Top Renewable Energy Stocks
With the gradual shift toward cleaner power sources, renewable energy sector is growing extremely fast. Green energy stocks attract investors, but it is hard to choose the best shares to buy among the variety presented on the market. Read how to select top stocks and which companies are the best investment choice now.
The Best Renewable Energy Stocks for Investing
The world is gradually shifting from GHG-releasing conventional energy sources to more eco-friendly and sustainable resources, such as solar, wind, biomass, geothermal, hydro, wave and tidal energy.
The transfer to green power is estimated to drag on for dozens of years and to cost thousands of billions of American dollars. Anyway, it is an attractive source of income for investors. Let’s consider the key points of investing in clean energy shares.
Alternative Energy Growth Pace
The sector is growing exponentially. As IEA reported, as of 2018, renewable energy constituted one fourth of the world’s total power production capacity. The agency predicts the sector to grow by a half more by the end of 2024 in the base case. In case of proper economic policies and rebates, it can race up still more considerably.
The most promising prospects are predicted for solar electricity, which is forecasted to constitute the largest portion of the sector. The solar capacity added during the coming four years is expected to reach 700GW (out of 1.2TW of the total renewable energy development).
On-shore wind power comes next with the estimated 300 gigawatts of new capacity. Water power is anticipated to exceed 100 gigawatts, while off-shore wind farms are projected to add 50 gigawatts.
Taking these prognoses into consideration, solar seems to be the most tempting green energy sector in the nearest future.
But there is one stumbling block that can keep the sector from developing, and this is finance. More funds are required than available, but it look like a challenging and enabling factor at the same time.
Looking for Profitable Clean Energy Stocks to Invest In
FCF generating firms with assets exceeding liabilities are more attractive than their weaker competitors, because more funds are available to the former for investing in their development. We recommend concentrating on the firms with stable finances.
Thanks to the sector’s development prospects, green energy firms get a chance to flourish. But not every business can make use of this opportunity. Growth alone does not guarantee enrichment for stockholders. That is why, you should look for those firms who are wise to fund the projects generating high RoI. Allocating the funds smartly is crucial for keeping the company’s financial position strong.
Taking all the above and some other factors into consideration, we have compiled a listing of the most interesting renewable energy stocks to buy in 2020.
The Best Value Clean Energy Stocks
Below we have listed the top 3 renewable energy companies with the lowest price to earnings ratio based on twelve months trailing. Stockholders can gain profit as dividends and share repurchases. The lower price-earnings ratio is, the less you pay for every USD of profits earned.
Renewable Energy Group (NASDAQ: REGI)
The biggest biodiesel producing company throughout the United States focuses on biodiesel and renewable chemical development and distribution.
Biofuel meets a ready market. In 2018 alone, ten American states (including CA, TX and NY) purchased 1.5bln gal of biodiesel (compared to 1.15bln as of 2016).
The owner of thirteen refineries has made 700mln gal of biofuel by now. Its production capacity allows making 575mln gal of fuel each year, seven tenth of which is purchased by large truck service stations and fuel jobbers.
The firm’s average daily trading volume exceeds 600 thousand. Earnings per share is 11.17 USD. The total revenue as of 2019 constituted 2.6bln USD.
As REGI reported, its revenue declined by 0.7 percent in the first quarter of the current fiscal year. Anyway, it performed strongly in spite of the global impact of the coronavirus pandemic.
In 2019, the company opened its 1st diesel filling station in the state of Illinois. Around 17 thousand lorries visit the Seneca-based station annually. The vehicles can be filled with biodiesel blend on-site, which decreases GHG release.
Canadian Solar (NASDAQ: CSIQ)
The Canadian company is a designer, manufacturer and seller of photovoltaic panels. It delivers its solutions to over 160 nations. The owner and operator of seventeen Asian and American solar stations has over 43GW of solar power projects in its portfolio. 15GW more are currently under development.
The average trading volume exceeds 800 thousand, earnings per share is 4.96USD. The revenue as of 2019 was 3.2bln USD. It ranks among top stocks under 20USD in the clean energy sector.
CSIQ’s subsidiary Recurrent Energy has been approved for the 138mln-dollar BTA with Entergy Mississippi, Inc. for the construction of a 100MW (the state’s biggest) solar station.
In early spring of the current year, the Australian unit of the company signed a PPA with Amazon.
