Posted by About 20% of the electricity generated by the U.S. power sector comes from renewable energy stocks. As the world’s climate changes and nations seek cleaner energy sources, carbon-based fossil fuels are becoming a thing of the past. The world is shifting towards renewable energy sources, and investors are noting. This energy source has outperformed its counterpart over the years and is poised to keep doing so in the foreseeable future. In this article, we’ll reveal the leading companies driving this evolution, discussing the top renewable energy stocks to watch out for.
We’ll help you contribute to a more eco-friendly world and secure your financial future.
How To Invest In Renewable Energy Stocks
Investing in renewable energy stocks is a smart way to support the growth of clean energy while benefiting from the financial performance of the companies. Here is a step-by-step guide to help you start:
- Get Informed
Start your green journey by learning about the different renewable energy sources and the sector. As you familiarize yourself with key players in the industry, learn about renewable sources like solar, wind, hydro, and geothermal.
- Assess Your Risk Tolerance
Consider how much you’re willing to invest and how much you can afford to lose. Note that renewable energy stocks can be volatile, so you should align your investment with your risk tolerance level.
- Open Brokerage Account
Next, find a good broker and open a brokerage account. Ensure that the platform you choose offers a variety of stocks in the renewable energy sector.
- Research and Due Diligence
Before investing in any company’s stock, please do your due diligence by analyzing their financials, growth prospects, and sustainability. Also, check other factors like debt and revenue.
- Environmental, Social, and Governance (ESG) Considerations
If you’re concerned about the ethical and ecological aspects of your investment, prioritize companies that have strong ESG policies.
- Diversify
Diversification spreads risk, so don’t put all your money into one renewable energy stock. Instead, invest in multiple companies across the sector.
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Top Renewable Energy Stocks to Watch
In this section, we will take a look at the top renewable energy stocks to watch out for. They include:
1. NextEra Energy (NEE)
Price: 59.04 USD
NextEra Energy has been on the news recently due to fluctuations in stock price. The company’s stock price fell by around 26% over the past year. However, it recently rebounded by 9% as investors took the opportunity to buy the stock at a cheap rate after the release of its quarterly numbers.
Basically, this is one of the best times to invest in NextEra Energy stock. The organization is confident about raising its annual dividend by 10% in 2024, as it has been doing in previous years. The company also has a yield rate of 3.2% and offers a direct stock purchase plan.
2. Brookfield Renewable Partners (BEP)
Price: 23.07 USD
The Bermuda-based company Brookfield Renewable Partners is another leader in the renewable energy sector. Its stock has been on shaky grounds recently, having lost 27% over the last year. However, the company has a strong outlook for the future.
The company has a proven and repeatable growth strategy that combines a value Investment growth strategy with operating expertise. With a 5–9% annual distribution growth vision and a 12–15% total returns target.
3. Enphase Energy (ENPH)
Price: 78.18 USD
Another renewable energy stock to watch out for is Enphase Energy, a leading provider of microinverters for solar panels. Its stock, however, has been volatile these past months, falling up to 30%. The price has been in a free fall for some time now, falling below its peak of $340.
This is a great time to invest in Enphase Energy, as its earnings and revenue are expected to grow by 9.4% and 8.4% per annum. The company has a target for delivering 30% annual revenue growth and 40% annual earnings growth.
4. First Solar (FSLR)
Price: 146.97 USD
First Solar was born in Midwest America and has grown to become a leading manufacturer of thin-film solar panels. The value of the company’s stock has continued to grow as it reported adjusted earnings of $2.50 per share on revenue of $801 million in Q3 2023.
Although the company’s stock fell short of estimates, it rose 4.5% and was up 3% in after-hours trading following Q3 2023’s report. FSLR’s stock is being traded on the NASDAQ stock exchange. The market capitalization is $16.23B, with 106.84M shares outstanding.
5. SolarEdge Technologies (SEDG)
Price: 71.77 USD
With over 4000 employees, SolarEdge Technologies develops and sells direct current (DC) inverter systems. According to Simply Wall St., SEDG’s earnings and revenue are expected to grow by 29.1% and 6.4% per annum, respectively.
The stock is traded publicly on NASDAQ, and as of September 19th, 2023, the stock price was $71.44. The 52-week trading range at the time was $63.25 — $345.80.
