Goldman Sachs Solar and Green Energy Stocks: Top 10 Stock Picks

Published on August 31, 2023 at 7:46 am by Fatima Farooq in Hedge Funds, News

In this article, we will be taking a look at Goldman Sachs solar and green energy stocks: top 10 stock picks. To skip our detailed analysis of the green energy market and Goldman Sachs’ second quarter holdings, you can go directly to see the Goldman Sachs Solar and Green Energy Stocks: Top 5 Stock Picks.

The Global Climate Change Environment

Renewable energy and the sources from which it is borne, such as wind and solar, have become hot topics not only among your everyday consumers but also among businesses, investors, and financial professionals. As global warming continues to ramp up with each passing moment, the global community is becoming increasingly fixated on ways to curb the impact of rapid climate change in an attempt to preserve the planet and its resources for future generations. As a result of this sense of urgency, renewable energy and the companies working to make such energy available have both steadily begun to gain popularity among consumers, governments, and businesses alike.

According to the United States Office of Energy Efficiency and Renewable Energy, renewable energy was generating about 20% of all US electricity in 2022. Of this 20%, 9.2% comes from wind, 6.3% from hydropower, 2.8% from solar, 1.3% from biomass, and 0.4% from geothermal resources. In 2022 alone, solar and wind energy resources were expected to add over 60% of the utility-scale generating capacity to the US power grid, representing a split of 46% from solar and 17% from wind. This widespread use of renewable energy in the country has many reasons. One notable reason is the continued effort on the part of the government to promote renewable energy-related programs and projects. According to the United States Environmental Protection Agency, there are several programs in place right now for the purpose of promoting the use of sustainable energy. These include the Combined Heat and Power Partnership, Energy Star, and WaterSense. The Combined Heat and Power Partnership program aims to reduce the environmental impact of power generation by promoting the use of combined heat and power. At the same time, Energy Star is working to provide an energy management strategy that can help measure current energy performance, set goals, track energy savings, and reward improvements. Finally, the WaterSense program is working to protect the American water supply by offering simpler ways to use less water with water-efficient products.

“This Country Should Be Ahead Of Where It Is”

These are merely a few examples of the immense effort that is going into promoting renewable energy in the US today. Such efforts are also aiding companies like Enphase Energy, Inc. (NASDAQ:ENPH), SolarEdge Technologies, Inc. (NASDAQ:SEDG), and NextEra Energy, Inc. (NYSE:NEE) in their renewable energy projects today. Despite this, major investors such as billionaire Warren Buffett still believe that the country is falling behind its environmental obligations. Here’s what Buffett had to say on his company’s contributions to the renewable energy space at the 2023 Berkshire Hathaway annual shareholders meeting:

“We’ve probably spent more money than any other utility I’d guess in the United States. And we’ve just scratched the surface. But it is not easy when you cross state lines, I mean you have different jurisdictions. This country should be ahead of where it is in terms of transmission. We have been the biggest factor in helping that.”

Buffett’s comments make it clear that there is an expectation of major companies in the US to make large contributions to the continuing progress of the renewable energy transformation. Many companies have been following suit with environmental programs and projects to make these very contributions for the betterment of the environment and the planet as a whole. Considering the amount of money and effort that is thus being piled into this space at the moment, we have compiled a list of some of the top renewable energy and solar stocks to invest in according to Goldman Sachs, an institutional investor. These include some of the best solar and green energy stocks to buy today for those looking to invest in renewable energy in the face of climate change.

Goldman Sachs Solar and Green Energy Stocks: Top 10 Stock Picks

Photo by Jason Blackeye on Unsplash

Our Methodology

We went through Goldman Sachs’ 13F holdings for the second quarter to pick 10 solar and green energy stocks the institutional investor was seen to be holding in that quarter. We then ranked these stocks based on Goldman Sachs’ stake value in each of them, from the lowest to the highest. We also mentioned hedge fund information for these companies by using Insider Monkey’s hedge fund data for the second quarter.

Goldman Sachs Solar and Green Energy Stocks: Top Stock Picks

10. Dominion Energy Inc. (NYSE:D)

Goldman Sachs’ Q2 Stake Value: $213.4 million

Number of Hedge Fund Holders: 25

Dominion Energy Inc. (NYSE:D) is a utility company based in Richmond, Virginia. The company produces and distributes energy in the US. It has the Dominion Energy Green Power program for the provision of green energy to its customers, among more.

As of August 7, analysts at BMO Capital Markets have an Outperform rating on shares of Dominion Energy Inc. (NYSE:D). The analysts also maintain a price target of $54 on the stock.

Dominion Energy Inc. (NYSE:D) had 25 hedge funds long its stock in the second quarter, with a total stake value of $431.7 million.

Holding 3.8 million shares in the company, Diamond Hill Capital was the largest shareholder in Dominion Energy Inc. (NYSE:D) at the end of the second quarter.

