Businesses are under immense pressure from consumers to provide sustainable initiatives and products as the world faces a climate crisis. Consumers, particularly millennials, are spending an average $600 billion each year on eco-friendly products, with sustainability efforts showing twice the growth as their usual counterparts.
Here are three stocks that are on the way to a greener future:
This company is leading the way when it comes to manufacturing electric vehicles. Tesla (NASDAQ: TSLA) entered the electric car race in 2003 and now its Model 3 has become the world’s best selling plug-in electric vehicle model. While the market remains quite small, it is expected to expand quickly. Research suggests that the industry will grow to $567 billion by 2025.
Tesla announced it delivered more than 100,000 vehicles around the world during its fourth-quarter in 2019. The environmentally focused company made $24.6 billion in revenue for 2019 and $7.4 billion in its fourth-quarter alone, up 2% year-on-year. However, Tesla did not make a profit in 2019 but lost $862 million.
A partnership between Tesla and Panasonic has been called off according to various reports. The deal would have seen the production of solar panels for roofs at a New York factory. In addition, CEO Elon Musk is in a battle with shareholders who sued in 2017 over its $2.6 billion acquisition of SolarCity. The shareholders say the deal should never have happened and a trial is expected to start in March.
2. Beyond Meat
You may have noticed a lot of big food chains starting to offer vegan or vegetarian burgers. Beyond Meat (NSDQ: BYND) is biting into the food market with its popular plant-based substitutes for chicken, beef, and pork sausages. The company already has partnerships with eateries including McDonald’s (NYSE: MCD), Del Taco (NASDAQ: TACO), Subway, and Dunkin Donuts (NASDAQ: DNKN).
The demand for non-meat products is high at the moment and is common among those dubbed “flexitarians” who eat meat less and less. One of the key drivers is the positive impact on the environment, with one study by the University of Michigan revealing the production of a Beyond Meat Burger has less impact on the climate.
The research showed the process leads to 90% less greenhouse gas emissions and 46% less energy is used, and 93% less impact on land usage compared to making a quarter pound of domestic beef. The business has also been praised for its efforts by the United Nations for its multifaceted eco-friendly practices. In 2018 the company received the Environment Champion of the Earth Award, mainly for the use of compostable trays within their sausage line.
At Beyond Meat’s earnings call for the fourth quarter of 2019, net sales jumped by 212% to $98.5 million, from $31.5 million a year prior. This figure also exceeded analysts’ predictions of $79.5 million. Despite the huge increase in sales, the company posted a fiscal fourth-quarter net loss of $0.5 million. The future for Beyond meat is looking extremely positive and is expected to post revenue in a range of $490 million to $510 million in fiscal 2020.
Mostly known for its personal care products like Dove and Axe, Unilever (NYSE: UL) manufacturers a number of consumer goods and owns 400 companies. Food products include Lipton, Knorr, Best Foods, and more recently it launched its Vegetarian Butcher brand into Burger King across 25 countries in Europe. This is another example of a company investing in the craze of meat alternatives, with Unilever saying at its latest earnings call it’s a big growth opportunity for the business.
Unilever has a strong focus on making sure its products are eco-friendly and sources all of its raw materials through sustainable agricultural practices. The company has pledged to half its environmental footprint of the making and use of its products by 2030. So far, the company is ahead of itself with production sites across five continents powered completely by renewable energy.
However, Unilever reported a 38% fall in net profit to $6.64 billion at its fourth-quarter earnings call for 2019. Turnover did increase by 2% to $2.15 billion and was mainly driven by a strong Asian market, being the company’s largest region. At the most recent earnings call, Unilever said it still doesn’t know the full impact of the deadly coronavirus that started in China.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Beyond Meat and Tesla. Read our full disclosure policy here.
Contributing Writer at MyWallSt
Alsha is a contributing writer to MyWallSt. Alsha’s favorite stock is Shopify because not only does she enjoy a bit of online shopping, but she believes the e-commerce solutions business is going to continue making big gains.