11 Most Undervalued Renewable Energy Stocks to Buy According to Hedge Funds

Published August 23, 2023 at 5:49 pm EDT Updated August 19, 2026 at 10:19 am EDT

In this article, we discuss the 11 most undervalued renewable energy stocks to buy according to hedge funds.

Renewable energy is the fastest-growing energy source in the world as most companies and countries around the world are targeting net zero carbon emissions by 2050. Between 2010 to 2020, renewable energy usage increased by 42% and accounted for 20 percent of utility-scale U.S. electricity generation. The Energy Information Agency (EIA) believes that in 2024, electricity usage through renewables will reach 26% in the US. Furthermore, in 2023, the International Energy Agency (IEA) predicts that global energy sector investments will be at $2.8 trillion, and nearly 61% of that total is expected to be accounted for by renewable energy sources.

The biggest economies of the world, the USA and China, have been making significant investments in the industry. In 2022, nearly half of all green energy investments were made in China. The country invested $546 billion in clean energy in 2022, surpassing the United States which made investments worth $141 billion during the same period. Moreover, the European Union recently reached a provisional deal to increase the percentage of renewable energy to 42.5% by 2030 from the current 32%. Since the Paris Agreement of 2015, investments in renewable energy have nearly tripled. Renewable energy investments are also catching pace in South Asian countries as India plans to deploy solar investments of around $25 billion between 2022 to 2027.

Challenges Faced by the Renewables Segment

Despite being the fastest-growing segment in the energy sector, installation of clean energy does have its challenges. Weather conditions and time of day significantly affect renewable energy deployment. For example, in 2023, solar energy stocks have been showing a downward trend as storms and rains have delayed solar panel installations.

In addition to that, the renewable energy infrastructure costs are quite significant even though the alternative energy usage costs have declined remarkably over the years. Nevertheless, as the technology grows, the costs might go down exponentially. A major factor behind the high costs of clean energy infrastructure is the interest rate hikes by the Federal Reserve since early 2022. The high interest rates have affected the deployment as companies mostly borrow money to cover the initial cost of installations and high interest causes an increase in expenditures.

Exelon Corporation (NASDAQ:EXC) was one of the companies that was affected by both of the above-mentioned challenges as mentioned by the Chief Financial Officer of the company, Jeanne Jone during the Q2 2023 earnings conference call:

“Earnings are lower in the second quarter relative to the same period last year, driven primarily by $0.04 of higher interest expense due to the rise in interest rates and higher levels of debt at the holding company and at some of our utilities as well as $0.03 of unfavorable weather at PECO.”

Despite the challenges faced by the renewable energy industry, it is still expected to grow at a tremendous rate and its market size is expected to reach around $2 trillion by 2030. To take advantage of this growth, investors can look towards some prominent clean energy stocks such as Tesla, Inc. (NASDAQ:TSLA), General Electric Company (NYSE:GE), and NextEra Energy, Inc. (NYSE:NEE).

11 Most Undervalued Renewable Energy Stocks To Buy According To Hedge Funds

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Our Methodology

After a thorough research of the renewable energy industry, we selected the stocks with the highest number of hedge fund holders in the second quarter of 2023. The hedge fund sentiment around each stock was taken from Insider Monkey’s database of 910 elite hedge funds.

We only chose the stocks that have notable operations or infrastructure in the renewable energy segment and skipped the stocks whose investments in the sector are still in the initial phases.

11 Most Undervalued Renewable Energy Stocks To Buy According To Hedge Funds

11. NRG Energy, Inc. (NYSE:NRG)

Number of Hedge Fund Holders: 39

NRG Energy, Inc. (NYSE:NRG) is a Texas-based energy company that provides electric utilities to over 7 million customers in the United States. The company distributes electricity through natural gas, coal, oil, nuclear, wind, and solar power sources.

In the last three months, 3 out of 4 Wall Street analysts have maintained a Buy rating on NRG Energy, Inc.. The average analyst price target of $44.25 suggests over 19.5% upside to its stock price on August 21. On July 20, BoFA maintained a Buy rating on the company stock and raised its price target to $46 from $43.

In the second quarter, NRG Energy, Inc. was owned by 39 hedge funds with a combined stake value of $1.074 billion.

Tesla, Inc., General Electric Company, and NextEra Energy, Inc. are some of the most undervalued renewable energy stocks along with NRG Energy, Inc..

