In this article, we will take a look at the 10 cheap renewable energy stocks to buy now.
Renewable energy stocks are in the spotlight after the European Union reached a provisional deal to increase the percentage of renewable energy in its total energy mix to 42.5% by 2030, up from its current target of 32%. The move is driven by climate change emergency and the Russian invasion of Ukraine which has highlighted the continent’s heavy reliance on Russia for energy. Data suggests that wind and solar energy accounted for about 22% of the EU’s electricity in 2022, surpassing gas for the first time.
The latest development is in-line with the expectations that suggest that the world is on its way to cut its reliance on traditional energy sources as companies and governments move to electrification and cut back on carbon emissions. According to a detailed report by McKinsey, electricity demand in the world could triple by 2050, driven by global electrification and the rise of hydrogen-based fuels.
The firm also said in its report that renewable energy generation would account for a whopping 80% to 90% of the global energy mix by 2050. This estimate is based on the firm’s projection that the global build-out rates for solar and wind will grow by a factor of five and eight, respectively.
An important and surprising data point shared by McKinsey shows that the energy consumption in the world is expected to stay flat in the coming decades despite a growing global population. The firm believes energy consumption in the world in the coming decades will grow by only 14%, while population is expected to increase by 2 billion people. One of the factors causing this is the trend of energy efficiency in the world. Governments in the developed world are focusing on increasing energy efficiency of buildings, cars and industries.
In the renewable energy equation, solar and wind are expected to make the biggest dent in the traditional energy markets, according to McKinsey. This is because of low costs of these energy sources. McKinsey expects solar and wind to account for about 43% and 26% of energy generation, respectively, in 2050.
But not all is well for the solar and wind energy companies. The renewable energy business is vulnerable to rising interest rates and the current state of the economy. Most of the companies in the sector are heavily reliant on debt. According to Wall Street Journal, wind and solar companies use debt for a whopping 85% to 90% of capital expenditures. Most of the renewable energy companies were formed after 2009, an era of almost zero interest rates. The 2022 market crash ushered in an era of volatility and not-so-easy money for these companies.
Another short-term headwind for renewable energy companies is the trade wars between the West and China, from where most of the equipment is sourced. The effects of the strict policies enforced by the West related to Chinese imports are now visible. Recently, German utility company RWE said that it is facing “stringent checks” for solar imports from China which could affect its expansion plans.
Solar energy, the most significant chunk of the renewable energy industry, has been famous because of its low costs. But global macroeconomic situation is showing its effects here as well. The WSJ report quoted data from the Solar Energy Industries Association and Wood Mackenzie, which shows that the average price of a solar photovoltaic system rose in 2021 and 2022.
However, almost all of these headwinds seem temporary and are expected to recede in the future. Because the renewable energy industry is fueled by long-term demand and secular growth catalysts, long-term investors have an opportunity to pile into renewable energy stocks while they are cheap. Some of the notable names that analysts and hedge funds are piling into are Tesla, Inc. (NASDAQ:TSLA), Enphase Energy, Inc. (NASDAQ:ENPH) and NextEra Energy, Inc. (NYSE:NEE).
Copyright: lassedesignen / 123RF Stock Photo
Our Methodology
For this article, we scoured the renewable energy space and picked 10 stocks whose price targets are significantly higher than their current stock prices, as of April 6. The rationale is that Wall Street analysts believe these stocks have a significant upside potential from their current levels, which means these renewable energy stocks are currently cheap and have attractive valuations. With each stock we have mentioned its one-year average price estimate by analyst, taken from Yahoo Finance.
Cheap Renewable Energy Stocks to Buy Now According to Analysts
10. Canadian Solar Inc. (NASDAQ:CSIQ)
Number of Hedge Fund Holders: 16
One-Year Average Price Estimate: $44.39
Canadian Solar Inc. (NASDAQ:CSIQ) ranks 10th in our list of cheap renewable energy stocks to buy now. In March, Canadian Solar Inc. (NASDAQ:CSIQ) posted upbeat Q4 results. GAAP EPS in the quarter came in at $1.11, beating estimates by $0.14. Revenue in the period increased by about 29% year over year to reach $1.97 billion. There was a 68% increase in solar module shipments in the quarter on a year-over-year basis.
