Different people have different approaches to caring about and contributing to the recovery and improvement of the climate. Some people make several personal lifestyle changes, like responsibly disposing of waste and relying on renewable power. Others may go a step further by spending and investing with green companies. This ESG (environmental, social, and governance) investing approach is gaining momentum in Canada.
For many of these people, a company’s commitment to the environment and good operating practices may trump its profitability potential. But you don’t have to sacrifice one for the other. With the right stocks, you can carefully balance responsibility with profitability.
An EV company
Transportation is one of the most significant sources of emissions in the world, and EV companies, especially ones like Lion Electric (TSX:LEV) that are focused on developing zero-emission, mass-transit options like school buses, public buses, and trucks, contribute to the environment in two ways.
The first is mass transit itself, which is far more environmentally friendly than the same number of individuals being driven in individual vehicles. The second contribution is taking emissions out of the equation by electrifying the transport solution altogether. The company does more than that and also offers financial and infrastructure support.
The performance of the stock so far has been quite disappointing. It joined the market in May 2021 and, so far, has lost over 87% of its value. But this also presents an opportunity. This discounted, beaten-down company might experience a surge if it receives orders to convert existing school fleets in the U.S. and Canada, which is a massive untapped market right now.
A fuel cell company
Ballard Power Systems (TSX:BLDP) is a fuel cell company, a technology that has yet to gain traction against conventional electric vehicles (EVs) since it relies on hydrogen.
The mass extraction of hydrogen, its supply, and storage is still an issue, but many experts agree that it may prove to be a viable fuel and power option in the future. It also provides a zero-emission transportation option superior to EVs.
Unlike conventional EVs that require batteries to store electrical charge, fuel-cell-based vehicles simply need a fuel cell and a power train to drive the car (in essence). That gets rid of the batteries and all the emissions and waste problems associated with them.
Ballard stock has shown its enormous potential. Between mid-2018 and early 2021, the stock rose by about 1,200%. It has been in a major decline ever since, but with the right catalyst, the stock may shoot up again.
A renewable company
Brookfield Renewable Partners (TSX:BEP.UN) represents the renewable energy front of a massive asset management company.
Brookfield Renewables has an impressive presence around the globe, with renewable energy production facilities in multiple domains (wind, solar, hydro, and storage) spread out across four different markets. The highest concentration of its assets, however, is in North America.
By investing in a company like Brookfield Renewable, you will basically be investing in the future of clean energy. It’s also a compelling pick from a profitability perspective.
The company pays dividends, and in the last 10 years, it returned over 300% to its investors through both capital appreciation and dividends. With an $18.9 billion market cap and a leadership position within the industry, it can also be counted among the blue-chip stocks of the TSX.
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Foolish takeaway
The three green stocks have amazing growth potential, though, in the case of Ballard and Lion Electric, the companies will need to gain solid traction in their respective markets for the stocks to fully realize their potential. Buying now when the stocks are heavily discounted can help you fully capitalize on the situation.