This is what Carillon Tower Advisers said about Dominion Energy Inc. (NYSE:D) in its fourth-quarter 2022 investor letter:

“Dominion Energy, Inc. (NYSE:D) traded lower following the surprise announcement of the company’s strategic review. The company is likely to sell several business units, which will impact future earnings. As a result of earnings uncertainty, we decided to sell the stock.”

Like Enphase Energy, Inc. (NASDAQ:ENPH), SolarEdge Technologies, Inc. (NASDAQ:SEDG), and NextEra Energy, Inc. (NYSE:NEE), Dominion Energy Inc. (NYSE:D) is a top renewable energy stock hedge funds are eyeing today.

9. Sempra (NYSE:SRE)

Goldman Sachs’ Q2 Stake Value: $217 million

Number of Hedge Fund Holders: 30

Analysts at Barclays initiated coverage on shares of Sempra (NYSE:SRE) with an Overweight rating on August 23.

Sempra (NYSE:SRE) is another utility company on our list. It is based in San Diego, California. The company operates through its San Diego Gas & Electric Company, Southern California Gas Company, Sempra Texas Utilities, and Sempra Infrastructure segments. It provides electricity generated through wind, solar, and other resources.

In the second quarter, 30 hedge funds were long Sempra (NYSE:SRE). Their total stake value in the company was $594.7 million.

Citadel Investment Group was the largest shareholder in Sempra (NYSE:SRE) at the end of the second quarter, holding 1.5 million shares in the company.

8. Xcel Energy Inc. (NYSE:XEL)

Goldman Sachs’ Q2 Stake Value: $291.5 million

Number of Hedge Fund Holders: 27

Xcel Energy Inc. (NYSE:XEL) was spotted in the 13F holdings of 27 hedge funds in the second quarter, with a total stake value of $394.7 million.

Xcel Energy Inc. (NYSE:XEL) is an electric utility company based in Minneapolis, Minnesota. The company generates, purchases, transmits, distributes, and sells electricity. It operates through its Regulated Electric Utility, Regulated Natural Gas Utility, and Other segments. The company generates electricity through solar, hydroelectric, biomass, oil, and wind energy resources, among more.

Analysts at Barclays initiated coverage on Xcel Energy Inc. (NYSE:XEL) shares on August 24. The analysts also placed a price target of $60 on the stock.

7. Enbridge Inc. (NYSE:ENB)

Goldman Sachs’ Q2 Stake Value: $301.4 million

Number of Hedge Fund Holders: 28

GQG Partners was the most prominent shareholder in Enbridge Inc. (NYSE:ENB) at the end of the second quarter, holding 6.4 million shares in the company.

Enbridge Inc. (NYSE:ENB) is an energy company that operates through its Liquid Pipelines, Gas Transmission and Midstream, Gas Distribution and Storage, Renewable Power Generation, and Energy Resources segments. The company is based in Calgary, Canada. It operates several power-generating assets, including wind, solar, geothermal, waste heat recovery, and transmission assets in North America.

A Buy rating was maintained on shares of Enbridge Inc. (NYSE:ENB) on August 8 by analysts at TD Cowen. The analysts also placed a price target of $58 on the stock.

Our hedge fund data for the second quarter shows 28 hedge funds holding stakes in Enbridge Inc. (NYSE:ENB). Their total stake value in the company was $449.7 million.

6. Suncor Energy Inc. (NYSE:SU)

Goldman Sachs’ Q2 Stake Value: $480.9 million

Number of Hedge Fund Holders: 33

Shares of Suncor Energy Inc. (NYSE:SU) were upgraded from Equal Weight to Overweight on August 23 by analysts at Wells Fargo & Company. The analysts also raised their price target on the stock from $44 to $54.

Suncor Energy Inc. (NYSE:SU) was seen in the portfolios of 33 hedge funds during the second quarter, with a total stake value of $889.5 million.

Suncor Energy Inc. (NYSE:SU) is an energy company based in Calgary, Canada. It operates through its Oil Sands, Exploration and Production, and Refining and Marketing segments. The company has been producing renewable fuel since the early 2000s at its ethanol plant in St. Clair, Ontario.

Here’s what Artisan Partners said about Suncor Energy Inc. (NYSE:SU) in its fourth-quarter 2022 investor letter:

“Suncor Energy Inc. (NYSE:SU), a Canada-based operator of oil sands mines, refineries and retail gas stations, was the third-largest contributor to return for the year, mainly due to higher oil prices. The share price increased by one third. Notably, the portfolio generated significant returns from energy stocks, including Suncor, Tenaris, Imperial Oil and tangentially Alimentation Couche-Tarde and Seven & i Holdings, both of which are in the gas station business. Given the cyclicality and commodity nature of the oil business, we have sold shares of these investments, including the complete sale of both Tenaris and Imperial Oil.”

Like Enphase Energy, Inc. (NASDAQ:ENPH), SolarEdge Technologies, Inc. (NASDAQ:SEDG), and NextEra Energy, Inc. (NYSE:NEE), Suncor Energy Inc. (NYSE:SU) is a renewable energy stock that Goldman Sachs is piling into this year.

Click to continue reading and see Goldman Sachs Solar and Green Energy Stocks: Top 5 Stock Picks.