For the first quarter, Canadian Solar Inc. (NASDAQ:CSIQ) said it expects its revenue to total in the range of $1.6 billion to $1.8 billion, versus the consensus estimate of $1.75 billion.
Insider Monkey’s database of 943 hedge funds shows that 16 hedge funds had stakes in Canadian Solar Inc. (NASDAQ:CSIQ).
9. Bloom Energy Corporation (NYSE:BE)
Number of Hedge Fund Holders: 24
One-Year Average Price Estimate: $29.58
Earlier in April, Morgan Stanley’s Andrew Percoco gave bullish comments on Bloom Energy Corporation (NYSE:BE). The analyst thinks that Bloom Energy Corporation (NYSE:BE) is a “key beneficiary” of the growing value proposition of distributed energy, rising grid instability, grid capacity limitations, and hydrogen tax credits.
As of the end of the last quarter of 2022, 24 hedge funds tracked by Insider Monkey had stakes in Bloom Energy Corporation (NYSE:BE). The total worth of these hedge funds’ stakes was $140 million. The biggest stakeholder of Bloom Energy Corporation (NYSE:BE) is John Overdeck and David Siegel’s Two Sigma Advisors which owns a $42 million stake in Bloom Energy Corporation (NYSE:BE).
8. Plug Power Inc. (NASDAQ:PLUG)
Number of Hedge Fund Holders: 25
One-Year Average Price Estimate: $22.13
Plug Power Inc. (NASDAQ:PLUG) recently jumped after the company said it produced 122 MW of its 1 MW electrolyzer stack platform in Q1, which was a quarterly record for the company and PEM electrolyzers industry.
Recently, Morgan downgraded Plug Power Inc. (NASDAQ:PLUG) to Equal Weight from Overweight with a $15 price target. The firm’s analyst Andrew Percoco said that he likes Plug Power Inc. (NASDAQ:PLUG)’s plan to vertically integrate its green hydrogen ecosystem. However, he is cautious on the pace of revenue growth and margin improvement. Plug Power Inc. (NASDAQ:PLUG)’s one-year average price estimate set by analysts is $22.13.
As of the end of the fourth quarter, 25 hedge funds had stakes in Plug Power Inc. (NASDAQ:PLUG), according to Insider Monkey’s database of 943 hedge funds.
7. Sunnova Energy International Inc. (NYSE:NOVA)
Number of Hedge Fund Holders: 27
One-Year Average Price Estimate: $34.48
Texas-based residential and commercial solar company Sunnova Energy International Inc. (NYSE:NOVA)’s stock fell sharply amid a broader downturn in the solar sector and the company’s announcement of entering new loan facilities. Year to date Sunnova Energy International Inc. (NYSE:NOVA) is down 15%. This could be a buying opportunity for long-term investors as Sunnova Energy International Inc. (NYSE:NOVA)’s one-year average price estimate according to analysts is $34.48.
As of the end of the fourth quarter of 2022, 27 hedge funds tracked by Insider Monkey had stakes in Sunnova Energy International Inc. (NYSE:NOVA). The total worth of these hedge funds’ stakes was $166 million. The biggest hedge fund stakeholder of Sunnova Energy International Inc. (NYSE:NOVA) was Joe Shaver’s Electron Capital Partners which has a $61 million stake in the company. Hedge funds also love Tesla, Inc. (NASDAQ:TSLA), Enphase Energy, Inc. (NASDAQ:ENPH) and NextEra Energy, Inc. (NYSE:NEE).
6. Sunrun Inc. (NASDAQ:RUN)
Number of Hedge Fund Holders: 39
One-Year Average Price Estimate: $39.38
Sunrun Inc. (NASDAQ:RUN) was one of the biggest losers after the SVB collapse as investors were concerned about the company’s exposure to SVB Financial. However, as the banking fears eased, Sunrun Inc. (NASDAQ:RUN) rebounded.
