Years of investment in renewable energy look ready to take off
- There are many appealing clean energy growth stocks, but investing in the sector will still require patience.
- BP (BP): The traditional oil company is also one of the leaders in the clean energy sector.
- Enphase Energy (ENPH): The recent sell-off is giving investors a second chance to buy shares of this energy storage company.
- Lithium Americas (LAC): Demand for lithium will drive the growth of the electric vehicle industry and major automakers are trying to stake their claim.
- Plug Power (PLUG): Analysts believe in the company’s growth; it may be time for investors to jump in.
- NextEra Energy (NEE): It’s portfolio of both traditional fossil fuel and green energy makes this a good choice for risk-averse investors.
- SolarEdge Technologies (SEDG): Earnings are expected to double year-over-year in 2023 which makes SEDG stock a must-have in a clean energy portfolio.
- Stem Inc. (STEM): This small-cap stock gives speculative investors exposure to AI as well as clean energy.
The promise of clean energy has been around for over a quarter of a century. For a long time, the payoff on the promise of clean energy growth stocks seemed to be years away, and that’s if it happened at all. There have been multiple stories of promising companies that didn’t make it.
But while I’m skeptical of the phrase, “this time it’s different,” there does seem to be a growing acceptance of clean energy in all its forms. From electric vehicles to what appears to be a full-court press on solar power adoption, there is no lack of clean energy solutions being developed.
That makes now as good a time as any for investors to consider investing in some clean energy growth stocks that are ready to deliver in a big way. Here are seven names to consider for your portfolio.
Keep in mind, that growth stocks carry more risk than blue-chip stocks. But if you have a long-term time horizon, these stocks look like good bets to pay off for you over time.
I’m old enough to remember when BP (NYSE:BP) was the first of the traditional oil stocks to embrace renewable energy in the early 1990s. The company has been associated with renewable energy ever since, arguably at the expense of its shareholders.
In the last five years, BP stock is up just 1.41%. That includes the 33% gain the stock has made in the last 12 months. Comparatively speaking, Exxon Mobil (NYSE:XOM) stock has gained over 49% in the last five years.
However, investors may soon be getting some rewards. In its latest earnings report, BP says it will be scaling back its low-carbon investments in an effort to return capital to shareholders in the form of a share buyback program.
But scaling back doesn’t mean the company is abandoning renewable energy. In fact, BP recently inaugurated its green hydrogen initiative of the Valencia area at its Castellon, Spain refinery.
The company is forecasting an annual output of 650,000 tons of biofuel by 2030, nearly triple the output today, and the Castellon plant will be key to that.
Enphase Energy (ENPH)
Enphase Energy (NASDAQ:ENPH) first got on my radar because of its microinverters. This is a solution that allows solar panels to efficiently convert AC power to DC power.
In early 2023, Enphase gave investors a demonstration of its bidirectional EV charging technology. As Louis Navallier wrote recently, this will offer several important benefits including helping to “relieve the strain on electric utilities during times of peak demand.”
That product isn’t ready yet. But Enphase continues to grow its revenue on a quarterly and year-over-year basis. In fact, it’s developing a habit of layering one record-breaking quarter of revenue after another.
However, in this risk-off environment, shares of ENPH stock dropped significantly from their 52-week high of over $330. That drop is giving investors a second chance to buy the stock at a more attractive price.
With EPS projected to grow at a rate of over 19% in the next five years, an investment at its current price (approximately $211 as of this writing) should have plenty of room to run.
Lithium Americas (LAC)
Lithium Americas (NYSE:LAC) has delivered investors two significant catalysts in early 2023.
First, after a protracted legal dispute, the company received a Record of Decision (ROD) for its Thacker Pass mine and lithium project. Estimates suggest the mine holds 13.7 million Tonnes of lithium carbonate. That would make it the largest lithium resource in the United States.
The second catalyst comes in the form of the $650 million contract Lithium Americas has signed with General Motors (NYSE:GM) to co-develop the Thacker Pass.
When fully operational, Lithium Americas is targeting up to 80,000 Tonnes of lithium carbonate every year. The company is projecting to be ready to begin mining operations at its 100%-owned mind in 2026. In the meantime, the company will start to mine lithium in late 2023 via its joint-venture mine in Argentina.
Plug Power (PLUG)
Hydrogen is among the cleanest of clean energy technologies, and Plug Power (NASDAQ:PLUG) is a name for investors to watch closely.
The company has put in place more than 60,000 fuel cell systems for e-mobility and is now the largest buyer of liquid hydrogen.
I’ve written about PLUG stock several times in the last few years. Still, I was surprised to learn that the stock is up a whopping 587% in the last five years.
However, that also includes PLUG stock being down nearly 50% in the last 12 months. That’s the nature of investing in an emerging technology.
Plug Power reported earnings on March 1, 2023, and it missed on both the top and bottom lines. The stock, however, only dropped about 5% for the week. Analysts maintain their Moderate Buy rating for PLUG stock but advise caution about the company’s short-term outlook.
Still, if you’re looking for clean energy growth stocks for the long haul, PLUG stock may fit your portfolio nicely.
NextEra Energy (NEE)
NextEra Energy (NYSE:NEE) operates a network of power generation and distribution facilities that includes energy generated from fossil fuels. Just because it’s not a pure play on clean energy, doesn’t mean it should be overlooked. After all, of the company’s 58 GW of electricity that NextEra is capable of generating each year, 60% comes from green energy.
And with ESG initiatives taking on outsized importance for some investors, it’s good to know that NextEra Energy is a recognized leader in clean energy and ESG practices. That also means the company will likely be a beneficiary of the Biden administration’s clean energy initiative outlined in the Inflation Reduction Act.
Of the stocks on this list, NEE stock offers the most compelling dividend. The yield is currently 2.59% and the company has been increasing the payout for the last 30 consecutive years.
SolarEdge Technologies (SEDG)
It’s usually a good sign when a company exceeds already lofty analysts’ expectations.
SolarEdge Technologies (NASDAQ:SEDG) was expected to grow earnings per share in the fourth quarter of 2022 after several quarters of sequential declines.
The company did that and then some. The $2.86 EPS was 70% better than analysts were forecasting. And it’s EPS estimates for 2023 and 2024 suggest the gains will continue.
SolarEdge makes a range of products including photovoltaic inverters, power optimizers, photovoltaic monitoring, software tools, and electric vehicle chargers for the purpose of maximizing power generation. This gives the Israeli-based company a foothold in many emerging renewable energy sectors.
Analysts give SEDG stock a price target of $367.65, but several analysts are boosting their price targets since the company’s earnings. Forecasts suggest SolarEdge will grow revenue and earnings at 17% and 24% rates respectively over the next five years.
Since the U.S. and Europe are the company’s two largest markets, those targets seem achievable which will make the company a clear winner in the solar sector.
Stem, Inc. (STEM)
Stem, Inc. (NYSE:STEM) is an emerging leader in AI-enabled smart energy storage. This will be critical to maximizing the output of wind and solar projects.
As my InvestorPlace colleague Larry Ramer explained, the company’s signature product, Athena, increases the efficiency of energy storage systems by using AI to switch between battery power, onsite power generation, and grid power.
And the company recently entered into a joint venture with ChargePoint (NYSE:CHPT) that will provide an added source of revenue for the company, which is not yet profitable.
This post originally appeared at InvestorPlace.
On the date of publication, Chris Markoch had a LONG position in ENPH. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.