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5 Green Building Stocks to Consider in 2022

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With greater interest in “going green,” investors have enjoyed a variety of new opportunities as they strive to create wealth. You’ve likely evaluated these options and seen the potential in solar energy systems, fuel-cell technology, sustainable fishing and similar endeavors. Green building practices are another example that has not gotten nearly as much attention, but has a lot of appeal to many investors.

The market for green buildings was worth $238.91 billion in 2021 and is projected to be worth over $383 billion by 2030. The growing demand creates all kinds of opportunities for companies and investors catering to sustainable construction practices.

Factors Driving Demand for Green Construction

Green building projects are becoming a lot more popular these days. A number of factors are driving interest in them, which is creating opportunities for investors. Some of the driving factors are listed below.

New Government Initiatives in the US and Europe

The World Green Building Council reports that a number of changes have created more demand for green construction than ever. On April 4, 2022, they responded to the new EU Energy Performance of Buildings Directive, which is going to play a huge role.

New regulations geared towards lowering the global carbon footprint will mean more companies have to construct sustainable buildings. Green construction companies and their investors will stand to benefit.

Realizations Made During the Pandemic

The pandemic has really fueled investor interest in green building projects. Many people all over the world finally realized how vulnerable our world is due to changes brought on by the pandemic. Many people are more concerned about climate change as a result.

Investors recognize these developments and want to take advantage of growing demand for companies focused on sustainability.

Green Construction is Gaining Momentum in the United States and Abroad

As the practice of green building rises in popularity, construction companies across the United States started to adapt their outdated methods. They reduced their carbon emissions and eliminated waste, improving their sustainability under the pressures of environmental regulations and public attention.

In this transition, construction companies have also embraced the use of green building components. In doing so, they decreased their dependence on harmful materials and increased their investment in eco-friendly alternatives. Naturally, these changes benefit progressive investors looking to build their portfolio.

Of course, you shouldn’t select the first company that has an association with green building. You have to take a strategic approach, choosing the green building stocks that show significant potential. To that end, this article will serve as a resource to guide you in the right direction, providing the top stocks of 2022.

Nothing is a guarantee, of course, and risk is an inherent element in every investment. Even so, you should review these five options for your portfolio. In the coming decade, the interest in “going green” will only continue to grow, and you can take advantage of these trends with the following stocks.

1. Johnson Controls International PLC

Johnson Controls provides a diverse range of tech-driven solutions for building efficiency and similar purposes. With their experience in building-related equipment — and their mission to create “a smart future” for facilities — they represent an excellent option for investors searching for green building stocks.

Concerning the expected earnings, their EPS forecast for this quarter shows $0.63 with a P/E ratio of 30. Johnson Controls pays an annual dividend of $1.40 per common share. Their earnings growth last year was +35.78%, and their projected earnings growth over the next five years is +8.50%.

Clearly, Johnson Controls International PLC has significant promise within the context of current trends. Their management technologies will prove valuable to building managers as they improve sustainability in their facilities. Needless to say, energy efficiency will remain relevant well into the next decade.

2. Honeywell International Inc.

Honeywell International Inc. is a multinational conglomerate company and a leader in building climate control. That said, building automation and control represents only around a third of their sales. They also have aerospace, materials and transportation segments beyond their focus on green building.

Concerning the expected earnings, their EPS forecast for this quarter shows $1.86 with a P/E ratio of 24.4. Honeywell International Inc. pays a quarterly dividend of $0.98 per common share. Their earnings growth last year was +319.35%, and their projected earnings growth over the next five years is +7.47%.

As for the value of Honeywell International Inc., climate control is one of the essential elements of green building. Similar to Johnson Controls, the regulation of a building’s interior temperature is an energy-intensive task. Improved technologies from Honeywell will likely prove important for reducing energy usage.

3. Brookfield Infrastructure Partners LP

Similar to Johnson Controls and Honeywell, Brookfield Infrastructure Partners LP has a focus on energy usage. They’ve identified energy efficiency as a crucial driver of long-term growth, and they hope to improve sustainability and combat the escalating threat of climate change through their infrastructure assets.

Concerning the expected earnings, their EPS forecast for this quarter shows $0.36 with a P/E ratio of 38.3. It fell from over 300 when we published this article in 2019, which shows it is likely no longer highly overvalued. BIP pays a quarterly dividend of $0.54 per common share. This is a $0.04 increase in their dividend earnings from what they were paying in 2019 when we first published this article. Their earnings growth last year was +1,263.25%, and their projected earnings growth over the next five years is +9.59%.

As for alternative options in the same area of investment, you have a range of stocks and funds to select from. For example, 40% of the new international micro-cap fund from Brookvine covers relevant areas like green energy, e-commerce, connectivity, health and wellness, data analytics and cybersecurity.

4. PFB Corporation

PFB Corporation manufactures and sells proprietary insulating building products that use expanded polystyrene. The company operates in both Canada and the United States, selling EPS products, structural insulating panels, building systems and similar tools. Their primary focus is on green building.

Concerning the expected earnings, their EPS forecast for this quarter shows $0.70 with a P/E ratio of 5.8. PFB Corporation pays a quarterly dividend of $0.07 per common share. Their earnings growth this year is 168%, and their projected earnings growth over the next year is 17.60%.

In terms of PFB Corporation’s potential, the increasing demand for alternative building materials will likely continue into the next decade. Among other green building materials, it’s safe to speculate that PFB Corporation’s expanded polystyrene and similar eco-friendly insulators will see greater adoption.

5. LSB Industries Inc.

LSB Industries Inc. is a chemical and GHP manufacturer with a stake in green building practices. Around a third of its revenue comes from its climate control technologies, which, as mentioned earlier, represent an essential element of green building in terms of energy efficiency and the reduction of carbon emissions.

Concerning the expected earnings, their EPS forecast for this quarter shows -$0.09 with an unavailable P/E ratio. LSB Industries does not pay a dividend. Though LXU doesn’t appear promising, their earnings growth this year was +153%, and their projected earnings growth over the next five years is +10.00%.

Investors should give thought to LSB Industries Inc. for its present and future relevance to green building practices. Though it may seem somewhat unappealing next to the other options on this list, its earnings growth this year and projections show it’s still an option deserving of consideration.

An Investment in the Future

As you review green building stocks for your portfolio, consider the five companies above. Each has significant potential in 2022 and the next decade, so research these options in greater detail and determine which of them works best for your current goals.

Whether you choose to invest in Johnson Controls, PFB Corporation, LSB Industries or another, similar option, you’ll see that wealth creation and environmental conservation are one and the same.

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