What Elon Musk Can Teach Us About Investing in Clean Energy Stocks

Clean-Energy-StocksInvesting in Clean Energy Stocks

Elon Musk rarely spends more than a few days outside the news. The man is anything but low profile, often seen issuing ambitious promises or assertions on everything from the nature of reality to the success of the next Tesla car.

But while much of Elon Musk’s myth has to do with far-off futures, investing in clean energy of the future and the technology of tomorrow, one way he’s promising to deliver in the present is with alternative energy. In fact, the argument could be made that Elon Musk is leading the renewable energy stocks charge. You might even call them Elon Musk stocks.

After all, Tesla Inc (NASDAQ:TSLA) is far more than a simple car manufacturer. Between the merging of SolarCity Corp (NASDAQ:SCTY) with Tesla in late 2016 and developments of groundbreaking energy-related tech, the tech luminary is seeking to revolutionize more than just the car.

When Tesla Motors became simply Tesla Inc, the move meant more than just a simple name change. It was a symbolic transition from a company that was focused on bringing the consumer the latest in alternative fuel-source cars to a company that wants to dramatically alter how we produce and store energy all over the world.

Again, ambitious claims, but strap in: there’s a lot more coming. Elon Musk is not exactly renowned for pragmatic underselling.

Due to the success of Tesla on the market—which we’ll cover later in this piece—alongside some of the profound advancements we’ve experienced in the renewables industry, we’ll examine some of the best alternative energy stocks as well as how you can best enter the market.

But first, let’s examine why the industry is set to explode as a whole.

Should You Follow Elon Musk Investments?

The thing about the Elon Musk investment portfolio is that, while he has a penchant for lofty promises, he also has a solid track record of delivering. Ask any TSLA stockholder who has seen over 800% growth in the past five years, and over 40% growth in the past 12 months.

Tesla stock chart

Chart courtesy of StockCharts.com

TSLA stock certainly has its fair share of haters and doubters, and there is cause for concern with a CEO as trigger-happy as Elon Musk when it comes to grand promises, but the company has been able to best the pessimists at every step so far.

First, let’s examine just where Elon Musk stands in the world right now.

“Stands” is perhaps the wrong word, as Musk has repeatedly made the claim that he wants to get humans off of Earth and onto Mars. And he has a whole company dedicated to spaceflight—SpaceX—under his direction.

While not publicly traded, at least not yet, SpaceX is still planning to be a major leader not only in the private space travel industry, but also in more terrestrial modes of transportation. Which brings us to the Elon Musk “Hyperloop.”

The idea behind the Hyperloop is to take a levitated pod in a low pressure tube and propel said pod using a custom electric motor. The result would be a form of travel that could outpace even air travel, with the website claiming that a four-and-a-half hour flight would be accomplished in 55 minutes using the Hyperloop.

Sound like science fiction? Don’t worry, a lot of what Elon Musk dreams up does. But the website also claims that Hyperloop plans to be transporting cargo by as early as 2020 and human passengers by 2021. (Source: “Hyperloop One” Hyperloop One, 2017.)

When he’s not busy looking into groundbreaking tech, Elon Musk can be found at the side of U.S. President Donald Trump as he is a member of the president’s business committee.

The Elon Musk Trump advisor story has drawn a lot of criticism, especially from Musk’s more left-leaning fans. There does certainly seem to be at the very least a political and ideological disconnect on a great many things between the president and the entrepreneur.

Some have called the relationship an example of crony capitalism. (Source: “Trump is turning Elon Musk into a crony capitalist,” The Verge, February 6, 2017.)

Others see the move as one more born out of pragmatism and an ability to create a mutually beneficial relationship. (Source: “Elon Musk’s Influence on President Trump,” Bloomberg, February 10, 2017.)

But here’s another important part: Elon Musk would much prefer to have the government on his side. For his businesses, more than most, government is key.

Take the fact that the Elon Musk “Gigafactory”—a massive lithium ion-producing plant out in Nevada and currently under construction—is set to receive $1.29 billion in order to complete the project. The subsidy is mostly comprised of tax breaks over a 20-year period. (Source: “Complete breakdown of the $4.9 billion in government support the LA Times claims Elon Musk’s companies are receiving,” Electrek, June 2, 2015.)

In addition, SolarCity receives about $2.5 billion from the U.S. government via subsidies, tax exemptions, and other deals.

That’s quite a hefty sum to be getting from the government. While most funds aren’t from the federal government, the Trump administration could definitely make things more difficult for Musk if it so chose. For instance, the government has the ability to hamper or even cancel the Zero Emission Vehicle (ZEV) program in California, which helps boost Tesla sales. (Source: “What is ZEV?,” Union of Concerned Scientists, October 31, 2016.)

Having an ear of the president is certainly going to help Tesla stock in the long-run. Couple that with the fact that former Paypal Holdings Inc (NASDAQ:PYPL) partner Peter Thiel is also a close part of the administration, and you have what may turn out to be, despite all odds, a friendly presidency to Tesla.

Remember, the president did at one time call climate change a Chinese hoax, which would not bode well for Elon Musk solar roofs, or at least, it would detract from the moral argument to adopt them.

But the rapid development of advanced technology, a strong bevy of well-managed companies and a direct line to the president all point towards the Elon Musk investment portfolio as a being a solid pick.

Should You Invest in Clean Energy Stocks?

After having gone on and on about how solid Tesla is positioned, obviously I believe that the company is poised to make breakthroughs in multiple markets (we didn’t even mention the “Tesla Model 3”) that will help see that stock grow.

But what about the other renewable energy stocks? Are there are any others worth looking at besides Tesla?

Clean Energy Stocks List

While I would argue that Elon Musk’s alternative energy producer is your best bet, there are several other solid stocks worth looking at in the sector.

One such stock is Hannon Armstrong Sustnbl Infrstr Cap Inc (NYSE:HASI).

HASI stock is a real estate investments trust and an investment bank that specializes in financing sustainable infrastructure. The company is a leader in its net effect on greenhouse gas emissions caused by its activities.

The company is a relatively safe investment and a good stepping stone into the alternative energy market as its assets are quite fluid and it is able to circumvent some scenarios that would affect most clean energy producers but not HASI stock due to the nature of the company.

While the U.S. election did cause some hurt to the stock, it has at the end of the day still had a solid year, ending with a respectable 12% gain over the past year.

While the election did hold some sway on the stock price, there aren’t many (maybe any) companies that operate in this space that are immune to the politicking going on in the outside world. But Hannon has the advantage of having a lot of fluid assets ready to go to help keep it afloat or avert disaster, something many other renewable energy stocks don’t have have.

A final solid clean energy stock to watch is Atlantica Yield PLC (NASDAQ:ABY).

ABY stock benefits off of its wind and solar energy production, two areas in development in the states and potential catalysts for ABY stock growth if 2017 continues apace and the industry continues to thrive.

All in all, when you’re looking to invest in renewable energy stocks, you have to be conscious of both the short-term gains as well as the long haul. A company like Tesla can deliver both through its multifaceted approach, while more particular companies have far more to contend with due to their reliance on green energy growth.

Much like many other emergent techs, you have the big massive companies with one part focused on the development, and you have the companies that are seeking to make this tech their new bread-and-butter. In the end, it’s up to you decide which stocks are worth the risk and which ones are better left behind.