In this article we will take a look at the top 10 best renewable energy stocks to buy now.
Energy usage around the world is rising as emerging economies in Asia become the drivers of the manufacturing power in the global economy. According to statistics released by the United States Energy Information Administration, the energy usage on the planet is expected to grow by 50% in the next three decades, largely due to the rising demand from China, India, and other nations in the East. However, diminishing fossil fuel sources and global warming concerns around the burning of coal, oil, and gas have led to a shift in governmental priorities.
Global Shift to Renewable Energy
This shift is marked by policy changes at the international and national level that reward businesses for switching to renewables and incentivize research and development into alternative energy. Already, the results of this shift are evident. The International Energy Agency estimates that renewable energy will overtake coal to become the largest source of electric power in the next four years. In 2020, alternative energy sources accounted for almost 28% of the total electricity generation in the world, up from 26% the previous year.
In 2021, the share of renewables in power generation is expected to rise by 8%, the largest year-on-year growth on record in absolute terms. The trends on the ground mirror the overall market direction on renewable stocks. The S&P Global Clean Energy Index was expanded earlier this month to include 52 new stocks. The iShares Global Clean Energy ETF (NASDAQ: ICLN), which tracks the results of investments in clean energy, has outperformed the wider market by posting a total return of 75.9% compared to the total return of 33.4% by the Russell 1000 over the past year.
Even big economic powers like China and Australia, who depend on coal for power and manufacturing needs, are taking steps towards a shift to cleaner sources. In 2019, China spent more than $83 billion on renewable energy compared to the $55 billion spent by the US on the same sector that year. However, as President Biden assumes charge, Washington is planning to allocate $1.3 trillion to build a power capacity mostly built on clean energy by 2030, with large sections of the investment going towards wind and solar power plants.
All market indicators point towards the growth of the renewable energy sector in the coming years. But there should be clarity in the minds of investors with regards to the overall business model and the balance sheets of companies involved in clean energy. There is fierce market competition and much of the growth in the industry is driven by innovative firms operating on thin margins. But there is little doubt that the clean energy sector will transform the power market in the coming years even as fossil fuel demand rises and leads to hedge fund interest.
The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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With this context in mind, here is our list of 10 best renewable energy stocks to buy now.
Best Renewable Energy Stocks to Buy Now
10. SunPower Corporation (NASDAQ: SPWR)
SunPower Corporation (NASDAQ: SPWR) is a California-based company that offers solar solutions to residential, commercial and industrial clients. The firm also sells directly to a network of third-party dealers and resellers. The products that the company markets include commercial roof, carport, and ground mounted systems, as well as post-installation operations and maintenance services. SunPower Corp was founded in 1985 and is placed tenth on our list of 10 best renewable energy stocks to buy now.
The shares of the firm have been soaring since last month after President Biden announced a plan last month to extend tax credits offered to clean energy firms by ten years and promised increased spending on research and development in the sector. On March 23, investment bank Goldman Sachs upgraded the stock rating on SunPower to Buy from Neutral. At the end of the fourth quarter of 2020, 24 hedge funds in the database of Insider Monkey held stakes worth $345 million in the firm, up from 14 in the preceding quarter worth $91 million.
9. Brookfield Renewable Partners L.P. (NYSE: BEP)
Brookfield Renewable Partners L.P. (NYSE: BEP) is a Bermuda-based firm that owns several renewable power energy generating plants. The firm operates in the United States, Canada, Colombia, Brazil, Europe, India, and China. It owns a total of 19,000 megawatts of power generation capability globally through hydroelectric, wind, solar, distributed generation, pumped storage, cogeneration, and biomass sources. The company was founded in 1999 and is ranked ninth on our list of 10 best renewable energy stocks to buy now.
Last month, financial services firm Wells Fargo upgraded Brookfield stock to Equal Weight from Underweight with a price target of $42. In February, the clean energy firm hiked its quarterly dividend by 5% to $0.30 per share. Out of the hedge funds being tracked by Insider Monkey, London-based investment firm Ecofin Ltd held the most shares in the firm – 280,135 – worth more than $12 million. NewGen Asset Management was 2nd with more than 71,000 shares worth almost $3 million.
