4 Top “Green Economy” Stocks for Energy Investors

Energy investors viewing a frothy sector should get ready to buy names with extra upside, such as Lithium Americas Corp. (TSX:LAC)(NYSE:LAC).

The oil price crash may have had a muted effect on Canadian stocks, especially in comparison with those down in the United States. But the fact is that hydrocarbon producers are facing some stiff headwinds.

Let’s take a look at alternative sectors for investment today. Here’s what energy investors need to know right now from commodities and a popular green power play to an exciting new IPO to watch.

Oil isn’t done yet, but it needs to change tack

There’s a strong case for going green in a stock portfolio. However, the black gold isn’t finished just yet. Oilfields could be repurposed for hydrogen sequestration. In the long run, therefore, some oil names may well be worth holding for long-term upside. Investors should also look beyond the energy industry for an oil recovery, since oil is also a major chemical and manufacturing component.

That said, it seems safe to say that there is no upside left in oil stocks in their current form. Where, then, should energy investors look for stronger returns and a healthier long-term outlook? With demand destruction eating away at the thesis for holding oil stocks, the green economy could provide an alternative source of upside. Undervalued commodities, such as lithium and uranium, are a potentially lucrative long-term play.

Scouting for green economy stocks? Buy for growth

Selling for $4.40 a share, Lithium Americas fits the bill as an undervalued pure play for potentially steep upside. Its high price target of $20 shows just how hefty the returns from this name could be in the mid- to long term. Uranium is a similar play for an undervalued commodity attached to the green economy. Cameco is strong a buy in this space, bringing the potential of 30% upside if uranium gains.

If you’re buying green power stocks, though, Brookfield Renewable Partners should be on your wish list. The Brookfield stable is renowned for world-class asset management expertise, so that’s reason number one to get invested. Other selling points include strong diversification across energy types and regions, and a tasty and reliable dividend. Revenue from wind, solar, and hydro sources feeds a 4.6% yield.

GFL Environmental is a key new IPO in the green economy space, and a strong buy. Comparing GFL and its closest competitor Waste Connections shows the main reason to buy the new IPO: GFL’s P/B is a touch lower at 2.5 times book. Its share price is also considerably lower at $24.80 at the time of writing. A dividend yield of 0.26% is on offer from GFL and could potentially grow as time goes on.

The bottom line

Investors should know how exposed they are to hydrocarbon in their portfolios. Rallies are as good a time as any to trim these types of names, especially the ones that are the most exposed to cratering crude prices. In the meantime, stacking shares in top names that span the full gamut of the green economy could bring tangible rewards from a global growth trend.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Victoria Hetherington has no position in any of the stocks mentioned.

More on Energy Stocks

how to save money
Energy Stocks

The Ultimate Energy Stock to Buy With $1,000 Right Now

A top-performing small-cap stock in the energy sector is a screaming buy right now.

Read more »

A worker overlooks an oil refinery plant.
Energy Stocks

Top Energy Sector Stocks to Invest in for 2025

Dodge U.S. tariffs! Top Canadian energy stocks including Suncor (TSX:SU) stock offer growing dividends and potential growth in 2025

Read more »

golden sunset in crude oil refinery with pipeline system
Energy Stocks

Trump Tariffs: Are Canadian Energy Stocks Still a Safe Haven for Investors?

Trump tariffs have put Canadian energy stocks in the limelight. These stocks have outperformed post-pandemic. Can they continue doing so?

Read more »

Pumpjack in Alberta Canada
Energy Stocks

Canadian Natural Resources: Buy, Sell, or Hold in 2025?

Here's my take when it comes to CNQ this year.

Read more »

happy woman throws cash
Energy Stocks

Best Stock to Buy Right Now: Brookfield Renewable vs Canadian Solar?

Clean energy stocks such as Brookfield Renewable offer significant upside potential for long-term shareholders in 2025.

Read more »

Trans Alaska Pipeline with Autumn Colors
Energy Stocks

Invest $16,650 in this TSX Stocks for $1,000 in Passive Income

This TSX stock offers a 6% yield and will enable you to earn $1,000 in stress-free passive income with a…

Read more »

Make a choice, path to success, sign
Energy Stocks

2 Sectors That Could Take a Big Hit in a U.S.-Canada Trade War

The potential of a U.S.-Canada trade war has sent shockwaves in the TSX. A few sectors could face the biggest…

Read more »

Canadian energy stocks are rising with oil prices
Energy Stocks

Dividend Investors: Top Canadian Energy Stocks for February

Are Canadian energy stocks worth considering amid the threat of import tariffs from the United States? Let's find the answer.

Read more »