Legacy Ridge Capital made the following comment about NRG Energy, Inc. in its Q4 2022 investor letter:

“NRG Energy, Inc. was covered in the 2019 letter with VST. We sold the shares as COVID induced volatility presented better risk/reward opportunities, but never subsequently repurchased shares—as we did with VST. Not only do we think VST is a better value, but the management team at NRG appears to have gone astray. Despite coming to his position during an activist campaign by Elliott Management in 2017, when the prior empire-building CEO was shown the door, the replacement CEO has seemingly embarked on the same failed strategy. In early December they announced the purchase of Vivint Smart Home, a smart home platform company, for $2.8 billion. The transaction diversifies NRG’s business, increases leverage, dramatically reduces intermediate-term shareholder capital returns, and most importantly, is the opposite of what management told us they were going to do when they assumed the role in 2017. The stock fell 15% on the day of the announcement and is down another 5% since then, and now 10% lower than when we first wrote about it. We like the generation business at NRG and the valuation is almost back to interesting, but we’d probably have to see turnover in the C-suite and a refreshed corporate strategy to reignite our enthusiasm.”

10. SolarEdge Technologies, Inc. (NASDAQ:SEDG)

Number of Hedge Fund Holders: 43

SolarEdge Technologies, Inc. (NASDAQ:SEDG) is a renewable energy company that develops DC-optimized inverter systems for solar power technology. The company is headquartered in Israel and operates globally.

SolarEdge Technologies, Inc.’s stock was owned by 43 hedge funds in the second quarter of 2023, compared to 42 in the previous quarter. D E Shaw increased its stake in the company by 68% in Q2 and remained the largest stakeholder for the second quarter in a row. The firm owned 1.5 million shares of SolarEdge Technologies, Inc. worth $404.651 million.

In the last three months, 13 out of 16 Wall Street analysts have kept a Buy or Overweight rating on SolarEdge Technologies, Inc. stock. The average analyst target for the company is $310.06, compared to the stock price of $163 at the August 21 market close.

9. Shell plc (NYSE:SHEL)

Number of Hedge Fund Holders: 43

Shell plc (NYSE:SHEL) is a British integrated oil and gas company. It also has significant operations in renewable energy such as hydrogen and biofuels. The company also has investments in electric vehicle charging infrastructure. Shell plc (NYSE:SHEL) is targeting to reduce half of its greenhouse gas emissions by 2050.

On July 27, Shell plc (NYSE:SHEL) increased its quarterly dividend per American Depository Share by 15% to $0.662. The dividend will be payable by September 18 to the shareholders of record on August 11. On top of that, Shell plc (NYSE:SHEL) also authorized a $3 billion share repurchase program on the same day.

Third Point Management made the following comment about Shell plc (NYSE:SHEL) in its second quarter 2023 investor letter:

“We initiated a position in Shell plc (NYSE:SHEL) in the summer of 2021 and highlighted the company’s significant discount to intrinsic value as well as to US-listed peers after decades of poor performance. While shares have performed well since we initiated the investment, the company still trades at staggering discount to intrinsic value and represents a compelling investment at current levels. We initially argued (and still believe) that the fastest path to improved performance and better valuation would be a separation of Shell’s business units to better attract shareholders and improve accountability, the latter of which was essential when the company was in the hands of executives who had demonstrated virtually no focus on shareholder value creation.

The most important change at Shell over the past two years has been the upgrade in the management team, with the appointments of Wael Sawan as CEO and Sinead Gorman as CFO. They have demonstrated an unwavering commitment to shareholder value, capital discipline, and improved returns. At their recent analyst day, Mr. Sawan stated “underpinning all that we do will be a ruthless focus on performance, discipline, and simplification.” It was the third time they used the term “ruthless” in their presentation, sending a strong message to shareholders…” (Click here to read the full text)

8. Constellation Energy Corporation (NASDAQ:CEG)

Number of Hedge Fund Holders: 46

Constellation Energy Corporation (NASDAQ:CEG) is an American company that provides electric power, natural gas, and energy management services in the United States. It provides utilities to its customers through fossil fuels, nuclear energy, and renewables. Constellation Energy Corporation was founded in 1999 and is headquartered in Baltimore, Maryland.