6. Vestas Wind Systems (VWDRY)
Price: 163.68 DKK
Vestas Wind Systems is a Danish company that manufactures, maintains, and distributes wind power plants. According to The Motley Fool, Vestas Wind Systems has been profitable this year. The profitability has increased by 4.50% during the past year.
The stock is traded on the Copenhagen Stock Exchange and the OTC market in the US. As of September, the stock price was kr. 154.24 (Copenhagen) and $20.10 (OTC) with a market capitalization of kr. 155.62B (Copenhagen) and $20.10B (OTC).
7. Iberdrola (IBDRY)
Price: 10.54 EUR
Another major player in the renewable energy sector is a Spanish electric utility company known as Ibredola. The company invested €10.54 billion in the last 12 months and increased its net profit by 21% to €2.52 billion.
Iberdrola is listed on over 65 stock market indices at national, European, and global levels. They include Ibex-35, Dow Jones Eurostoxx 50, Dow Jones Stoxx Global 1800, and Dow Jones Sustainability Index.
What to Look for in a Promising Renewable Energy Company
When looking for a renewable energy company to invest in, there are certain factors to look out for. They include:
- Strong Growth Potential
Check the company’s earnings, projected revenue, and previous performance. Is it demonstrating a consistent upward trajectory? If yes, it is a good choice.
- Competitive Advantage
Consider the company’s competitive advantage. Look for what sets it apart from others; this could be proprietary technology, unique market positioning, or exclusive contracts.
- Sustainable Energy Focus
Ensure that the organization is dedicated to maintaining a portfolio of clean energy projects. They should have a clear commitment to renewable energy.
- Stable Cash Flow
Also, look out for a renewable energy company with a stable and predictable cash flow. Such organizations are better positioned to weather recessions and fund new projects.
- Strong Management Team
It is also very important to check the track record of the leadership team. Ensure the management is competent, as this proves they’ll be able to handle industry challenges.
- Market Opportunity
As the world transitions away from fossil fuels, there is a growing market opportunity for companies investing in clean or renewable energy sources. So, look for companies that look like they’re going to benefit from the trend.
What the Future Holds for the Renewable Energy Market
As more individuals and businesses (small and big) move toward the renewable energy market, the future of this industry is bright. Here are some of the factors driving the growth of this sector:
- More Government Support
Most governments around the world are supportive of renewable energy and have implemented policies to promote it. The US government, for instance, has a target of achieving carbon-free electricity by 2035, while the European Union’s target is 2030.
- Falling Costs
The cost of renewable energy has fallen significantly over the years and will continue to do so. For instance, the cost of solar panels has been reduced by 80% since 2010, making it a competitive alternative to fossil fuels.
- Technological Advances
Renewable energy technologies will also become more efficient. New solar panels can provide sufficient electricity from sunlight, and new wind turbines from lower wind speeds.
- Growing Demand
The demand for renewable energy will also continue to grow as businesses and customers are trying to reduce their energy costs and carbon footprint.
- Increased Investment
Investment in renewable energy will also continue to grow as more investors are expected to spend more on it than oil and gas. This increased interest is a result of renewable energy becoming more cost-competitive and being a cleaner alternative.
FAQs
Does Warren Buffett Invest in Renewable Energy?
Yes, Warren Buffett’s Berkshire Hathaway invests in renewable energy. As a matter of fact, the company has invested over $30 billion in wind, solar, and geothermal energy projects. The company also proposed to spend $3.9 billion on a wind and solar renewable energy project in Iowa, one that was among the biggest renewable energy projects in the world.
Who is the Market Leader in Renewable Energy?
NextEra Energy is the market leader in renewable energy, with over 50,00 megawatts of clean energy capacity. The company is the world’s largest generator of wind and solar energy and is also a leader in energy storage and transmission. NextEra is poised to keep growing as it takes over the renewable energy business in years to come.
Which Country is the Largest Producer of Renewable Energy?
The country that is the largest producer of renewable energy is China, with a capacity of around 1,161 gigawatts. The country produces about 27.1% of the world’s renewable energy, followed by the United States, Brazil, India, and then Canada. The country’s energy sector is dominated by hydropower, which accounts for most of the country’s renewable energy production.
Conclusion
Renewable energy is a rapidly expanding sector, and savvy investors are already jumping in on the opportunity. In the article, we have explored seven of the top renewable energy stocks to watch out for in 2023. The companies listed are well-positioned to offer investors the potential for dividend income and capital appreciation.