Investors like penny stocks because of their upside potential. Those same investors should consider seeking out the best green penny stocks in particular because a clear trend toward sustainable investing isn’t slowing: Between 2018 and 2036 ESG and sustainable investing are expected to grow by 43%.
The worldview is changing and more and more investors are demanding that environmental stewardship and profitable returns must coexist. The numbers behind ESG funds support their mandates from a business perspective as well. 77% of ESG funds that were 10 years old still existed in early 2022. That number was a much lower 46% for conventional funds.
That strongly suggests that the best green penny stocks below will provide big gains.
|Babcock & Wilcox Enterprises
American Superconductor (AMSC)
The investment argument that favors American Superconductor (NASDAQ:AMSC) as one of the best green penny stocks relies on the company’s strong demand dynamics.
The company improves the efficiency, reliability, and affordability of wind projects for utility firms and developers. While its Q2 revenues fell $0.2 million on a year-over-year basis, to $27.7 million, demand remains very strong.
The company booked $30 million in new orders during the quarter. Those $30 million worth of orders brings the firm’s backlog above $100 million.
It’s clear that its products and solutions continue to have a strong market, but it’s also evident that American Superconductor is dealing with the same supply chain issues that are choking businesses everywhere.
Those issues simply mean that the constituent parts of an end product are now harder to source than before. So then, investors who believe supply chain woes will get better should buy AMSC stock because it has a large stream of revenue waiting to hit its books.
The company reported a net loss of $9.9 million in Q2 but maintains $37.4 million in liquidity. In other words, it can keep taking order for quite some time and will rise quickly once things normalize.
Babcock & Wilcox Enterprises (BW)
Babcock & Wilcox Enterprises (NYSE:BW) provides power generation and environmental equipment for the renewable and fossil energy sectors. The company’s overall trajectory is very positive which is evidenced by its overweight analyst rating which carries nearly 100% upside.
The lone fundamental issue against BW stock relates to its $20.6 million net loss in Q3. That represented a sharp reversal in fortune compared to the $13.6 million net income in Q3 21.
Babcock & Wilcox Enterprises is dealing with the same supply chain bottlenecks that firms are everywhere. Its CEO enumerates raw material, fabrication, and labor shortages as the bottlenecks that are negatively affecting the firm.
But demand remains very strong and the company saw revenues increase 34% in Q3, reaching $214.9 million. The company also boasts bookings of $227 million, a 31% increase over Q3 21.
Strong growth continues with the company announcing separate deals worth $42 million and $24 million just a week after Q3 earnings were released.
VivoPower International (VVPR)
VivoPower International (NASDAQ:VVPR) will continue to gain recognition as one of the best green penny stocks.
The company is a certified B Corporation which simply means it focuses on the triple bottom line of people, profits and planet. Although such designations can be controversial, VivoPower International remains in elite company: A mere 4,000 were B Corp certified as of 2021.
Investor capital will flow into ESG firms in the years to come based on growth forecasts. Those investors will seek firms with certifications so VVPR has an advantage.
The company designs Electric Vehicle battery conversion kits under its Tembo subsidiary and also designs electrical systems for solar energy projects.
The company secured a definitive agreement with Toyota Australia for its Tembo EV conversion kits and reported 3,350 kit commitments to end Q2. While revenues have been stagnant, the company looks to have opened substantial Middle East and Southeast Asian markets into which it can sell its EV conversion kits.
Ring Energy (REI)
Ring Energy (NYSEAMERICAN:REI) is a relatively small oil & natural gas exploration firm that continues to perform very well. First of all, Ring Energy has posted four straight quarters in which it has beat EPS expectations.
That string of strong quarterly performances continued when the company announced Q3 earnings on Nov. 9. The firm posted its highest-ever quarterly revenues with $94.4 million in sales.
Net income increased by 79% in the period, reaching $75.1 million. When many companies are seeing profits decline Ring Energy instead has seen net income increase from $41.9 million to $75.1 million.
The company also reported its 12th consecutive quarter of free cash flows. What that means is that Ring Energy has had cash on hand after accounting for all of its business operations for every quarter in each of the last three years.
The company is also deleveraging itself quickly. It now stands at 1.4X after ending 2021 leveraged 3.5X based on EBITDA.
Fuel Tech (FTEK)
Fuel Tech (NASDAQ:FTEK) stock has more than 200% upside and momentum on its side with consecutive quarters in which it has posted earnings beats. That makes it one of the best green penny stocks to buy on momentum.
Fuel Tech itself is a steady firm backed by evidence-based engineering approaches to optimize combustion efficiency while minimizing air pollution. The company has installed more than 1,000 nitrogen oxide reduction units worldwide as well as carbon dioxide reduction units that reduce costs in the process.
Fuel Tech employs a relatively small employee base of 70, more than 70% of whom hold advanced degrees. The company is very much focused on scaling operations slowly while adhering to reducing costs and emissions for its partners.
It’s a slow approach. The company reported $8.017 million in sales in Q3, up from $7.559 million on a YoY basis. Net income declined to $314k in the quarter, down from $678k a year prior.
It’s fair to liken FTEK stock to a steady growing firm that relies on science and has less concern for rapid growth. That should interest investors in any economy, but even more so now as fundamentals matter more.
ReneSola (NYSE:SOL) stock represents a solar project developer and operator with operations across 10+ countries globally.
ReneSola’s corporate strategy is to seek high-margin project development opportunities in geographies with clear policy stances. This has resulted in the company establishing leading positions in Poland, Hungary, Minnesota and New York.
ReneSola’s Q2 results point to it being a growth opportunity with revenues that jumped 134% to $8.2 million, from $3.5 million a year earlier. While those numbers are impressive, they were below company guidance which the company blamed on delayed project sales.
The news, then, was somewhat mixed but an optimistic investor might point to the fact that ReneSola still managed to post an EBITDA of $2.4 million.
The company sold $5.897 million worth of electricity to China, its largest partner. Project development accounted for 25% of sales but, again, was stunted due to delays during the quarter.
Denison Mines (DNN)
Denison Mines (NYSEAMERICAN:DNN) is an opportunity in the increasing demand for nuclear power. Denison Mines produces the uranium that fuels nuclear power.
Nuclear power is a zero-emission energy source that splits uranium atoms to produce steam that powers turbines. Although nuclear power is controversial, the production of power through uranium fission creates no emissions as opposed to powering turbines with fossil fuels which do.
Nuclear power plant demand is rising, leading to an expected increase to 209 million pounds of uranium concentrate by 2035 from 180 million pounds in 2020.
Denison Mines controls a strategic portfolio of uranium assets that make it attractive. For one, the company maintains 2.5 million pounds of uranium stored in North American facilities. That uranium was acquired at an average cost below $30. That is important because uranium is expected to trade for around $60 in a year’s time.
The company also maintains control, to varying degrees, over several mining projects giving it long-term upside and strategic options moving forward.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.