8. Canadian Solar Inc. (NASDAQ: CSIQ)
Canadian Solar Inc. (NASDAQ: CSIQ) is a Guelph-based solar energy company. The products that the firm markets include solar ingots, wafers, cells, modules, and other solar power products. The company designs, develops, and sells these products while also offering repair and management services related to these products. The firm also equips and operates electricity-generating solar power plants. It has a fleet of solar power plants in operation with an aggregate capacity of approximately 880 megawatt.
The firm was founded in 2001 and is placed eighth on our list of 10 best renewable energy stocks to buy now. After dipping on the back of proposed changes to laws related to solar companies in California earlier this year, the stock of the firm has bounced since President Biden announced a plan to cut the cost of solar energy-related products by 60% over the next decade. At the end of the fourth quarter of 2020, 14 hedge funds in the database of Insider Monkey held stakes worth $118 million in the firm, down from 25 in the preceding quarter worth $245 million.
7. Plug Power Inc. (NASDAQ: PLUG)
Plug Power Inc. (NASDAQ: PLUG) is a New York-based company that is involved in development and selling of hydrogen fuel cell systems that replace conventional batteries in equipment and vehicles powered by electricity. The products that the firm makes include GenDrive, a hydrogen fueled PEM fuel cell system that powers electric vehicles, and GenFuel, a hydrogen fueling delivery, generation, storage, and dispensing system. The firm was founded in 1997 and is placed seventh on our list of 10 best renewable energy stocks to buy now.
On April 20, financial advisory firm Evercore launched coverage on Plug Power stock with an Outperform rating, noting that pouring money into alternative energy would be an investment mega theme over the coming months. Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm DE Shaw held the most shares in the firm- 15.3 million – worth more than $522 million. Citadel Investment Group was 2nd with more than 1.5 shares worth almost $53 million.
6. Tesla, Inc. (NASDAQ: TSLA)
Tesla, Inc. (NASDAQ: TSLA) is a California-based automaker that develops and sells electric vehicles around the world. The firm also has stakes in the clean energy business. It makes batteries, solar panels and other energy-related products as well. It has a market cap of over $649 billion and posted more than $31 billion in annual revenue in December 2020. Earlier this month, Vancouver-based investment firm Canaccord Genuity upgraded Tesla to a Buy rating and set the price target of shares at $1,071.
At the end of the fourth quarter of 2020, 68 hedge funds out of 887 in the Insider Monkey database held stakes in Tesla, up from 67 out of 817 in Q3 2020. The total value of the shares held by these funds in Q4 was over $12.3 billion, up from $8.1 billion in the preceding quarter. Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group held the most shares – 28 million – worth more than $20 billion.
5. General Electric Company (NYSE: GE)
General Electric Company (NYSE: GE) is a Boston-based multinational company operating in aviation, healthcare, electronics, power, and other industries. The firm has stakes in the wind, solar, hydro, and hybrid branches of the clean energy sector. The company was founded in 1892 and is placed fifth on our list of 10 best renewable energy stocks to buy now. The firm is most famous for wind energy solutions driven by state-of-the-art wind turbines that operate both onshore and offshore for power generation needs.
The company has a market cap of more than $119 billion and posted an annual revenue of close to $80 billion in December 2020. Last month, Bank of America retained a Buy rating on GE stock with a price target of $15. Analysts at the bank projected a positive outlook for the firm in 2021. Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Eagle Capital Management held the most shares in the firm – 125 million – worth more than $1.3 billion. Pzena Investment Management was second on the list with shares worth $970 million.
Longleaf Partners Global Fund, in their Q4 2020 investor letter, mentioned General Electric Company (NYSE: GE):
“General Electric (GE) (-3%, -0.28%; 74%, 3.32%), the Aviation, Healthcare and Power conglomerate, was among the top two contributors in the fourth quarter after a very difficult first half. The company’s crown jewel Aviation business sells and maintains commercial and military jet engines. With air travel frozen, this year’s second quarter was its worst in over a century of operating history with a $680 million operating loss. 3Q revenues improved sequentially as some flights resumed but still declined 39% year-over-year. Yet GE Aviation earned a remarkable $356 million in the third quarter due to extreme cost discipline. With fewer expenses, the same world-class competitive position and favorable long-term air-travel growth prospects, Aviation should keep improving incrementally with the potential to emerge stronger than ever within several years. GE Healthcare revenues, excluding non-recurring ventilator sales for COVID treatment, also improved 3% year-over-year in an encouraging performance. GE also took steps to give back in 2020 by working to help develop thousands of ventilators to aid coronavirus patients. The stock has roughly doubled from its March low as business results improved, in large part due to CEO Larry Culp’s excellent management. Please stay tuned for the next episode of the Price-to-Value Podcast in which Vice-Chairman Staley Cates interviews Larry Culp on Lean manufacturing, GE’s culture, navigating COVID and his outlook for the business.”
