We recently compiled a list of the 12 Most Promising Green Stocks According to Hedge Funds. In this article, we are going to take a look at where NextEra Energy, Inc. (NYSE:NEE) stands against the other most promising green stocks according to hedge funds.
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order, signed on Trump’s first day in office after being sworn in for a second term, marks the second time the US has withdrawn from the agreement, having previously done so in 2017.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.
A wind turbine, its blades spinning to generate clean renewable energy.
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).
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.
Overall, NEE ranks 3rd on our list of the most promising green stocks according to hedge funds. While we acknowledge the potential of NEE as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NEE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