On August 3, Constellation Energy Corporation posted strong Q2 results with a GAAP EPS of $2.56, outperforming the estimates by a huge margin of $1.94. Its revenue of $5.45 billion exceeded the forecasts by $900 million. The company’s stock closed at $101.14 on the day, registering a 5.85% increase from the August 2 close. Constellation Energy Corporation closed at its all-time high of $107 on August 14.

Constellation Energy Corporation stock was owned by 46 hedge funds in Q2 2023, at a combined value of $1.85 billion.

Alger Capital made the following comment about Constellation Energy Corporation in its Q3 2022 investor letter:

“Constellation Energy Corporation 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.”

7. Vistra Corp. (NYSE:VST)

Number of Hedge Fund Holders: 48

Vistra Corp. (NYSE:VST) is a Texas-based electricity and power generation company. It owns the world’s largest battery energy storage system at its Moss Landing Power Plant project in California. Additionally, Vistra Corp. provides electricity through several sources, including solar, wind, nuclear, and natural gas.

Vistra Corp.’s stock was a part of 48 investment portfolios in Q2 2023 and their total stake was valued at $1.58 billion. In the previous quarter, it was owned by 46 hedge funds with a total stake value of $1.51 billion. Oaktree Capital Management held the largest stake in the company with 17 million shares worth $446.25 million.

Vistra Corp. declared a quarterly dividend of $0.206 per share, compared to the previous $0.204. It is payable by September 29 to the shareholders of record on September 20. The company has raised its dividend for the last four years and has a yield of 2.75% as of August 21.

Legacy Ridge Capital made the following comment about Vistra Corp. in its Q4 2022 investor letter:

“I sent the 2019 letter on February 10, 2020. Vistra Corp. closed that day at $22.27. As I write in early January the price is $22.30. Now I did say “We would actually prefer it if both (VST & NRG) securities went nowhere for as long possible”—assuming repurchased shares at depressed valuations was our best-case scenario. But A) I didn’t think I’d be that right with respect to “nowhere”, and B) I certainly didn’t think I’d be right 3-years on. Here we are though, with the stock literally going nowhere for the last 3-years. Just like we drew it up!

“Management has indeed repurchased 20.3% of the shares outstanding since year-end 2019 and will probably repurchase another 12-15% of the outstanding shares in 2023. My initial assumption was that management could plausibly repurchase 60% of their shares by 2030, leaving them with 200mn outstanding (that assumed shares were appreciating and they had to pay more as the years went on, not what’s transpired so far), but at the current pace of about 50mn shares repurchased per year, they’ll hit that mark by the end of 2026, which would imply free cash flow of $10 pershare if the underlying business continues to perform as it currently is. That’s a 45% FCF yield on today’s price. Meanwhile, dividends per share have grown 54% since 2019 and the stock now yields 3.5%, growing about 15% a year.

Being paid to wait makes waiting much easier. We had sold VST shares in mid-2020, replacing some of the position with call options, to free up capital for other opportunities that became available. But when winter storm Uri hit Texas in February 2021 and VST shares went down 20%+, below $17 a share, we rebuilt our common equity position. Today VST oscillates between the biggest and second biggest position in the fund, depending on weekly performance.”

6. Enphase Energy, Inc. (NASDAQ:ENPH)

Number of Hedge Fund Holders: 50

Enphase Energy, Inc. (NASDAQ:ENPH) provides solar power solutions, battery energy storage solutions, and EV charging stations. The company focuses primarily on residential customers. Enphase Energy, Inc. is headquartered in California and serves over 140 countries. With 50 hedge funds holding a stake in the company, it is our 6th most undervalued renewable energy stock to buy according to hedge funds.

Enphase Energy, Inc. has been covered by 24 analysts in the last three months according to Tipranks. 17 of those analysts are bullish on the company stock and the average price target of all the analysts is $199.86, showing a 53.55% upside to its stock price of $130.16 on August 21. Enphase Energy, Inc. is one of the most undervalued technology stocks according to Wall Street analysts.

Enphase Energy, Inc. joins the likes of Tesla, Inc., General Electric Company, and NextEra Energy, Inc. in our list of most undervalued renewable energy stocks.