4. NextEra Energy, Inc. (NYSE: NEE)
NextEra Energy, Inc. (NYSE: NEE) is a Florida-based electric utility company. Although the firm generates electric power through fossil fuels, it focuses on the capabilities installed for wind, solar, and nuclear power generation. It has a total of 28,400 megawatts of net generating capacity and serves almost 11 million people through an estimated 5.6 million customer accounts in the US. It was founded in 1925 and is placed fourth on our list of 10 best renewable energy stocks to buy now.
On April 19, the firm announced that it was purchasing four wind power assets from competitor Brookfield in a deal worth $733 million. The firm said that the assets were located in strong clean energy markets, California and New Hampshire, and would contribute to the growth of the company in 2021. At the end of the fourth quarter of 2020, 61 hedge funds in the database of Insider Monkey held stakes worth $3 billion in the firm, down from 64 in the preceding quarter worth $2.7 billion.
3. Enphase Energy, Inc. (NASDAQ: ENPH)
Enphase Energy, Inc. (NASDAQ: ENPH) is a California-based company that designs and manufactures software-driven clean energy solutions for residential areas that focus on solar generation, home energy storage and web-based monitoring and control. The firm was founded in 2006 and is placed third on our list of 10 best renewable energy stocks to buy now. The products that the company makes include a semiconductor-based microinverter, AC battery storage systems; as well as Envoy and Enlighten, which are data-based services.
On March 29, the company announced that it had signed an agreement with Rubicon Energy in South Africa to distribute its products to customers in the African country. The shares of the firm have been surging this month as it is expected to benefit from a new government plan for alternative energy. Out of the hedge funds being tracked by Insider Monkey, Hong Kong-based investment firm Sylebra Capital Management held the most shares in the firm – 1.9 million – worth more than $346 million. Citadel Investment Group was 2nd with shares of $242 million.
2. SolarEdge Technologies, Inc. (NASDAQ: SEDG)
SolarEdge Technologies, Inc. (NASDAQ: SEDG) is an Israel-based solar solutions firm. It designs, develops and markets direct current optimized inverter systems for solar photovoltaic installations globally. The product list of the firm includes inverters, power optimizers, communication devices, and smart energy management solutions. The firm also has stakes in the energy storage and electric vehicle charging businesses. It offers lithium-ion cells and battery packs and uninterrupted power supply solutions as well.
The firm was founded in 2006 and is placed second on our list of 10 best renewable energy stocks to buy now. At the end of the fourth quarter of 2020, 28 hedge funds in the database of Insider Monkey held stakes worth $458 million in the firm, down from 31 in the preceding quarter worth $553 million. On March 19, financial advisory firm Susquehanna upgraded SolarEdge stock to Positive from Neutral with a price target of $345. SolarEdge will also benefit from the US government plan to extend tax credits for clean energy firms by ten years.
1. JinkoSolar Holding Co., Ltd. (NYSE: JKS)
JinkoSolar Holding Co., Ltd. (NYSE: JKS) is a Shanghai-based manufacturer of solar products. It markets solar modules, silicon wafers, solar cells, recovered silicon materials, and silicon ingots. The firm provides solar integration services and also develops commercial solar power projects. It is one of the largest solar panel manufacturing firms in the world. JinkoSolar operates in China, the United States, Japan, Germany, the United Kingdom, South Africa, India, and other countries.
On April 9, the company reported that its quarterly revenues at the end of 2020 rose to $1.44 billion, posting a year-on-year growth of 5%. It also said that it expects the shipments of solar products to rise 30% in 2021 on the back of increased demand as the economy reopens following the pandemic. At the end of the fourth quarter of 2020, 18 hedge funds in the database of Insider Monkey held stakes worth $212 million in the firm, up from 10 in the preceding quarter worth $42 million.
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Disclosure: None. 10 Best Renewable Energy Stocks to Buy Now is originally published on Insider Monkey.
