In this article, we will take a look at the 10 best alternative fuel stocks to buy now.
Over the past few years, there has been a major shift towards alternative fuel sources because of their proven benefits. The demand for alternative fuel will continue to increase given its huge potential in the global market. Data shows that the global alternative fuel vehicle market alone was worth $392.92 billion in 2019 and is projected to increase at a CAGR of 15.5% to $1,244.4 billion by 2027. Between 2014 and 2019, in the United States alone, the number of fuel stations that allowed electric vehicle recharging more than tripled, from roughly 25,600 to 78,300. Excluding electric cars, alternative fuel charging stations increased by approximately 14% during the period.
The Rise of the Alternative Fuel Industry
Tesla, Inc. (NASDAQ:TSLA) is one of the pioneers in the electric vehicle and alternative fuel industry. But today, there are literally hundreds of companies in the world that are working on extremely innovative technologies in this emerging space. Latest media reports suggest that Tesla (NASDAQ:TSLA) is trying to strike a battery supply deal with Chinese battery maker EVE Energy. Tesla shares are currently fluctuating as online chatter suggests that Elon Musk is dumping Bitcoin and buying other cryptocurrencies instead.
Innovators worldwide continue to develop innovative solutions to alter the use of electricity. For instance, startup kinetic energy manufacturer Constructis is engaged in the manufacturing of roadway energy platforms that generate electricity from roads. The company collects the energy generated by automobiles and turns it into reusable energy through their Roadway Energy X (REX). REX generates 1,000 watts of electricity for every 2-axle vehicle. The platform cuts up to 70 tons of greenhouse gas pollution annually.
Another notable startup company that focuses on alternative energy is American Wind. The company inverts the windmill strategy to make it smaller and more direct to the energy source by the use of their 1-kilowatt generator crammed into a generator with a diameter of just 3 inches.
Jennie Book / Shutterstock.com
Alternative Fuel in the Automotive Industry
The increasing demand for alternative fuel has led to more companies making the shift towards a cleaner fuel source including Japanese multinational automotive manufacturer Toyota Motor Corporation (NYSE:TM). In 2019, Toyota Motor Corporation (NYSE:TM) launched a redesigned hydrogen-powered fuel cell vehicle in an attempt to compete with Tesla, Inc. (NASDAQ:TSLA). Toyota Motor Corporation (NYSE:TM)’s hydrogen fuel cell vehicle, Mirai, is a mid-size luxury car unit classified as a 4-door sedan. In 2019, the total number of units sold worldwide was 10,250. The top-selling markets were the United States with 6,200 units, and Japan with 3,500 units sold. Toyota Motor Corporation (NYSE:TM) currently has a market cap of $216.4 billion. Shares of TM rose 33% over the last twelve months.
Another vehicle manufacturing company that is striving to compete with Tesla, Inc. (NASDAQ:TSLA) is Nikola Corporation (NASDAQ:NKLA). The company uses hydrogen fuel cell technology to operate its zero-emission trucks. In 2024, the company targets to lease 5,000 hydrogen-fuel units. Nikola Corporation (NASDAQ:NKLA) currently has a market cap of $4.7 billion. Shares of Nikola Corporation jumped 10% over the last month. On May 10, Deutsche Bank maintained Hold on Nikola Corporation (NASDAQ:NKLA) and lowered the price target to $16.
Another notable corporation that uses fuel cells is multinational automotive manufacturer Hyundai Motor Company. In 2020, the company delivered its first seven units of XCIENT Fuel Cell, a fuel cell electric heavy-duty truck, to purchasers in Switzerland. In 2021, Hyundai Motor Company intends to produce 2,000 units to fund expansion for clean energy in Europe, the United States, and China.
Just like the energy markets, the hedge fund industry is also seeing the winds of change. 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.
Let’s now take a look at the 10 best alternative fuel stocks to buy now.
Best Alternative Fuel Stocks to Buy Now
10. Atlantica Sustainable Infrastructure plc (NASDAQ: AY).
Number of Hedge Fund Holders: 14
Total Value of Hedge Fund Holdings: $98.1 Million
Ranking 10th in our list of the 10 best alternative fuel stocks to buy now is Atlantica Sustainable Infrastructure plc (NASDAQ:AY). It is a United Kingdom-based solar energy company that maintains and manages natural gas fields and provides transmission, distribution, and water resource options. In March 2021, the company agreed to buy Coso Geothermal Power Holdings, LLC, for $170 million. Coso is a 135 megawatt (MW) geothermal power station.
