It’s safe to say that 2020 has been great for Tesla Inc (NASDAQ:TSLA) so far. Tesla stock is already up about 35% since the year began. Over the past 12 months, it has nearly doubled.
Many investors feel that they have missed out on the early opportunity to see massive gains from TSLA stock, but that’s where they’re wrong. Stock investors can still see immense profits related to Tesla Inc, just not in the way they might think.
I’m not here to discuss Tesla stock itself. Instead, I’m here to point out that the green energy market is rife with opportunity for new companies to step in and see gains similar to those from Tesla.
The electric carmaker and green energy company recently hit more than $100.0 billion in market capitalization.
That’s almost as much as the market caps of Fiat Chrysler Automobiles NV (NYSE:FCA), Ford Motor Company (NYSE:F), and Bayerische Motoren Werke AG (ETR:BMW, OTCMKTS:BMWYY ) combined.
It’s a massive achievement, especially considering that Tesla sells far fewer vehicles than those three companies.
But here lies the opportunity.
You see, many believe that TSLA stock is overvalued. They believe it’s mainly being driven by hype generated by the company’s lofty promises and impressive (but at times maddening) leader, Elon Musk.
Tesla stock has long been the target of short sellers because of their belief that the company was doomed to fail. I don’t buy that narrative, but many others do, including analysts, banks, and big investors.
What that means is we have a market that’s worth over $100.0 billion. Yet we have a lot of people holding a lot of money that aren’t particularly impressed by TSLA stock right now.
That creates the perfect storm for investors.
You see, with all that money being held back from Tesla stock, but with the company’s concept now solidly proven, other companies could swoop into the green energy market and electric vehicle market and receive healthy investments from the TSLA stock naysayers.
There’s a huge market for green energy stocks and electric vehicle stocks
What we have, then, is a fantastic opportunity for either an existing automaker’s stock or an entirely new green energy stock to see massive gains.
And the beauty of it is that Tesla stock doesn’t necessarily have to take a hit if a healthy competitor emerges in the green energy market.
You see, while there are many who doubt TSLA stock’s potential, just as many (if not more) are already on board with the stock, as evidenced by its massive surges lately.
With that in mind, Tesla stock can continue to grow as die-hard fans continue to pour money into the company and additional investors are convinced by the company’s expansion.
Meanwhile, all the investors who were waiting on the sidelines, unmoved by Tesla, may have the opportunity to juice a competitor with a deluge of investment, leading to massive gains for said company.
Many believe that Tesla’s best days are behind it in regards to share growth. With fear of missing out (FOMO) setting in, many investors will want to eek out similar gains from a different stock that’s full of potential.
Again, a newer green energy stock or an impressive move by a rival automaker in the electric vehicle field could help generate massive excitement, which in turn could lead to huge gains.
Why Green Energy Stocks Are Set to Explode
If you’re not convinced about the opportunity that exists for green energy stocks, just look at the numbers.
According to a UN report, investment in new renewable energy capacity (not including large hydro) from 2010 to 2019 was estimated at $2.6 trillion. (Source: “Global Trends in Renewable Energy Investment 2019,” United Nations Environment Programme, last accessed January 29, 2020.)
That’s more than three times the amount invested in the previous decade. It’s a significant sum to be poured into the industry, with more likely on the way as the discussion surrounding climate change intensifies.
A report by Bloomberg L.P., meanwhile, showed that investments in clean energy have been huge, totaling over $332.0 billion in 2018. (Source: “Clean Energy Investment Exceeded $300 Billion Once Again in 2018,” Bloomberg NEF, January 16, 2020.)
So that’s trillions of dollars being funneled into the green sector looking for the next big green tech startup.
And that brings us to another exciting opportunity in 2020: the U.S. presidential election.
Considering how monumental it is every time a new president enters the Oval Office, it’s important to remember just how impactful this can be on stocks.
I’ve long written about how a new president could radically alter the U.S. marijuana legalization timeline, thereby affecting the prospects of marijuana stocks. It’s hard to overstate just how much of an impact a new U.S. president can have on stocks around the globe.
One major way that a president could influence green energy stocks is with subsidies. While many subsidies relating to electric vehicles are at the state level, there’s no reason a federal subsidy for electric vehicles couldn’t be implemented.
Considering that every major Democratic Party presidential hopeful has a climate change agenda, we could expect to see some form of electric vehicle encouragement if they defeat Donald Trump in the general election.
So on one hand, you could have the government encouraging more electric vehicle purchases, which in turn could lead to higher revenue for green energy companies, which in turn could lead to higher green energy stock prices.
On the other hand, you have a more macroeconomic force that could help electric vehicle stocks and renewables stocks in general: tax incentives.
Things like a carbon tax or, on the flip side, a tax rebate for companies that are emissions-neutral or reduce their emissions are certainly tools that a Democratic president could employ to further their aims in relation to climate change.
If that comes to pass, it would create a very favorable environment for green energy stocks, with many companies likely benefiting.
And of course, one of the last major forces supporting growth in this sector is public sentiment. Green energy companies are back in a big way.
Politically and socially, climate change is among the most discussed issues of our time.
While it may not be on everyone’s mind, many in the middle class and above tend to discuss climate change often these days. That means those with the purchasing power to buy new electric vehicles are also likely going to be predisposed to do so.
The overall trend, then, is of a world that is going to become increasingly reliant on—and friendly toward—green energy.
In 2020 and beyond, we’re going to see a proliferation of green energy stocks and profits from many parts of the sector, from legacy companies to newer startups. That means there’s no lack of opportunity for investors to see strong returns.
Green energy stocks are once again having a moment.
While they have generally seen their clout rise over the years as climate change has become an increasingly dire issue on the political stage, in 2020 we may see a breakthrough in this area unlike one we’ve ever seen.
The rise of TSLA stock is a great indicator of just how impressive these companies can be. And remember, the green energy market is still new.
Large countries like China are looking to reduce emissions, and electric vehicle stocks could be beneficiaries of such a move.
In other countries, like several European ones, plans are in the works to eradicate carbon-emitting vehicles. Companies that are able to take advantage of changing attitudes will be rewarded handsomely.
Billions of people around the world may be looking to buy electric vehicles in the coming years. With such a massive market rich with opportunity for innovation, there’s no shortage of stocks that could see their fortunes dramatically improve in the near future.
From established companies like Tesla, to newer electric vehicle startups, to longstanding automakers that are looking to get into the electric vehicle market, there are many ways that investors could make money.
What investors need to do, then, is monitor the green energy industry carefully and determine how they want to play it.
That could be by investing in a more volatile (but higher-potential) younger company or a more established company. Each path offers a chance to reap big rewards. The overall takeaway is that things are looking up for green energy stocks.