Renewable Energy Stocks: 11 Green Energy Companies With Massive Upside Potential
Buying renewable energy stocks once seemed like something only the most environmentally conscious investors would do. But renewable energy is quickly becoming more prevalent and providing any investor with massive opportunities to benefit from this growing sector.
Green energy skeptics may think that investing in the stocks is premature, but there’s compelling evidence that a historical energy shift is happening right now. Consider that:
- The International Energy Agency (IEA) says that renewable energy will surpass coal as the largest source of electricity by 2025
- Installed renewable energy capacity will surpass natural gas’s 23% electricity market share in 2023
- Many natural-gas-fired plants, which generate 38% of electricity in the United States, won’t be economically viable by 2030, according to data from IHS Markit
Additionally, governments around the world are investing in and subsidizing alternative forms of power generation—including offshore wind, geothermal, solar power, battery technology, hydropower, biomass, etc.—to fight climate change.
This is creating a massive opportunity for investors as the world shifts away from fossil fuels to clean energy. So let’s take a look at some top renewable energy stocks that could reward investors handsomely.
Top 11 Renewable Energy Stocks
- BYD Co. Ltd
- ChargePoint Holdings
- First Solar
- SolarEdge Technologies
- Brookfield Renewable Partners
- NextEra Energy
- Bloom Energy
- Atlantica Sustainable Infrastructure
Electric Vehicle Stocks
Why electric vehicle stocks should be on your radar:
- Every major car brand already sells an electric vehicle (EV) or has plans to release one
- EVs will account for 26% of all new cars sold worldwide in 2030. By 2050, the percentage will rise to an astonishing 82%
- President Biden’s administration has set a goal of having 500,000 EV charging stations across the United States as part of his massive $2 trillion infrastructure plan
Tesla (Nasdaq: TSLA)
Tesla has already benefited from the EV trend and, arguably, helped start it. Elon Musk’s company has developed its own battery technology, which has been at the core of its EV success, allowing Tesla’s vehicles to have superior power and longer mileage ranges compared to the company’s competitors.
Major automakers and a few small startups are trying to close the performance and mileage gap Tesla created, but Musk’s company has already established itself as the EV king. Tesla delivered 500,000 EVs in 2020 and the company accounts for nearly 80% of all EVs sold in the United States.
BYD Co. Ltd (OTCMKTS: BYDDF)
China-based BYD makes electric vehicles for the Chinese market—along with trucks, buses, and monorails—and in 2020 the company sold an impressive 130,000 electric cars.
You may not have heard of BYD before, but if you’re looking for some evidence that the company is worth your attention, consider that Warren Buffet’s Berkshire Hathaway (BRK.A) (BRK.B) has owned its stock since 2008 and now owns 8% of the company.
Why does BYD deserve investors’ attention? Because in 2020 sales of EVs in China accounted for 41% of the global EV market. Meanwhile, U.S. EV sales made up just 2.4%. That’s great news for BYD as the company grows and as China continues to build out its EV market.
ChargePoint Holdings (NYSE: CHPT)
Let’s shift gears (like what I did there?) and focus on another EV-related technology that may not be as flashy as all-electric vehicles, but is critical to their survival: charging stations.
EVs are only as good as the batteries inside of them and the availability of charging stations. So the world is going to need a lot of them very soon. And that’s where ChargePoint Holdings comes in. The company currently holds 70% of the North American charging station market (for stations with 240V power).
But even with that leading position, the company believes there’s plenty more room to grow. Management says that it will reach 2.5 million charging stations by 2025, an increase of 50 times what the company had in 2018.
ChargePoint isn’t just great because its stations dominate in the United States, but because they’re also expanding in Europe. That could be a key market for ChargePoint considering that the European Union was the No. 1 EV market in 2020.
With the company anticipating that EVs will account for more than half of all new cars sold in 2040, ChargePoint is preparing for an all-electric future now.
QuantumScape (NYSE: QS)
We can’t talk about alternative energy stocks without quickly mentioning one company trying to develop even newer alternative energy batteries: QuantumScape.
The company is developing lithium-metal batteries which would be an improvement over the current lithium-ion batteries used by many EV makers. While QuantumScape hasn’t released any commercial products yet, it has secured the world’s second-largest automaker, Volkswagen (VWAGY).
Volkswagen has invested $200 million in the company, half of which was recently given to QuantumScape after the company met technical milestones that Volkswagen helped set.
While QuantumScape is more of a speculative clean energy stock than others on this list, the company’s work with Volkswagen shouldn’t be overlooked. The German automaker sold 9.3 million vehicles worldwide in 2020 and estimates that by 2030, 70% of its vehicles sold in Europe will be electric, and 50% of those sold in the United States and China.
Solar Energy Stocks
Why solar energy stocks have upside potential:
- Global annual solar installations will increase 30% in 2021
- Solar power will surpass wind energy in 2040 as the largest source of renewable power generation in the United States, according to the U.S. Energy Information Administration
First Solar (Nasdaq: FSLR)
Solar panels aren’t a new technology, but First Solar is at the forefront of innovative solar panel modules, which could give it a long-term advantage over its competitors.
First, the company uses its thin-film technology in its panels to create more energy compared to traditional modules, and the company says its panels function better in hot climates and humidity. In addition, their panels shed snow better than their peers.