Atlantica Sustainable Infrastructure plc (NASDAQ:AY) has a market cap of $3.82 billion. Atlantica Sustainable Infrastructure plc’s revenue in the first quarter of 2021 came in at $235.2 million, an 11.8% increase compared to the same period of 2020. Shares of AY surged 51% over the past twelve months. In April, Morgan Stanley maintained an Overweight rating on Atlantica Sustainable and lowered the price target to $43.
There were 14 hedge funds that reported owning stakes in Atlantica Sustainable Infrastructure plc (NASDAQ:AY) at the end of the fourth quarter. The total value of these stakes at the end of Q4 is $98 million.
9. Renewable Energy Group, Inc. (NASDAQ: REGI)
Number of Hedge Fund Holders: 16
Total Value of Hedge Fund Holdings: $66.8 Million
Renewable Energy Group, Inc. (NASDAQ:REGI) ranks 9th on the list of best alternative fuel stocks to buy now. The Iowa-based biodiesel production company has over 13 biorefineries and one feedstock processing facility. On May 4, Piper Sandler maintained an Overweight rating on Renewable Energy Group, Inc. and lowered the price target to $97.
Renewable Energy Group, Inc. (NASDAQ:REGI) has a market cap of $2.76 billion. The company’s revenue in the first quarter of 2021 came in at $540 million on 134 million gallons of fuel sold. Shares of REGI surged 162% over the last twelve months. Unlike Tesla, Inc. (NASDAQ:TSLA) and Toyota Motor Corporation (NYSE:TM), REGI is one of the affordable stocks to buy to gain exposure to the alternative fuels market.
There were 16 hedge funds that reported owning stakes in Renewable Energy Group, Inc. (NASDAQ:REGI) at the end of the fourth quarter, down from 30 funds a quarter earlier. The total value of these stakes at the end of Q4 is $66.8 million.
8. Ormat Technologies, Inc. (NYSE: ORA)
Number of Hedge Fund Holders: 16
Total Value of Hedge Fund Holdings: $276 Million
Ranking 8th in our list of the 10 best alternative fuel stocks to buy now is Ormat Technologies, Inc. (NYSE:ORA). The alternative fuel company has over 933 megawatts (MW) of geothermal and recovered energy-based power plants located in Reno, Nevada, and the USA. Furthermore, the company delivers clean energy and energy options to customers worldwide. Last month, Ormat Technologies’ Heber South geothermal power plant in California concluded a 15-year power purchase deal with Clean Power Alliance (CPA), one of the largest electricity providers in California. The partnership will provide CPA with 14 MW of clean, green electricity from ORA’s geothermal facility located in Imperial Valley, CA.
Ormat Technologies, Inc. (NYSE:ORA) currently offers a dividend yield of 0.72% and posted its total revenue of $705.3 million in 2020. On February 2, Roth Capital maintained a Neutral rating on Ormat Technologies, Inc. and raised the price target to $100.
There were 16 hedge funds that reported owning stakes in Ormat Technologies, Inc. (NYSE:ORA) at the end of the fourth quarter, down from 19 hedge funds during the third quarter.
7. NextEra Energy, Inc (NYSE: NEE)
Number of Hedge Fund Holders: 61
Total Value of Hedge Fund Holdings: $3.07 Billion
Ranking 7th in our list of the 10 best alternative fuel stocks to buy now is American energy company NextEra Energy, Inc (NYSE:NEE). The Florida-based leading global bank has over 200 million customer accounts. In April 2021, NextEra Energy Partners reached a binding deal to buy Brookfield Renewable’s 391 megawatts (MW) wind portfolio in the United States. The agreement includes facilities in California, specifically Alta Wind VIII, Windstar and Coram, and the Granite facility in New Hampshire.
NextEra Energy, Inc (NYSE:NEE) has a market cap of $142.4 billion. In the first quarter of 2021, NextEra Energy, Inc’s earnings came in at $1.33 billion. Shares of NEE rose 28% over the past twelve months. On April 20, Morgan Stanley maintained an Equal-Weight rating on NextEra Energy and raised the price target to $72.
There were 61 hedge funds that reported owning stakes in NextEra Energy, Inc (NYSE:NEE) at the end of the fourth quarter, down from 64 funds a quarter earlier. The total value of these stakes at the end of Q4 is $3.07 billion.