In February, Sunrun Inc. (NASDAQ:RUN) posted its Q4 results. GAAP EPS in the period came in at $0.29, beating estimates by $0.56. Revenue in the quarter increased by 40% YoY to $609 million, beating estimates by $20.63 million.
In the fourth quarter of 2022, Customer Additions were 37,359, including 27,493 Subscriber Additions. As of December 31, 2022, Sunrun Inc. (NASDAQ:RUN) had 797,296 Customers, including 667,241 Subscribers. Customers grew 21% in the fourth quarter of 2022 compared to the fourth quarter of 2021.
As of the end of the fourth quarter of 2022, 39 hedge funds in the database of 943 hedge funds tracked by Insider Monkey had stakes in Sunrun Inc. (NASDAQ:RUN). The biggest hedge fund stakeholder of Sunrun Inc. (NASDAQ:RUN) was William B. Gray’s Orbis Investment Management which had a $293 million stake.
In addition to RUN, some other renewable energy stocks popular among hedge funds include Tesla, Inc. (NASDAQ:TSLA), Enphase Energy, Inc. (NASDAQ:ENPH) and NextEra Energy, Inc. (NYSE:NEE).
5. SolarEdge Technologies, Inc. (NASDAQ:SEDG)
Number of Hedge Fund Holders: 43
One-Year Average Price Estimate: $366.99
Israel-based SolarEdge Technologies, Inc. (NASDAQ:SEDG) ranks 5th in our list of cheap renewable energy stocks according to analysts. SolarEdge Technologies, Inc. (NASDAQ:SEDG) sells solar inverters for photovoltaic arrays.
In February, SolarEdge Technologies, Inc. (NASDAQ:SEDG) posted upbeat Q4 results. Adjusted EPS in the period came in at $2.86, beating estimates by $1.27. Revenue in the quarter jumped 61.4% year over year to reach $890 million, beating estimates by $11.64 million.
SolarEdge Technologies, Inc. (NASDAQ:SEDG) said its revenue from the solar segment was $837.0 million, a record.
Out of the 943 hedge funds tracked by Insider Monkey, 43 hedge funds had stakes in t SolarEdge Technologies, Inc. (NASDAQ:SEDG). The total worth of these stakes was $1.3 billion. The most significant hedge fund stakeholder of SolarEdge Technologies, Inc. (NASDAQ:SEDG) was Richard Mashaal’s Rima Senvest Management which has a $215 million stake in the company.
4. Constellation Energy Corporation (NASDAQ:CEG)
Number of Hedge Fund Holders: 51
One-Year Average Price Estimate: $97.92
Constellation Energy Corporation (NASDAQ:CEG) is one of the cheap renewable energy stocks according to analysts. Constellation Energy Corporation (NASDAQ:CEG) was trading at around $76.5 as of April 6 morning, while its one-year average analyst price estimate is $97.92. This shows a strong upside potential.
Constellation Energy Corporation (NASDAQ:CEG) recently announced that hydrogen production has started at its Nine Mile Point Nuclear Plant in New York.
As of the end of the fourth quarter of 2022, 51 hedge funds tracked by Insider Monkey were bullish on Constellation Energy Corporation (NASDAQ:CEG). The total worth of these hedge funds’ stakes was $2.4 billion. The biggest hedge fund stakeholder of Constellation Energy Corporation (NASDAQ:CEG) was William B. Gray’s Orbis Investment Management which owns a $357 million stake.
Alger Capital made the following comment about Constellation Energy Corporation (NASDAQ:CEG) in its Q3 2022 investor letter:
“Constellation Energy Corporation (NASDAQ:CEG) is America’s leading clean energy company, based on carbon-free production. The company is the largest supplier of clean energy and sustainable solutions to homes, businesses, governments, community aggregations, and a range of wholesale customers (such as municipalities, cooperatives, and other end markets) across the continental U.S., backed by approximately 32,400 megawatts of generating capacity consisting of nuclear, wind, solar, natural gas and hydroelectric assets. Constellation produces nearly 10% of the nation’s carbon-free energy.