Aristotle Atlantic Partners, LLC made the following comment about Enphase Energy, Inc. in its Q1 2023 investor letter:

“Enphase Energy, Inc. designs, develops, manufactures and sells home energy solutions in the U.S. and internationally for the solar industry. The company is the world’s leading manufacturer of microinverters that convert solar-generated D.C. energy to A.C. energy usable in homes and buildings. Enphase introduced the world’s first microinverter system in 2008 and has expanded its offerings to include battery storage systems and proprietary technologies that provide energy monitoring and control services for solar energy systems. It sells its products and solutions directly to solar system distributors, large installers and strategic partners.

We see Enphase having a substantial market share that is gained through a premium product offering, superior customer service and the development of a large and diverse network of solar installers and distributors. The company’s products and services address a growing residential solar market. Coupling battery backup systems with existing and newly installed residential solar systems could accelerate the company’s revenue and earnings growth over the next several years, in our view. Additionally, commercial and international expansion offer additional revenue and earnings upside. Enphase also plans to expand manufacturing capacity in the U.S. during 2023 to benefit from tax incentives related to domestic production included in the Inflation Reduction Act (IRA).”

5. First Solar, Inc. (NASDAQ:FSLR)

Number of Hedge Fund Holders: 50

First Solar, Inc. (NASDAQ:FSLR) is an American solar power company headquartered in Arizona, US. The company provides utility-scale solar power plants and related services including end-of-life panel recycling.

On July 27, First Solar, Inc. announced that it is going to build a fifth manufacturing facility in the United States worth $1.1 billion. On August 10, the company selected the Acadiana Regional Airport in Iberia Parish, Louisiana, to build the facility and it is expected to generate 3.5 gigawatts of electricity. First Solar, Inc. plans to complete this facility by the first half of 2026.

On August 16, Roth MKM analyst Philip Shen reaffirmed a Buy rating on First Solar, Inc.’s stock with a $230 price target. At the time of writing on August 21, the company’s stock price declined by over 14% since August 15 as an independent review found subcontractors were involved in forced labor through foreign migrant workers at First Solar, Inc.’s Malaysian facility. Shen believes that the company’s stock will recover and will “move beyond this issue quickly.”

4. PG&E Corporation (NYSE:PCG)

Number of Hedge Fund Holders: 51

PG&E Corporation, also known as Pacific Gas and Electric Company, is a California-based utility company. The company provides electricity to over 5 million customers in California. The company generates electricity through natural gas, solar plants, hydropower, and nuclear energy.

On August 7, UBS analyst Gregg Orrill upgraded PG&E Corporation’s stock from Neutral to Buy and raised the company’s price target to $21 from $19. The analyst revised his rating and price target on the company stock as he believes that PG&E Corporation has reduced the risk of a major wildfire with its equipment by 90% since 2017-18.

In Q2 2023, PG&E Corporation’s stock was owned by 51 hedge funds. Dan Loeb’s Third Point Management was the most prominent stakeholder in the company with 54 million shares worth $933.120 million.

Third Point Management made the following comment about PG&E Corporation in its Q1 2023 investor letter:

“Our strategy is to preserve liquidity and buying power to take advantage of markets when they “break”. While overall indices remain elevated, we are finding more chances to provide liquidity across all three asset classes in which we invest – credit, structured credit, and equity – opportunities which have been key drivers of performance for the fund. Our portfolio is balanced across industries with a focus on event-driven names including companies involved in spin-offs, significant cost-cutting, or other types of under-appreciated business transformation. PG&E Corporation, which is still our largest position, continues to deliver strong performance, down 50bps in the first quarter but up 6.2% for the year to date after the Fire Victims Trust sold another 60 million shares in a block trade.”

3. NextEra Energy, Inc. (NYSE:NEE)

Number of Hedge Fund Holders: 59

NextEra Energy, Inc. is one of the global leaders in clean energy. The company has 67 gigawatts of generation capability and a majority of it is through renewable sources. The company plans to completely eliminate its carbon emissions by 2045 according to its ‘Real Zero’ plan.

NextEra Energy, Inc. inked two deals in August to supply a combined 335 megawatts of solar energy to two companies. The first one was signed with Nucor Corporation (NYSE:NUE) for 250 megawatts and the second was signed with Ingevity Corporation (NYSE:NGVT) for 85 megawatts.