6. Covanta Holding Corporation (NYSE: CVA)
Number of Hedge Fund Holders: 21
Total Value of Hedge Fund Holdings: $148 Million
New Jersey-based energy-from-waste and industrial waste management services Covanta Holding Corporation (NYSE:CVA) ranks 6th in the list of 10 best alternative fuel stocks to buy now. The company was founded in 1986 and has over 30 waste-to-energy power generation plants worldwide. At the beginning of the year, Covanta joined forces with North Hempstead to generate a long-term waste management approach. The agreement will reduce truck traffic on congested roads and remove around 4,000 tons of carbon dioxide from automotive pollution per year.
Covanta Holding Corporation (NYSE:CVA) has a market cap of $1.98 billion. As of May 14, the company offers a dividend yield of 2.20%. The company’s revenue in the first quarter of 2021 came in at $498 million. Shares of CVA jumped 82% over the last twelve months.
Like Nikola Corporation (NASDAQ:NKLA), Tesla, Inc. (NASDAQ:TSLA) and Toyota Motor Corporation (NYSE:TM), CVA is one of the best alternative fuel stocks to buy now.
There were 21 hedge funds that reported owning stakes in Covanta Holding Corporation (NYSE:CVA) at the end of the fourth quarter. The total value of these stakes at the end of Q4 is $148 million.
5. Solaredge Technologies, Inc. (NASDAQ: SEDG)
Number of Hedge Fund Holders: 31
Total Value of Hedge Fund Holdings: $358 Million
The 5th best alternative fuel stock to buy now is Solaredge Technologies, Inc. (NASDAQ:SEDG). The California-based power optimizer and solar inverter shipped over 65.3 million power optimizers and more than 1.9 million PV installations. Solaredge Technologies, Inc. (NASDAQ:SEDG) has a market cap of $10.6 billion. The company’s total revenue came in at $405.5 million in the first quarter of 2021. Shares of SEDG surged 81% over the last twelve months.
There were 28 hedge funds that reported owning stakes in Solaredge Technologies, Inc. (NASDAQ:SEDG) at the end of the fourth quarter, down from 31 funds a quarter earlier. The total value of these stakes at the end of Q4 is $358 million.
Richie Capital Group mentioned that Solaredge Technologies, Inc. (NASDAQ:SEDG) was one of their biggest skeptics in its 1Q 2021 investor letter:
“Our biggest detractors for the quarter included SolarEdge Technologies (SEDG – down 11.2%) – The Smart Energy solar company declined during the quarter along with most other solar energy stocks due to concerns over higher interest rates. Higher interest rates will make it more expensive for businesses and consumers to borrow money for residential and commercial solar projects. We expect interest rates to be somewhat of a headwind for years to come. However, the stronger underlying trends are in their favor. We expect SEDG to be a net winner from the Biden Administration’s infrastructure plan which focuses on Clean Energy.”
4. Evergy, Inc. (NYSE: EVRG)
Number of Hedge Fund Holders: 33
Total Value of Hedge Fund Holdings: $1.40 Billion
Ranking 4th in our list of the 10 best alternative fuel stocks to buy now is Evergy, Inc. (NYSE:EVRG). The Missouri-based multinational clean energy provider has over 1.6 million customers in Kansas. Evergy, Inc. (NYSE:EVRG) has a market cap of $14.4 billion and total revenue in the first quarter of 2021 of $1.61 billion. In April, Wolfe Research upgraded Evergy to Outperform from Peer Perform, with a $69 price target.
There were 33 hedge funds that reported owning stakes in Evergy, Inc. (NYSE:EVRG) at the end of the fourth quarter, down from 37 funds a quarter earlier. The total value of these stakes at the end of Q4 is $1.40 billion.
3. First Solar, Inc. (NASDAQ: FSLR)
Number of Hedge Fund Holders: 34
Total Value of Hedge Fund Holdings: 406 Million
Ranking 3nd in our list of 10 best alternative fuel stocks to buy now is First Solar, Inc. (NASDAQ:FSLR). The Arizona-based solar panel manufactures and provides utility-scale PV power plants. Earlier this month, the company began a partnership with Nel Hydrogen Electrolyser, a division of Nel ASA, to establish a supervisory monitoring and data acquisition system for automated power plant control.