Second, the company is expanding its production. That should help First Solar continue to produce superior solar panel modules with high margins. The company just opened a new production facility in Malaysia that it says will increase its production capacity by 2022.
And finally, unlike many alternative energy companies, First Solar has lots of cash and only a little debt, which should allow the company to continue innovating solar tech for years to come.
SunPower (Nasdaq: SPWR)
If you’re looking for a company that’s trying to take a more holistic approach to solar energy technology, then SunPower might be a good bet.
The company’s rooftop solar panels and energy storage systems are aimed at residential and commercial customers. The company has made some smart moves to reduce low-performing aspects of its business—including panel manufacturing—to focus its attention on higher-margin business like energy storage and management.
SunPower is looking ahead to a future where many homeowners are charging their electric vehicles using solar panels and using large batteries to store extra energy.
SolarEdge Technologies (Nasdaq: SEDG)
Some investors may want a renewable energy investment that doesn’t get too into the weeds, but for investors who don’t mind the nitty-gritty of energy efficiency—at huge share price gains—then SolarEdge Technologies may be the right play.
The company sells direct-current-optimized inverter systems for solar photovoltaic solar panel systems around the world, boosting the output of solar panels. If that sounds too technical, then maybe you’ll be more interested in the fact that SolarEdge’s stock is up 1,000% over the past five years.
SolarEdge has benefited as sales of its inverters and power optimizers have climbed and as the company has expanded its footprint around the globe. The company’s largest market is in Europe, which accounts for nearly 43% of its revenue, but the United States is close behind with 42% of its total sales.
These two regions are important to SolarEdge because both Europe and (particularly under President Biden) the United States are focusing more on alternative energy sources. Investments in clean energy in the United States and Europe should help fuel SolarEdge’s business, which is already profitable, and help the company continue to dominate its niche market.
Other Alternative Energy Stocks
Brookfield Renewable Partners (NYSE: BEP) (BEPC)
If you’re looking for a more diversified approach to renewable energy stocks, then Brookfield is your stock. The company has more than 2,000 alternative energy assets including hydroelectric, solar, wind, and even energy storage, across 30 countries.
The majority of the company’s energy production comes from hydro right now, but the company has been steadily increasing its solar and wind assets as well.
Not only does Brookfield have a large renewable energy footprint, with power plants all across the globe, but the company is also a great dividend play. Brookfield currently pays a yield of about 3.2% and the company targets 5% to 9% annual growth in cash distributions to its shareholders.
But what’s really impressive about Brookfield is that the company’s size allows it to buy up smaller businesses to add to its energy portfolio. A series of wind and solar acquisitions are making Brookfield even stronger than before and will help the company benefit from the shift to renewables for years to come.
NextEra Energy (NYSE: NEE)
Another renewable energy behemoth with lots of long-term potential for investors is NextEra Energy. The company claims to be the world’s largest producer of solar and wind energy and its future plans for more renewable energy production are nothing short of impressive.
NextEra Energy already has 15.25 gigawatts of renewable power contracts but management estimates that by 2025 it could nearly double that amount. One such example of the company’s renewable expansion is happening in Florida, where a utility owned by NextEra is building the world’s largest solar-powered battery system—which will replace some of the company’s natural gas energy production.
Like Brookfield, many investors are drawn to NextEra as a dividend play. The company only pays a yield of about 2% right now, but income investors will love that NextEra has increased its payout for 26 years running.
Bloom Energy (NYSE: BE)
One aspect of renewable energy that we haven’t touched on much yet is the growing need for energy to be stored and used for later. Bloom Energy is helping to meet that demand with the company’s fuel cells.
Bloom’s fuel cells can be used as backup sources of electricity for commercial locations and utility companies, but they can also be used to generate electricity as well.
The company’s fuel cells have been powered mostly by natural gas in the past, but Bloom is transitioning to hydrogen fuel cells, a cleaner source of energy.
Bloom’s stock can sometimes experience more volatility than some of its peers, but the company’s bet on efficient fuel cells for both storage and on-demand electricity production could be a key component of clean energy moving forward.
Atlantica Sustainable Infrastructure (Nasdaq: AY)
Just like it says on the bottle, Atlantica is a sustainable infrastructure company that generates the majority of its revenue from renewable energy assets, including solar and wind.
Atlantica operates its wide-ranging infrastructure business across North America, South America, Europe, the Middle East, and Africa, giving the company access to vast energy markets across the globe—and it continues to expand its opportunities.
Most recently, Atlantica entered into a deal to buy a geothermal power plant in the United States called Coso Geothermal Power Holdings. And with President Biden wanting to invest billions of dollars in renewable energy infrastructure in the coming years, the company could significantly benefit from an increased focus on renewables in the United States.
Add to all that the fact that Atlantica pays an attractive dividend of 4.6% right now and this renewable energy stock could be a nice addition to any alternative energy portfolio.
How to Spot Great Renewable Energy Stocks
- Competitive advantage: Ask yourself if the company you want to invest in has a competitive advantage that sets itself apart in the renewable energy sector.
- Potential market: Figure out the market size of the energy industry that you want to invest in and what the company’s management believes its total addressable market (TAM) is.
- Long-term growth plans: The energy industry can move slowly, so investors need to know how well a company is investing in new technology/acquisitions to plan for diverse energy revenue streams.
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