In the second quarter, NextEra Energy, Inc.’s revenue increased by 42% year-over-year to $7.35 billion, beating the market expectations by $1.18 billion. The company reported a non-GAAP EPS of $0.88, compared to $0.82 estimates.

2. General Electric Company (NYSE:GE)

Number of Hedge Fund Holders: 71

General Electric Company is an American conglomerate headquartered in Boston, Massachusetts. The company’s subsidiary, GE Renewable Energy, develops energy systems that use wind, hydroelectric, and solar power.

In the second quarter, 71 hedge funds had a stake worth nearly $10.2 billion in General Electric Company. In the previous quarter, the company was a part of 59 hedge fund portfolios with a combined stake of $7.6 billion. The most prominent stake in Q2 was held by Chris Hohn’s TCI Fund Management with 41.65 million General Electric Company shares worth $4.575 billion.

In Q2, General Electric Company reported a non-GAAP EPS of $0.68 and revenues of $16.7 billion, outperforming the estimates by $0.22 and $1.5 billion, respectively. The company raised its FY 2023 organic revenue growth outlook to a low-double-digit range from the prior high-single-digit range and expects an adjusted EPS of $2.10 to $2.30, up from the previous outlook of $1.70 to $2.00.

Vulcan Value Partners made the following comment about General Electric Company in its Q1 2023 investor letter:

“General Electric Company was a material contributor during the quarter. With the successful spin-off of GE HealthCare in early January, the company operates in two major markets: GE Aerospace and GE Vernova. GE Aerospace powers three out of every four commercial flights. GE Vernova helps generate 30% of the world’s electricity and has a meaningful role to play in the energy transition. The company’s service activities, which are higher margin and more resilient, represent approximately 60% of revenue and 85% of its backlog. The company reported strong fourth quarter 2022 results and management’s 2023 outlook is positive.”

1. Tesla, Inc. (NASDAQ:TSLA)

Number of Hedge Fund Holders: 79

Tesla, Inc. is primarily known for its electric vehicles and has captured the biggest market share in the electric vehicle industry. The company also operates battery storage solutions and provides solar energy solutions to its consumers.

According to the Insider Monkey database, Tesla, Inc. was held by 79 hedge funds in the second quarter of 2023, making it the most undervalued renewable energy stock to buy according to hedge funds. Cathie Wood of ARK Investment Management has been bullish on Tesla, Inc. for a long time and was the most prominent hedge fund holder of the company. ARK believes that the company’s stock price could reach $2000 by 2027.

Baron Funds made the following comment about Tesla, Inc. in its Q1 2023 investor letter:

“Tesla, Inc. designs, manufactures, and sells EVs, related software and components, and solar and energy storage products. Following a sharp decline at the end of 2022, Tesla’s stock rebounded in the first quarter of 2023 on investor expectations that Tesla will continue to grow vehicle deliveries and maintain solid gross and operating margins despite a potential recession, competition in China, and vehicle price reductions. We wrote a long piece on Tesla last quarter and refer readers back to it, because for long-term investors not much has changed over the last three months. Tesla did hold its first Investor Day in March, and several Baron analysts and portfolio managers attended. We toured the Austin Gigafactory, drove in a Cybertruck, boarded a Semi truck, and spoke with a wide swath of Tesla senior managers. During the formal presentation, Tesla highlighted, among other things: (1) its broad and deep bench of executive talent supporting CEO Elon Musk; (2) its “Master Plan 3–Sustainable Energy for All of Earth,” which featured EVs, renewable power from solar and wind, and stationary electric storage; (3) its vehicle assembly innovations, including massive casted parts (building Model Y bodies with single front and rear castings, replacing a substantial number of parts and fastening steps), a stainless steel exoskeleton (for Cybertruck), and its next-generation highly efficient “unboxed process” for its next-gen $25,000 vehicle; (4) a future permanent[1]magnet electric motor that will not require any rare earths; and (5) the massive untapped market opportunity for commercial stationary electric storage, branded Megapack, as the world steadily shifts to renewable energy. As long-term shareholders, we have witnessed Tesla exploit its innovative Model 3/Y now-global mass-market platform to increase vehicle deliveries from barely a standing start to over 1.3 million units, while achieving industry-leading margins and reinforcing its iron-clad balance sheet to almost $23 billion in cash (and effectively no recourse debt). We expect Tesla’s next-generation EV and Megapack products to have a similar impact on company results.”

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