I’m increasingly on the lookout for ‘green’ shares to buy. That’s because my long-term positions tend to reflect global trends, such as the green agenda or ageing populations.
But my investments relating to eco issues aren’t always totally ‘green’. I appreciate that one of the biggest winners from the electrification of transport and other industries will be resource companies.
So, let’s take a closer look at four high-potential stocks to prosper from the green agenda.
‘Green’ transport
NIO shares display fairly extreme volatility. Despite this, I still see the Shanghai-based EV maker as a frontrunner in the sector. The firm has an impressive seven models on sale, and their performance rivals that of market leader Tesla. It’s battery-swapping tech is also unique and, for me, a winner.
After a challenging year of lockdowns, NIO delivered 15,815 vehicles in December 2022 — a new record-high monthly delivery, representing an increase of 50.8% year on year.
Geopolitics and the threat of more restrictions on China-made goods are ever-present concerns. However, it appears that NIO intends to de-risk. It already produces its battery-swapping stations in Europe.
I’m buying more of the stock while the share price is depressed.
Another stock I’m backing is Sociedad Química y Minera de Chile. The firm is a low-cost producer of lithium — a vital component in EV batteries.
It surged on increasing lithium prices over the past 18 months. Despite a weakening economic forecast in 2023, I’m still anticipating lithium demand to stay strong. That’s because demand for lithium is tied to one of the most important economic trends of our generation.
I expect increased competition for resources over the next decade that will translate to higher prices for fuels and metals. I bought the stock earlier in the month.
Renewables
The green agenda is naturally dependent on our energies coming from renewable sources. Wind is a resource the UK has in abundance. One stock that I particularly like and have bought twice over the past month is Greencoat UK Wind.
The trust owns 45 wind farms in the UK and produces enough energy for around 1.5m homes. It has a 12.5% share in the world’s biggest wind farm, but also owns a collection of very small facilities.
Wind is temperamental, and that’s a challenge. But hopefully, developments in battery technology will aid supply-and-demand issues. I’m also hoping to see the firm boosted by an end to a moratorium on onshore wind. Some estimates suggest onshore wind energy is half the price of offshore wind power.
I’m also keeping a close eye on BP. By 2025, nearly half of the energy giant’s $15bn capital expenditure budget will be channelled into greener power. Analysts forecast that the green arm of the business could generate as much as $9bn-$10bn in underlying cash profits by 2030. I’m certainly interested, but I’m always cautious about buying stocks on a bull run — it’s up 30% over 12 months.