JinkoSolar Holding (NYSE: JKS)
The Chinese company established in 2006 is among the biggest producers of PV panels worldwide. It is also a manufacturer of PV cells and Si wafers as well as a solar system integrator. The owner and operator of seven manufacturing plants offers solutions for industrial, business and home use in fifteen countries.
The daily trading volume exceeds 1mln, earnings per share is 1.94USD. The 2019 revenue constituted 4bln dollars.
In the current year, JKS has introduced its most advanced series of solar modules – Tiger Pro with the power output up to 580W. Extensive manufacturing of the product is announced for the third quarter of the year. It is likely to become a prevailing choice for large-scale solar projects.
The Australian unit of the company has concluded a 37mln AUD LOC agreement with NAB for one year.
The Fastest Growing Renewable Energy Stocks
Below are the renewable energy companies that have shown the highest year over year EPS growth. The EPS increase indicates that a firm is developing and making more capital that can be reinvested or returned to stockholders.
Enphase Energy (NASDAQ: ENPH)
The firm manufactures PV cells and solar monitoring systems for large installation companies, distributors, OEMs, strategic partners, and residents. In the first quarter of the current year, Enphase increased its net income by 2,393 percent to 68.9mln USD. This was possible due to 15.3mln dollar gain from fair-value change of derivative instruments as well as 11.9mln dollar income-tax benefits. The company’s gross profit margin has set an unprecedented record despite the coronavirus pandemic.
Daqo New Energy (NYSE: DQ)
The Chinese firm produces multicrystalline silicon. Its client base includes ingot, wafer, solar cell, module and other PV product makers.
Green Energy Stocks with the Most Momentum
In the table below we’ve collected the renewable energy companies that have shown the highest twelve-month total returns.
Ballard Power Systems (NASDAQ: BLDP)
The Canadian firm is a hydrogen fuel cell designer, developer, manufacturer, seller and servicer. Its products are meant for a wide range of applications. The company’s net operating loss constituted 13.5mln USD, although its revenue grew by half in the first quarter of the current fiscal year. The firm had to withdraw its revenue forecast for the year because of COVID-19 impact.
SolarEdge Technologies (NASDAQ: SEDG)
The Israeli solar power company is the worldwide leader of intelligent energy solutions. It manufactures optimizing and monitoring systems, tools and related products for optimized energy harvest, conversion and efficiency.
The firm has made over 1mln PV systems and delivered more than 16.2GW of solar power to 130 nations.
The daily trading volume exceeds 1mln, earnings per share is 3.36USD. The total revenue earned in the previous year reached 1.4bln US dollars.
In late winter of the current year, the firm singed an agreement with Enfindus (an international solar investing company) for a 1GW solar project. SolarEdge will supply PV solutions for industrial and business rooftop solar systems during four years.
SolarEdge’s prizewinning single-phase inverter has been certified by JET for compliance with the requirement of Japan’s market.
Other Top Renewable Energy Stocks
Beside EPS and price-to-earning ratio, you should take into account the company’s liquidity. The stocks presented below have shown excellent financial metrics and are among the most attractive picks for investors in 2020.
NextEra Energy (NYSE: NEE)
The Floridian firm is the worldwide biggest utility as well as producer of wind and solar power. NextEra’s subsidiary FPL supplies power to over 5mln Florida’s inhabitants. Its another subsidiary, NEER, is the owner of 120 North American wind farms generating 13GW of power per year.
The company’s annual solar energy output exceeds 2GW, the plants are located in Canada as well as 7 American states. Besides, the firm owns and operates a number of nuclear and natural gas power stations. The firm’s net power generation capacity is 45.5GW.
The firm is financially capable of investing dozens of billions of USD in the development of new clean energy (mostly solar) projects.
Its earnings per share and dividends have been constantly growing during over a dozen years. As of 2004, the company’s EPS constituted 2.49USD and dividend payment was 1.3USD. Since then, the figures have been growing by almost 8.5percent and 9.5percent, correspondingly.
The company forecasts to continue raising EPS by 6-8percent and dividends by approximately 10percent during the following two years. This will allow the firm to further generate the market-best combined stock return in the forthcoming years.
The ADTV is 3mln, the current earnings per share is 7.22USD. The dividend-price ratio is 2.32 percent, the total revenue earned last year is 19bln dollars.
