Green Metal Stocks Help Make Your Portfolio More Sustainable

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Jun. 29 2021, Published 11:00 a.m. ET

Steel, which represents about 95 percent of all metal production, contributes upwards of 6.5 percent of all CO2 emissions. Metal stocks aren't exactly the poster child of environmentalism, but some publicly traded companies are changing that. In fact, green metal stocks are now an individual subsector.

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What businesses are making an impact in the metal production space? Thanks to insight from Goldman Sachs analysts, these greenified companies give you insight into the changing face of metal stocks.

Alcoa is at the forefront of green metal stocks.

Goldman listed Alcoa Corp. (NYSE:AA) as a buy. Alcoa is a U.S. firm that mines aluminum, alumina, and bauxite.

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Recently, Goldman increased the company's EPS estimate by 14 percent for the year (and 30 percent through 2023). Inflation and supply have caused aluminum prices to increase, which contributed to this boost.

Also, Alcoa is on a mission to reduce debt while simultaneously targeting sustainability goals. The firm is currently working on new green tech in addition to waste-reduction strategies already in place. Mine rehabilitation is another key part of Alcoa's operations to help preserve biodiversity. So far, Alcoa stock is up 62.41 percent YTD.

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Hydro is another green metal stock to consider.

Based in Norway, Norsk Hydro ASA (OTC:NHYDY) has green metal production on lock. Goldman labeled the stock as a buy thanks to earnings growth that puts the company ahead of its sector.

Hydro focuses on sustainability efforts like recycling and green battery tech investments. Goldman's earnings expectations are up 22 percent for the year. Hydro stock is up 43.14 percent YTD.

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Rusal has a hold on the market, too.

Another pick for green metal stocks is Rusal (MCX:RUAL)—a Russian company that plans to spin off its energy-sucking divisions and maintain a more sustainable atmosphere in the core company.

Rusal says that it produces low-carbon aluminum and also prioritizes social investment. Goldman raised its earnings estimates for Rusal by 9 percent this year, which boosts another 29 percent into 2022. Rusal stock is up 35.39 percent YTD.

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South32 rounds out the list of green metal stocks.

Australia produces about 5.3 million tons of steel each year. One of the producers is South32 (OTC:SOUHY), which Goldman expects to see an earnings increase in the next few years.

South32 requires a stricter decrease in emissions, but its focus on stopping "modern slavery" adds another element. Also, the company's cash flow and dividends look promising, which means profit for investors. South32 stock is up 18.3 percent YTD.

Are green metal stocks really that green?

The reality of metal production, from aluminum to steel and everywhere in between, is that it's a strain on the environment. Green metal companies are reducing that impact, sometimes at pressing levels. Given our dependence on metal as a means of engineering, making the process more sustainable is a good thing. However, pushing for a faster rate of change could benefit the planet even more.

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