First Solar, Inc. (NASDAQ:FSLR) has a market cap of $7.39 billion. The company’s net sales in the first quarter of 2021 came in at $803 million. Shares of FSLR jumped 84% over the past twelve months. In May, B of A Securities upgraded First Solar to Neutral and announced a price target of $86.
There were 34 hedge funds that reported owning stakes in First Solar, Inc. (NASDAQ:FSLR) at the end of the fourth quarter. The total value of these stakes at the end of Q4 is $406 million.
White Brook Capital, in their Q1 2021 investor letter, mentioned First Solar, Inc. (NASDAQ: FSLR) and Itron, Inc. (NASDAQ: ITRI). Here is what White Brook Capital has to say in its letter:
“First Solar (FSLR) and Itron (ITRI), both of which I’ve written about in past In Focus sections were long-term positions that were sold as their prices exceeded price targets. Both are solid companies that remain on my watchlist, but the opportunity cost of not investing in other potential investments exceeded their potential mid-term returns.”
2. Enphase Energy, Inc. (NASDAQ: ENPH)
Number of Hedge Fund Holders: 48
Total Value of Hedge Fund Holdings: $988 Million
California-based energy technology company Enphase Energy, Inc. (NASDAQ:ENPH) ranks 2nd in our list of 10 best alternative fuel stocks to buy now. The company was founded in 2006 and is engaged in planning, creating, manufacturing, and retailing home energy solutions for the solar photovoltaic industry. In April, transport operator Transdev announced they selected Enphase to deploy microinverters for the first solar-powered public transport in Australia. On May 13, Capital One initiated coverage on Enphase Energy with an Overweight rating and announced a price target of $175.
Enphase Energy, Inc. (NASDAQ:ENPH) has a market cap of $15.5 billion. The company’s quarterly revenue in the first quarter of 2021 came in at $301.8 million. Shares of ENPH increased 105% over the past twelve months.
There were 48 hedge funds that reported owning stakes in Enphase Energy, Inc. (NASDAQ:ENPH) at the end of the fourth quarter, down from 42 funds a quarter earlier. The total value of these stakes at the end of Q4 is $988 million.
1. Equinor ASA (NYSE: EQNR)
Number of Hedge Fund Holders: 18
Total Value of Hedge Fund Holdings: $238 Million
Norway-based oil and gas exploration company Equinor ASA (NYSE:EQNR) is one of the best alternative fuel stocks to buy now. Equinor ASA operates in over 30 countries worldwide. At the beginning of the year, the company finalized an agreement with BP plc (NYSE:BP) to develop around 4.4 gigawatts (GW) through the New York Empire Wind and Beacon Wind coast projects.
Equinor ASA (NYSE:EQNR) has a market cap of $68.8 billion. The company’s adjusted earnings in the first quarter of 2021 came in at $5.47 billion. Shares of EQNR surged 61% over the past twelve months. On April 30, Kepler Cheuvreux downgraded Equinor ASA to Hold.
There were 18 hedge funds that reported owning stakes in Equinor ASA (NYSE:EQNR) at the end of the fourth quarter, down from 20 funds a quarter earlier. The total value of these stakes at the end of Q4 is $238 million. Unlike Tesla, Inc. (NASDAQ:TSLA) and Toyota Motor Corporation (NYSE:TM), EQNR is one of the affordable stocks to buy to gain exposure to the alternative fuels market.
In one of its investor letters, Massif Capital highlighted a few stocks and Equinor Asa (NYSE:EQNR) is one of them. Here is what Massif Capital said:
“Equinor (EQNX) serves as a strong ballast position with a large resource base, strong balance sheet, and the added benefit of an appealing dividend that will almost certainly be reconsidered by management, but is generally secure. Equnior is also driving its business towards a more sustainable and less carbon-intensive model. Equinor is developing and operating some of the lowest carbon-intensive oil reserves in the world. This signficantly reduces their risk of future stranded assets. Meeting the terms of the UN Paris Agreement would leave 29% of oil reserves stranded and eliminate roughly $360 billion in the value of the top 13 international oil companies by reserves. Equivalent to greater than 1/6th of their total enterprise value. We believe that EQNR has limited downside risk in this regard and will play an essential role in the evolving energy landscape as it burnishes its green credentials with interests in offshore wind.”
You can also take a peek at 10 Best Wind Energy and Renewables Stocks to Buy in 2021 and 10 Best Video Conferencing Stocks to Buy.
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Disclosure: None. 10 Best Alternative Fuel Stocks to Buy Now is originally published on Insider Monkey.
