing and 20x forward earnings.”
4. Tesla, Inc. (NASDAQ: TSLA)
Number of Hedge Fund Holders: 62
Total ESG Score: 31.3
Tesla, Inc. (NASDAQ: TSLA) ranks 4th on the list of 12 best environmental stocks to invest in. On top of being a market leader in the EV market, the company also promotes the use of solar energy as it manufactures and sells solar panels and solar energy storage products. Tesla, Inc. (NASDAQ: TSLA) produced and delivered over 200,000 electric vehicles in the second quarter of 2021. TSLA stock has offered more than 181% returns to investors in the past twelve months.
The company has a market cap of $654 billion. The company’s first-quarter revenue came in at $10.4 billion, up 74% from $5.98 billion in the same quarter in 2020. In April, Canaccord Genuity analyst Jed Dorsheimer upgraded Tesla, Inc. from Hold to Buy, with a price target of $1,071 compared to $419 previously. As of July 2, Tesla, Inc. (NASDAQ: TSLA) shares traded at $678.90 and have a P/E ratio of 680.26.
At the end of the first quarter of 2021, 62 hedge funds in the database of Insider Monkey held stakes worth $10.01 billion in Tesla, Inc. (NASDAQ: TSLA), down from 68 the preceding quarter worth $12.3 billion.
In the Q4 2020 Investor Letter, Baron Opportunity Fund highlighted a few stocks and Tesla Inc. (NASDAQ: TSLA) is one of them. Here is what the fund said:
“Tesla, Inc. designs, manufactures, and sells fully electric vehicles, solar products, and energy storage solutions. The stock increased on strong financial results, including profitability that exceeded market forecasts and strong growth across different geographies and vehicle programs. Indeed, in the third quarter, Tesla delivered almost 140,000 total vehicles – with strong unit-level economics of 27.7% GAAP automotive gross profit margins – and another quarter of GAAP profitability and strong free cash flow (almost $1.4 billion). Recently, Tesla announced a record of over 180,000 total vehicle deliveries for the fourth quarter, effectively hitting its goal of 500,000 deliveries for the calendar year, a projection given before the COVID pandemic. In addition, we believe newly released full self-driving functionality should yield further improvements in unit economics and open exciting new growth opportunities. Lastly, Tesla joined the S&P 500 Index, a meaningful milestone that significantly expands the potential shareholder base.”
3. NextEra Energy, Inc. (NYSE: NEE)
Number of Hedge Fund Holders: 63
NextEra Energy, Inc. (NYSE: NEE) ranks 3rd on the list of 12 best environmental stocks to invest in. Founded in 1925, the utility company has become one of the largest providers of renewable energy in the US. NextEra Energy, Inc. operates solar and wind generation facilities across the US. The renewable energy company is actively investing in energy infrastructure in the United States, with a total investment of $14.6 billion in 2020. NextEra Energy, Inc. (NYSE: NEE) distributes a $1.54 per share yearly dividend to its shareholders, yielding 2.07%. The stock has gained 21% over the last twelve months.
The company has a market cap of $146 billion. In the first quarter of 2021, the company’s sales were $3.7 billion, down from $4.6 billion in the same time of 2020. As of July 2, NextEra Energy, Inc. (NYSE: NEE) shares traded at $74.28 and have a P/E ratio of 35.20. On June 21, Morgan Stanley maintained an Equal-Weight rating on NextEra Energy, Inc. and upgraded its price target to $77 per share from $75 previously.
At the end of the first quarter of 2021, 63 hedge funds in the database of Insider Monkey held stakes worth $2.73 billion in NextEra Energy, Inc. (NYSE: NEE), up from 61 the preceding quarter worth $3.1 billion.
Just like Microsoft Corporation (NASDAQ: MSFT), Tesla, Inc. (NASDAQ: TSLA), and NIO Inc. (NYSE: NIO), NextEra Energy, Inc. (NYSE: NEE) is one of the best environmental stocks to invest in.
2. Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM)
Number of Hedge Fund Holders: 76
Chip-maker Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) ranks 2nd on the list of the 12 best environmental stocks to invest in. In 2019, the company cut 17% of its greenhouse gas emissions and 65% of fluorinated greenhouse gas emissions, making it an industry leader in low-carbon manufacturing. In addition, the company purchases renewable energy and installs solar-powered systems in its facilities. Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) currently pays an annual dividend of $1.81 per share with a 1.54% dividend yield. TSM stock has offered more than 107% returns to investors in the past twelve months.
The company has a market cap of $604 billion. The company’s first-quarter revenue came in at $12.92 billion, including an operating income margin rate of 41.5%. As of July 2, Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) shares traded at $118.91 and have a P/E ratio of 31.84. On June 22nd, Argus Research initiated coverage on Taiwan Semiconductor Manufacturing Company Limited with a Buy rating and $150 per share price target.
At the end of the first quarter of 2021, 76 hedge funds in the database of Insider Monkey held stakes worth $10.9 billion in Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM), up from 72 the preceding quarter worth $11.8 billion.
ClearBridge Investments, in its Q1 2021 investor letter, mentioned Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) and shared their insights on the company. Here is what the fund said:
“While we maintain high conviction in many of the emerging and secular growth names in the portfolio,– we continue to hold Taiwan Semiconductor, the world’s largest foundry. Semiconductor shortages, caused by a combination of years of capacity reductions, COVID-19 lockdowns, and better than expected rebounds in industries like autos, will cause short-term revenue pressure but are allowing companies to exert pricing power as they race to replenish depleted inventories.”
1. Microsoft Corporation (NASDAQ: MSFT)
Number of Hedge Fund Holders: 251
Topping the 12 best environmental stocks to invest in is tech giant Microsoft Corporation (NASDAQ: MSFT). The Washington-based tech giant is one of the carbon-neutral leaders not only in its industry but also globally. Microsoft Corporation (NASDAQ: MSFT) released its initial Environmental Sustainability Report in January 2021, announcing a $129 million investment in funds and organizations working on carbon reduction, water management, and circular economy innovations. This investment is part of Microsoft Corporation’s $1 billion Climate Innovative Fund, announced in 2020. The company currently pays its shareholders an annual dividend of $2.24 per share with a 0.85% dividend yield. MSFT stock has offered more than 34% returns to investors in the past twelve months. Shares of MSFT also increased 13% in the last three months.
The company has a market cap of $1.9 trillion. The company’s third-quarter revenue grew 19% to $41.7 billion, up from $35 billion in the same quarter in 2020. As of July 2, Microsoft Corporation (NASDAQ: MSFT) shares traded at $277.65 and have a P/E ratio of 37.84. On June 23rd, Wedbush maintained an Outperform rating on Microsoft Corporation, with a price target of $325 per share.
At the end of the first quarter of 2021, 251 hedge funds in the database of Insider Monkey held stakes worth $58.9 billion in Microsoft Corporation (NASDAQ: MSFT), down from 258 the preceding quarter worth $52.8 billion.
You can also take a peek at the 12 Best Solar Energy Stocks to Invest In and 10 Stocks to Buy to Profit from Post-COVID Economic Recovery.
