The future is renewable energy and these three companies are leading the sector
- Take home big gains by investing in these undervalued renewable energy stocks with strong upside potential.
- NextEra Energy (NEE): An elite dividend stock, NextEra enjoys an early-mover advantage in the industry.
- First Solar (FSLR): First Solar has solid financials and its fifth manufacturing unit coming up very soon.
- SolarEdge (SEDG): The European market is driving growth for SolarEdge and it has ample upside potential.
The future is renewable energy and whether you believe in it or not, the world is gearing up to be a cleaner and greener place. Countries across the globe are working tirelessly to increase the production and use of renewable energy and we will be able to see the results in the coming years. The government has given stimulus for green energy and there was a lot of excitement in the initial days.
However, the interest seemed to be cooling down with time and we saw several renewable energy stocks move sideways recently. But do not let this stop you from investing in renewable energy stocks. They have high upside potential since the anticipated shift towards renewable power is underway and we will see renewable energy companies raking in big numbers in the next few years. There will be steady growth in this sector and now is the time to invest in the most undervalued renewable energy stocks.
NextEra Energy (NEE)
A personal favorite and an elite dividend stock, NextEra Energy (NYSE:NEE) is already enjoying an early-mover advantage in the industry. A utility company, NextEra enjoyed steady income over the years and has a dividend yield of 2.7%. It has successfully managed to increase the dividend at a compound annual rate of 11% and it aims to continue rewarding shareholders over the coming years.
The company benefits from its presence in both the utility and renewable sectors. It is two solid businesses into one. The stock is down 18% year to date and this drop makes it a solid chance to make your move.
The largest electric utility holding firm, NEE reported impressive financials in the recent quarter. It saw a 100% jump in net income to reach $2.8 billion and the net income in the renewable energy sector increased by over 10 times. The company also added 1,665 megawatts of new renewables and projects to the backlog.
I believe NextEra has the potential to keep growing in the coming years and if the demand for power rises, it is set to make the most of it. The company also has enough liquidity to keep rewarding shareholders. NEE is one stock that is set to benefit the most from the transition towards renewable energy. Investors can also expect a higher dividend payout in the coming years.
First Solar (FSLR)
2023 has brought solar power to the forefront. Its importance, and the industry’s momentum are noteworthy. First Solar (NASDAQ:FSLR) is a big player in the solar space and it is making solid moves lately. The company reported impressive numbers with a 30.6% rise in net sales year-over-year to reach $811 million.
The transition towards solar energy has only started gaining momentum and there is a lot more to come. FSLR stock has soared 16% year to date. While the stock isn’t cheap, there is a lot of upside from the current level. It also has a cash balance of $1.5 billion which can allow the company to invest towards expansion purposes.
One big reason I love First Solar is its impressive backlog. The company has a backlog of 77.8 gigawatts which will continue to drive business throughout this decade. It is expanding at a rapid pace and will have the fifth U.S. manufacturing facility opened by 2026. First Solar recently commenced production at its manufacturing plant in India.
First Solar has already established itself in the industry and is one of the top players today. There can be plenty of upside from the current level.
SolarEdge Technologies (SEDG)
The European market has worked as a catalyst for SolarEdge Technologies’ (NASDAQ:SEDG) growth. The company offers solar solutions for residential and commercial markets. We have already seen a solid rise in the demand for solar products and batteries across Europe which led to the company reporting all-time high revenues.
The revenue came in at $991.3 million and the solar segment revenue hit $947.4 million. SEDG stock is down 53% in the past six months and smart investors know that now is the time to snap up the stock. It has generated over 240% returns in the past five years.
Solar power still accounts for a very small percentage of the electricity generation across the world and this means there will be a significant rise in demand in the coming years.
With impressive product offerings and a solid cash flow, there is a lot lined up for SolarEdge. This is one renewable energy stock you shouldn’t ignore. It is a pure-play solar stock that is benefiting from government policies and enjoying solid growth. With the revenue growing steadily since 2016, the company is in the perfect position to make the most of the growth of the solar sector.
This post originally appeared at InvestorPlace.
On the date of publication, Vandita Jadeja 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.
