The precipitous fall in oil prices over the last eight months hasn’t been kind to energy stocks, which have taken a beating as oil prices were cut in half.
With no end in sight to the global supply glut and as Saudi princes parade around declaring that the days of $100 oil will never reoccur, energy has become an intimidating sector to invest in.
Alternative energy stocks, on the other hand, largely avoid the geopolitical risks that go hand-in-hand with oil stocks. As an added benefit, alternative energy is a more nascent industry with loads of opportunity for pioneering investors.
With the world’s largest company, Apple Inc. (NASDAQ:AAPL), rumored to be in the early phases of putting together its own electric car, this isn’t just some harebrained idea. The shift away from fossil fuels is happening, and it’s time to invest.
So, without further ado, here are the five best alternative energy stocks to buy now.
5 Best Alternative Energy Stocks to Buy: Enphase Energy Inc (NASDAQ:ENPH)
Market capitalization: $585 million
As a small-cap stock in an emerging industry, Enphase Energy Inc (NASDAQ:ENPH) offers investors with a bit of a risk tolerance tremendous upside. ENPH specializes in microinverters, a technology that converts the direct current (DC) from solar panels into alternating current (AC) that can then be used by the consumer.
For a nod to how explosive this business is, look no further than Enphase Energy’s impressive financial maturation. In 2009, the company logged a mere $20 million in revenue, and lost nearly $17 million in the process.
Fiscal 2014 was quite different. Enphase reported revenue of $344 million, and non-GAAP net income of $2.7 million. Investors have started to take notice of the improving results, and ENPH stock is up a remarkable 82% in the last year alone.
If you’re looking for alternative energy stocks to buy, Enphase Energy isn’t a bad place to start.
5 Best Alternative Energy Stocks to Buy: SolarCity Corp (NASDAQ:SCTY)
Market capitalization: $5.2 billion
If you’re an energy or technology buff, the odds are pretty high that you’ve heard of SolarCity Corp (NASDAQ:SCTY), a leading player in the design, installation and financing of solar panel projects in the U.S.
Like Enphase, SCTY is growing revenue by leaps and bounds. Between 2010 and 2014, revenue grew a whopping 686% from $32 million to $255 million annually. Analysts expect revenue to soar another 61% in 2015.
And it’s not just the well-off, environmentally conscious consumer that SCTY markets is going after. The big money is in enterprise. As InvestorPlace contributor Scott Michnick noted in a recent article,
“SolarCity continues to grow and evolve, capturing big business clients like MillerCoors who recently contracted SCTY to install 10,000 solar panels at their corporate campus in Los Angeles County.”
Plus, as Michnick goes on to say, SCTY stock should rise with oil prices, as solar energy becomes more financially attractive when the costs of fossil fuels rise.
5 Best Alternative Energy Stocks to Buy: NextEra Energy Inc (NYSE:NEE)
Market capitalization: $46.9 billion
Looking for alternative energy stocks to buy but not quite willing to take the risk on a small- or mid-cap stock? Look no further than NextEra Energy Inc (NYSE:NEE), which is pretty well-established at a market value approaching $50 billion.
NEE stock plans to grow through “investing in energy technologies that are designed to provide affordable, clean and reliable power for our customers.” Practically speaking, this means that NextEra is the top provider of renewable energy from the wind and sun in North America.
Operating in 24 states and Canada, NEE is the largest electric utility in the state of Florida, and recently expanded into Hawaii through its purchase of a controlling stake in Hawaiian Electric Industries, Inc. (NYSE:HE).
With a dividend yield of 2.9%, revenue of $17 billion and net income that rose more than 40% last year, NEE stock is perhaps the most stable alternative energy stock to buy in today’s market.
5 Best Alternative Energy Stocks to Buy: Plug Power Inc (NASDAQ:PLUG)
Market capitalization: $550 million
Plug Power Inc (NASDAQ:PLUG) stock is one of the purest alternative energy plays in the market. A leader in fuel-cell technology, PLUG focuses on what may sound like an odd niche: the industrial off-road market.
While forklifts may not seem like the best place to seek out growth, analysts expect Plug Power to grow revenues by nearly 160% in 2014 and 55% in 2015.
Although InvestorPlace Editor Jeff Reeves named PLUG stock one of the 9 Best Cheap Stocks to Buy for 2015 on Feb. 2, he also cautioned investors about the company’s risk profile, saying
“While margins have gotten better, revenue has remained challenged over the past few years, and PLUG needs to keep up its sales growth to get ahead.”
So far, Plug has delievered and Jeff has been spot-on with his pick: PLUG stock is up 23% in the short time since he recommended it.
5 Best Alternative Energy Stocks to Buy: Toyota Motor Corp (ADR) (NYSE:TM)
Market capitalization: $231 billion
I know, I know. Toyota Motor Corp (ADR) (NYSE:TM) is hardly worthy of mention on a list of the best alternative energy stocks to buy now, right?
Hear me out.
You might naturally think that if we’re talking about the best overlap of alternative energy and the auto industry, Tesla Motors Inc (NASDAQ:TSLA) stock would be the obvious pick. Unfortunately for TSLA investors, Toyota could steal Tesla’s thunder, as it endeavors to pioneer the age of the hydrogen fuel-cell car with its Toyota Mirai later this year.
Last month, I outlined why I feel the Toyota Mirai could be a legitimate threat to TSLA and potentially disrupt its long-term plans. I noted that while Tesla has an impressive Supercharger network,
“Toyota is building out a network of its own. The carmaker is financing the construction of 19 fueling stations in California, and 12 in New York, New Jersey, Rhode Island, Massachusetts and Connecticut. The State of California has even pledged $200 million to build at least 100 fueling stations over the next 10 years.”
With the cost of fuel cell technology coming down rapidly, Toyota’s Mirai doesn’t just have low impact on the environment, it’s economically viable, making TM stock a potentially formidable player in the alternative energy market.
As of this writing John Divine held no positions in any of the stocks mentioned. You can follow him on Twitter at @divinebizkid or shoot him an email at editor@investorplace.com.
