The growth of renewable energy continues to create investment opportunities in renewable stocks. Environmental and economic factors drive the shift towards renewable energy sources as the cost of renewable energy technologies continues to fall. This has led to a growing demand for renewable energy, which is expected to continue in the future.
Renewable energy companies are involved in producing clean energy from sources such as wind, solar, hydropower, and biofuels. Investing in renewable stocks can offer potential benefits, such as diversification, stable long-term returns, and exposure to a growing market.
Overall, renewable energy stocks can provide investors with an opportunity to participate in the clean energy sector’s growth while also supporting environmental sustainability.
NextEra Energy (NEE)
NextEra Energy (NYSE:NEE) stock is an excellent buy for several reasons. However, one of the most obvious strengths of the company is its diversified business. NextEra Energy comprises a utility, Florida Power & Light, and the largest producer of wind & solar energy globally, NextEra Energy Resources. That means that investors benefit from the relative stability of its utility company with the growth upside inherent within the renewable energy side of the business.
It would be fair to call NextEra Energy one of, if not the biggest U.S. renewable energy companies because of its wind and solar energy production. It’s also fundamentally strong. NextEra released its 2022 earnings report in late January, which continued to show the company’s strong double-digit growth across several key metrics, including revenue and earnings per share, among others.
The company also had a busy year in terms of development, signing a record of more than 8,000 megawatts of new projects. For dividend investors, NEE stock is particularly attractive, given the company gave guidance that it will increase dividends by at least 10% through 2024 from a 2022 baseline.
Array Technologies (ARRY)
Array Technologies (NASDAQ:ARRY) stock represents a leading provider of renewable energy solutions. The company designs, develops, and manufactures solar tracking systems for utility-scale solar projects. The company’s innovative tracking systems help to increase energy production from solar panels by tracking the sun as it moves across the sky. Array Technologies is playing a significant role in the growth of the renewable energy sector and the transition to a clean energy future.
Investors recognize the overall growth in solar energy as an overarching opportunity. But within the solar sector, there are certain higher-growth subsectors also. The trackers that Array Technologies sells are part of one such fast-growing subsector that boasts demand growing 36% greater than the solar sector overall. Combine that with the fact that Array’s trackers enable 25% greater energy production with a moderate 11% increase in costs, and you can see why there’s interest in the company’s shares. That growth was on exhibit when Array Technologies last released earnings in November, with a record $515 million in revenues.
Enphase Energy (ENPH)
Enphase Energy (NASDAQ:ENPH) provides microinverter systems for the solar energy industry. The company’s microinverter technology allows for greater energy production and reliability in photovoltaic (PV) systems, and its simplicity makes it a popular choice among residential and commercial customers. The company’s solutions better allow customers to take control of their energy usage.
The company is also expanding into branded EV chargers currently being produced in Mexico and expected to be commercially available in the first half of this year.
From a fundamental perspective, Enphase Energy continues to thrive with record quarterly revenue of $724.7 million recently. The strong quarterly results extended to the entire year of 2022, in which Enphase reported 68.2% top-line growth. Those $2.33 billion in sales lead to a net income of $397.3 million, more than doubling the $145.4 million in net income in 2021. The company is expecting Q1 revenues to be in line with those from Q4 ’22, which is better than Wall Street had been anticipating.
Another solar stock, Sunrun (NASDAQ:RUN), provides residential solar, storage, and energy services in the U.S. The company offers solar panels and energy storage systems, along with energy management and monitoring services. Sunrun also offers financing options, including power purchase agreements, loans, and leases that make it easier for homeowners to switch to solar energy and lower their monthly electricity bills.
One of the primary reasons to consider investing in Sunrun is the rate at which it continues to expand its capacity. The company is on track to increase its installed capacity by 25% in 2022. The point to note here is that the company is establishing a strong recurring revenue base with a long contracted life. When the company released Q3 earnings in November, that annual recurring revenue was measured at $969 million with 17.6 years remaining on average.
That strongly suggests RUN stock should be a very stable investment as it matures following its rapid growth.
Boralex (OTCMKTS:BRLXF) is an independent renewable energy producer that develops, builds, and operates renewable energy power facilities in Canada, France, the United Kingdom, and the United States. The company primarily focuses on wind and solar power, with a growing presence in hydroelectric power and thermal energy. The Canadian company is France’s largest independent producer of onshore wind power. Boralex operates a portfolio of over 3 gigawatts of installed capacity, which represents a doubling over the past five years.
Boralex stock is deeply discounted and currently trades at $27. However, its average target price is above $47, and those shares include a modest dividend currently yielding 1.74%. All told, there is potential for the shares to provide returns that could double.
Through Q3 ‘22, revenues increased by 4%, with wind revenues accounting for $386 million CAD of the firm’s $496 million CAD in total revenues. The company’s EPS disappointed, though, lowering share prices that led to the current discounted price.
Brookfield Renewable (BEP)
Brookfield Renewable (NYSE:BEP) stock is a global renewable energy company. BEP operates a diversified portfolio of renewable power assets that span hydroelectric, wind, solar, and energy storage facilities. The company owns and operates assets in North America, Europe, South America, and Asia. The company has approximately $800 billion in assets under management and is an often discussed company and stock within the renewable industry.
BEP stock includes a relatively high-yield 4.97% dividend. That dividend was reduced in 2021 as measured on an annual basis but only modestly. It has also been paid for well over a decade and is reasonably dependable.
The company announced a record $4.711 billion in revenues in 2022 and increased its distribution by 5.5% as well. In 2022, the company closed or agreed to deploy $12 billion in capital investments over the next five years. That is nearly half of its target during the period and speaks to substantial growth in 2022.
Orsted (OTCMKTS:DNNGY) stock represents a Danish renewable energy company that develops, builds, and operates wind farms, solar farms, and energy storage systems. The company is a global leader in the renewable energy sector, with a portfolio of installed capacity across Europe, North America, and Asia. Orsted is committed to the transition to a low-carbon energy system and has set a goal to be carbon neutral by 2025.
In 2022, Orsted’s EBITDA increased 32% to 32.1 billion DKK (1 USD = 6.98 DKK) with 113 million DKK free cash flow in the year after being cash flow negative in 2021. The company’s return on capital employed reached 17% during the year, contributing to the firm’s 15 billion DKK profit.
The strong results led the board to increase the stock dividend by 8%, which is in line with company policy meaning investors shouldn’t take it as a one-off occurrence.
The Danish company operates onshore and offshore wind farms, solar farms, and energy storage facilities as well.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Battery, Energy, Hydrogen, Lithium, Renewable Energy, Solar, Wind