Renewable energy is a topic that makes headlines regularly. With experts pointing to climate change and other environmental damage done by our carbon footprint, consumers, corporations and governments alike are making a push to renewable energy.
In fact, Japan recently announced plans to make the 2020 olympics eco-friendly by powering the event with 100% renewable energy. As the global shift to green energy continues, strong investment opportunities are being created. Here are what I believe to be the top renewable energy stocks to watch for long-term growth.
SunPower (SPWR, Financial): Continued gains likely ahead!
SunPower is arguably the most interesting publicly traded solar power company on the market today, and a compelling story is leading to heavy investor interest. In fact, in the past year, the stock has risen from just over $5 per share to more than $12 per share as investors pile into what they believe to be a great long-term opportunity.
SunPower’s claim to fame is its unmatched efficiency. The company’s solar panels are rated as the most highly efficient panels available on the market today. However, unlike other big solar companies, SunPower isn’t focused on the development of solar farms. Well, not anymore.
Recently, the company has made a shift to smaller commercial and residential scale projects, rather than the utility-scale projects that it has done in the past and that its competitors seem to be focused on. In fact, it is this shift in focus that has analysts buzzing about the stock.
Recently Angelo Zino mentioned that the company’s shift to smaller projects is a haven from the burdens associated with tariffs under the trade war between the U.S. and China. Due to its exemption from these tariffs, the company has a strong competitive advantage.
Not to mention, the company has a strong and growing backlog. In fact, on the commercial side of the coin, 80% of its planned volume is covered in its contractual backlog.
With a strong and growing contractual backlog, a shift to a higher margin residential and smaller commercial project focus, and the most efficient solar panels available on the market today, SunPower is a stock that investors should be watching closely.
First Solar (FSLR, Financial): A utility-scale solar company making waves in the market
Another solar stock that has seen a strong run in value this year, First Solar is one that is worth paying attention to. However, the company operates on a completely different business model than what we see from SunPower.
First Solar’s focus is on utility-scale solar power installations. Essentially, the company operates in two models. It installs massive solar farms and then sells the power to utility companies who act as third-party providers to the end consumer. It also serves as a developer for third-party solar power projects.
This is a great business to be in at the moment. Analysts at Goldman Sachs expect that utility-scale solar power capacity in the U.S. will grow by double digits in the year 2020 as the world makes an attempt to reduce its carbon footprint. First Solar is on the leading edge of this market.
At the moment, First Solar is sitting on a strong project pipeline and backlog. Moreover, according to Goldman Sachs, the company has the ability to ramp up production in order to meet the forecasted growth in solar power demand, which the firm believes will rise at a rate of 10-15% between 2019 and 2022.
As a leading provider in utility-scale solar power solutions, First Solar is well positioned to take a large share of the growing solar energy market. As such, this is a stock that should be on your watch list.
CleanSpark (CLSK, Financial): A new way to create energy dependability
CleanSpark is like no other company on this list. While the company’s operations involve clean energy sources like solar and wind energy, its focus isn’t just on going green. The company is focused on going green while reducing costs and creating a dependable energy system.
The company designs, develops, and maintains microgrid solutions that have the potential to disrupt the current energy infrastructure. While it designs, provides the hardware for and develops microgrids, which generates revenue, the high-margin software business that the company operates is more interesting.
At the moment, CleanSpark has two proprietary software solutions under its belt. The first is known as mVSO, or Microgrid Value Stream Optimizer. The software is a tool designed to help enterprise-level customers make smart energy investment decisions. To do so, the software provides a detailed view of opportunities across several different markets. At the same time, it tests business models and performance under regulatory constraints, offering up answers to the most challenging questions when making energy investment decisions.
The second, and the most compelling software solution, is known as mPULSE, a microgrid enterprise control and monitoring system. The system uses artificial intelligence and machine learning to orchestrate the operation of energy assets. The software helps to coordinate electric loads and create maximum cost savings by purchasing power when it costs less and using it during peak hours. Moreover, the software reduces the carbon footprint of the customer’s energy use by sourcing from multiple clean energy sources.
The company’s microgrid technology is also likely to get some attention from the cannabis industry. As growers work to reduce the cost of production and increase reliability, CleanSpark recently licensed with two thought leaders in the industry who will educate cannabis producers.
As the global push to clean energy continues, and aging infrastructure met with growing demand leads to power failures, CleanSpark energy has the ability to revolutionize the way we see big power, generating an interesting investment opportunity in the process.
NextEra Energy (NEE, Financial): The world’s largest utility company goes green
If you’ve followed energy and utility companies, NextEra Energy is not new to you. At the moment, it is one of the world’s largest utility companies. In fact, its subsidiary, Florida Power and Light, serves more than 5 million Floridians and is one of the largest rate-regulated electric utilities in the U.S.
While the fact that NextEra Energy is the world’s largest utility is impressive, that’s not why it made today’s list. What’s interesting is that NextEra Energy is going green at a rapid pace, setting the foundation for strong future shareholder gains.
At the moment, another of the company’s subsidiaries, NextEra Energy Resources, is leading the charge in North American wind energy. The company owns 120 wind facilities in North America with the capacity to generate 13,000 megawatts of energy annually.
However, wind isn’t the only way that NextEra is going green. NextEra Energy generates in excess of 2,000 megawatts of solar power from its facilities in seven U.S. states and Canada. The company is also actively involved in natural gas-fired and nuclear power plants that develop additional power generation.
As a leading utility company, NextEra comes with a strong level of stability. Combining this with the company’s diversity as it dominates the green energy landscape makes this stock well worth your attention.
Renewable Energy Group (REGI, Financial): Simple, yet valuable!
Renewable energy group runs a relatively simple, yet highly valuable business. Essentially, the company turns used vegetable oils and animal fats into diesel fuels.
Have you ever noticed a truck with a hose that sucks grease traps at restaurants? If so, chances are that the truck is bringing this used grease to one of Renewable Energy’s 13 biomass refineries. It is at these refineries that this grease is turned into fuel.
The company’s business is booming too. At present, it can produce about 575 million gallons of diesel fuel on an annual basis. Of this impressive production capacity, about 70% of the end product is sold to travel centers and fuel marketers.
As demand for renewable diesel fuel continues to rise, Renewable Energy is in a strong position to capitalize. In just the fourth quarter of last year, the company sold 163.2 million gallons of their biodiesel product. These sales generated a total of $519.8 million in revenue and adjusted Ebitda of $44.5 million, the highest the company has seen in five years.
Unfortunately, this year hasn’t been so friendly to Renewable Energy’s stock after its strong 124% run last year. Nonetheless, there’s a strong argument that recent declines are only expanding the opportunity brought to the table by this compelling biodiesel company.
The takeaway
The renewable energy industry is a large and growing one. As this growth continues, investment opportunities are emerging, opening the door to potential growth.
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