NextEra Energy (NYSE:NEE) saw its shares plummet in value during the March stock market crash. 36% of its value was wiped out in just three weeks. Unlike the oil and gas stocks that sank and have continued to flail, NEE stock bounced back.
Within four months they had recovered and were back in growth mode. Even after a rough patch when the election euphoria was over, NextEra Energy has still posted growth of 23% so far in 2020.
With its large portfolio of sustainable energy generation plants, NestEra is in a good position. The current dip — which has seen NEE stock slip roughly 6% since mid-November — makes shares in this energy company very tempting.
Early Moves Put NextEra in the Right Place at the Right Time
NextEra began making bold moves into renewable and sustainable energy power generation in 2002. From there, the company made a bet on solar power generation. It was expensive, but costs were coming down. And as Bloomberg points out, NextEra employed a clever strategy. The company stated:
… leveraged government subsidies – often at the state level – to build plants before they would be profitable on their own…These were handouts to prop up a struggling new industry; the strategic coup came in realizing that it wouldn’t be struggling for long.
NextEra is now the global leader in wind power generation and a major player in solar power as well. The company currently has 126 wind turbine sites in operation across the United States. Its solar facilities generate more than 2,000 megawatts of power across the U.S. and Canada.
The company adopted a clean power focus before the public began to demand it. Now that fossil fuels are being singled out as a primary cause of climate change and the tide is turning against their use, NextEra is better positioned than virtually any other power company to adapt. It’s already well on the way.
Joe Biden’s Plan for a Clean Energy Revolution
As part of his campaign, President-elect Joe Biden released his plan for a clean energy revolution. One of the key points in Biden’s plan has investors in companies like NextEra Energy particularly excited:
Make a historic investment in clean energy and innovation. Biden will invest $400 billion over ten years, as one part of a broad mobilization of public investment, in clean energy and innovation. That investment is twice the investment of the Apollo program which put a man on the moon, in today’s dollars.
In addition, Biden is committed to creating millions of jobs to rebuild and upgrade America’s infrastructure, with a promise to spend that money to “prevent, reduce, and withstand the impacts of this climate crisis.”
With the new President’s focus on clean energy, there is a feeling that NextEra’s early bets on wind turbines and solar power are about to pay off in a big way. It’s no coincidence that NEE stock was on the rise in the lead up to the election and closed at an all-time high $77.75, just days after Joe Biden was declared the victor.
Bottom Line on NEE Stock
There are many investors who are nervous about the energy sector at the moment. Who can blame them? 2020 has been a rough year and the winds of change are blowing. It’s become increasingly clear that fossil fuels have had their day.
Yes, NextEra Energy still has some exposure to the coming battle to eradicate fossil fuels. Some of the company’s plants burn natural gas. I like to think of that as an opportunity, not a liability. NEE may be able to fund conversion of this generating capacity to sustainable sources using government incentives. The company has a proven history of being able to employ this strategy, and the Biden administration is signaling the money will be there.
Overall, NextEra’s focus on expanding its sustainable electricity generation — including becoming the world’s largest wind power generator — is going to pay off in coming years. The story of NEE stock over the past five years has been one of consistent, sustained growth. And that was when people were questioning its focus on sustainable power generation.
Under the current environment when green power and building infrastructure are key elements of the Biden administration’s policy, the future for NextEra looks even brighter.
On the date of publication, Louis Navellier had a long position in NEE. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