Shares outperformed during the third quarter primarily due to the Inflation Reduction Act (IRA). Signed into law in august, the bill provides a nuclear production tax credit of approximately $43.75 per megawatt hour of energy generated. This credit favorably impacted earnings, resulting in an increase in Constellation’s share price.”
3. NextEra Energy, Inc. (NYSE:NEE)
Number of Hedge Fund Holders: 61
One-Year Average Price Estimate: $94.85
Morgan Stanley recently shared its best long-term stocks to buy list. NextEra Energy, Inc. (NYSE:NEE) was in the list, as the firm sees prospects for NextEra to “be among the leaders in building out these new markets and capturing attractive low-risk returns.” The firm has a $97 price target on NextEra Energy, Inc. (NYSE:NEE).
As of the end of the last quarter of 2022, 61 hedge funds tracked by Insider Monkey had stakes in NextEra Energy, Inc. (NYSE:NEE). The total value of these hedge funds was $2.1 billion. The biggest hedge fund stakeholder of NextEra Energy, Inc. (NYSE:NEE) was Phill Gross and Robert Atchinson’s Adage Capital Management $169 million.
2. Enphase Energy, Inc. (NASDAQ:ENPH)
Number of Hedge Fund Holders: 63
One-Year Average Price Estimate: $294.00
Enphase Energy, Inc. (NASDAQ:ENPH)’s one-year average price target estimate by analysts stands at $294, which presents an attractive upside potential from the current levels. Recently, Goldman Sachs shared a list of high-margin growth stocks. Enphase Energy, Inc. (NASDAQ:ENPH) was in the list. Goldman said that its “Long Duration basket has outperformed the Short Duration basket by 6 pp YTD”. The firm said that this has created an “asymmetry” that supports its thesis to own high-margin growth stocks versus low-margin growth stocks.
As of the end of the fourth quarter of 2022, 63 hedge funds tracked by Insider Monkey had stakes in Enphase Energy, Inc. (NASDAQ:ENPH). The total value of these hedge funds’ stakes was $2.2 billion.
ClearBridge Investments made the following comment about Enphase Energy, Inc. (NASDAQ:ENPH) in its Q3 2022 investor letter:
“In IT, Enphase Energy, Inc. (NASDAQ:ENPH) delivered a strong quarter driven by secular growth in global rooftop solar, increased penetration into Europe, where demand accelerated, and a continued ramp up in battery storage sales. Also with a strong presence in the U.S., Enphase Energy designs and manufactures microinverters for residential and small commercial solar PV systems and has made strides in evolving from a solar inverter maker into a “home energy management” company that can act as the brains for the home’s energy system, including microinverters for solar, as well as storage and energy management software.”
1. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 91
One-Year Average Price Estimate: $199.16
According to data compiled by CNN Business, 35 analysts have a median price target of $218 for Tesla, Inc. (NASDAQ:TSLA). According to Yahoo Finance, Tesla, Inc. (NASDAQ:TSLA)’s one-year average analyst price estimate is $199.16. Cathie Wood, one of the biggest Tesla, Inc. (NASDAQ:TSLA) bulls, believes the stock could reach $500 by 2026.
Hedge funds are also bullish on Tesla, Inc. (NASDAQ:TSLA). Insider Monkey’s database of 943 hedge funds shows that 91 hedge funds had stakes in Tesla, Inc. (NASDAQ:TSLA). The biggest stakeholder of Tesla, Inc. (NASDAQ:TSLA) was Ken Griffin’s Citadel Investment Group which had a $926 million stake in Tesla, Inc. (NASDAQ:TSLA).
Latest data shows that Tesla, Inc. (NASDAQ:TSLA) sold 88,869 China-made EVs in March, which shows a 35% YoY increase.
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Disclosure: None. 10 Cheap Renewable Energy Stocks to Buy Now is originally published on Insider Monkey.
