In fact, one exchange-traded fund tracking the energy sector in the US, popularly known as Energy Select Sector SPDR ETF (XLE), has outperformed the broader market by a huge margin. It’s generated a total return of 49.6% over the last twelve months – significantly higher than the Russell 1000’s total return of 34.3%.
And while an ETF like XLE provides investors an easy way to play a basket of the largest energy stock, if you’re looking to buy individual companies advancing the clean energy market, you’re in luck.
Because today, we’re identifying two of the best clean energy stocks to buy…
Cheniere Energy, Inc. (NYSE: LNG) is an American energy infrastructure company headquartered in Houston, Texas, which is one of the supreme producers and exporters of liquefied natural gas (LNG).
Cheniere owns the world's largest liquefaction platforms. It consists of the Sabine Pass LNG terminal located in Cameron Parish, Louisiana, and Corpus Christi Liquefaction facilities located near the U.S. Gulf Coast.
The total production capacity is expected to be around 45 MTPA of LNG, currently operating or under construction. The company believes that LNG will play a significant role over the coming decades to have a lower-carbon future. It concurrently supports both economic growth and reduction of emissions.
Despite the COVID pandemic that shook the industries worldwide, Cheniere grew its gross handsomely due to reduced raw material costs and increased production efficiencies. The gross profit margin for FY2020 was at a whopping 41.7%, the highest in the last five years.
The above graph compares the 5-year total stockholder returns of $100 invested in Cheniere energy Inc., S&P 500 index, new peer group, and old peer group. From the graph, we can infer that Cheniere energy stock has outperformed its peer group, which includes companies like Apache Corporation (APA), Concho Resources Inc. (CXO), Continental Resources Inc. (CLR), and many more companies.
Although in the last five years, broader market indices have delivered more returns in comparison to Cheniere and its peer group companies, we believe that good times for the energy sector have just arrived, and Cheniere is well-positioned to capitalize on the growth of the energy sector.
Clean Energy Fuels Corp. (NASDAQ: CLNE) is a leading renewable energy company that provides natural gas as an alternative fuel for vehicle fleets.
The company focuses on the acquisition and distribution of renewable natural gas (“RNG”) and conventional natural gas, in the form of compressed natural gas (“CNG”) and liquefied natural gas (“LNG”), for the US and Canadian transportation markets.
Clean Energy is the largest provider of renewable natural gas in the US by pioneering RNG as a vehicle fuel. The company has a substantial network of over 570 fueling stations spread across North America and can deliver RNG to the transportation market.
RNG is a sustainable alternative for fossil-fuel-based vehicles that uses ICE engines like gasoline or diesel-powered vehicles. The regulatory push by US federal, state, and local authorities, along with increased demand by the public and investors for the RNG produced from biogas, is significantly growing and will capture a higher market share in the coming future.
The company was one of the first energy companies in the US to supply RNG for vehicle fuel, and sales for same have jumped from 13.0 million gallon equivalents (GGEs) in 2013 to 153.3 million GGEs in 2020.
The global transition towards low and negative carbon fuels by reducing GHG emissions is a significant industry tailwind that will drive the sales and market for the companies involved in clean energy generation.
Clean Energy Fuels Corp. (NASDAQ: CLNE) and Cheniere Energy, Inc. (NYSE: LNG) are two of your best stocks to buy for the transition to a clean energy future.