Brookfield Renewable Partners (NYSE: BEP)
The company is among the biggest global clean energy producers. The firm owns solar, wind, hydro power plants, and storage facilities. Multiple Brookfield’s PPAs guarantee stability of its cash flow used for payment of good dividends and development of new projects. BEP is financially capable of investing 4bln US dollars in developing new clean energy (mostly solar) projects through the next four years, which will be enough to increase dividends paid by 5-9 percent annually and continue generating high RoI.
The company and its partners have purchased 61mln more shares of TerraForm Power and currently own 65 percent, which is anticipated to increase Brookfield’s cash flow from operations by 80mln dollars per year. TerraForm produces over 3.63GW of wind and solar electricity globally, 65 percent of which is generated in the United States, 26 percent – in European countries, and the rest – at its Canadian, Chilean and Uruguayan plants.
BEP owns 843 clean power plants in North and Latin Americas and Europe, the combined production capacity of which is 16.3GW per year. Its North American power stations produce power sufficient for 2mln households.
First Solar (NASDAQ: FSLR)
The company is the leader in thin film solar module manufacturing. The power generated by such photovoltaic panels costs less per unit compared to conventional silicon devices. Besides, their performance is less affected by heat and humidity, which makes thin film products perfect for industrial use.
FSLR has one of the strongest balance sheets in the sector. Its constant cash flow enables it to earn interest income (in contrast to most solar module makers who have to pay interest to 3rd parties). Being financially strong, the company can continue both reducing the cost and developing its production facilities.
Though the firm’s cash flow cannot boast the same stability as the previous company on the list, it has a higher capital growth potential due to the expanding production capacity. The firm owns Ohio- and Vietnam-based facilities, which makes it competitive with China’s major solar panel manufacturers.
The company’s NCP equals 1.8 billion dollars (with the total cash, restricted cash, and marketable securities of 2.3 billion by the end of FY 2019), which is about 16USD per share. The global pandemic made FSLR’s share price fall down to 30USD, offering attractive opportunities for those who would like to invest in its stocks.
TransAlta Corp. (NYSE: TAC)
The corporation gets 150mln Canadian dollars of annual dividend payment from its subsidiary TransAlta Renewables (TSE: RNW) trading on TSX. The latter gains its FCF from the Canadian and United States-based wind farms with the total generation capacity of nearly 1.25GW. This constitutes 49 percent of the firm’s cashflow, while natural gas power plants generate 47 percent and hydropower plants – the remainder.
TransAlta Corp.’s subsidiary has strengthened its financial position by cutting the debt by 900mln Canadian dollars. This is expected to double the firm’s FCF through the following 3 years.
RNW’s current monthly dividend payout is 1.7 percent. Thus, investing in the subsidiary company, one can get higher dividend payments (though the parent company would make you feel safer).
Enviva (NYSE: EVA)
The company is not as attractive as other stocks in the list, but it is worth your attention anyway. The global leader in wood pellet production manufactures more than 3mln tonnes annually. The firm owns 7 manufacturing facilities in the southeast of the United States. It sells its products to British and European utility companies, which allows replacing coal and generating cleaner power. Wood-pellet production reduces GHG emission, keeps the forests safe, and creates new job opportunities.
Enviva Partners can be a good choice for income investors due to its cash flow stability provided by long term supply agreements.
TPI Composites (NASDAQ: TPIC)
The leader in wind turbine blade manufacturing owns North American, European and Asian production plants.
Besides its main business activity, the firm is also diversifying its portfolio. Two years ago, it entered into a JDA with Navistar International Corporation for development of tractors and frame rails for all-composite Class 8 trucks, which expands the company’s market and promises attractive growth potential for investors.
The firm’s revenue is expected to reach the unprecedented figure of 1.58bln USD in the current year, which gives great opportunities for profit growth.
Siemens (OTCMKTS: SIEGY)
The industrial giant is the owner of 59 percent shares of Siemens Gamesa (GCTAF) – the worldwide leader in wind turbine manufacturing. Gamesa’s products are sold to off-shore as well as on-shore wind facilities throughout the globe. Only in Norway, its turbines generate over 500MW of energy. 390MW more are in the pipeline. The total installed capacity of Gamesa is 85GW of wind power.
Scatec Solar (FRA: 66T)
This spring, the Norwegian solar system integrator announced that the pandemic had not influenced its activity. The dividend payouts will be delayed, while many businesses stop paying their investors. Moreover, the firm is likely to strengthen its balance sheet after COVID-19 crisis by signing lots of new and expanding the existing credit facilities, which allows it to take advantage of clean energy market growth both in Europe and globally.