“It is unequivocal that human influence has warmed the atmosphere, oceans, and land.” That is the clear conclusion from the Intergovernmental Panel on Climate Change. The news follows the first major review of the science surrounding climate change since 2013. The timing of the news release is clear as a major Glasgow, Scotland climate change summit called COP26 nears. It’s also a wake-up call for clean energy stocks.
The UN chief called the report a “code red for humanity” and several of its findings point to reasons for serious concern. According to the report, the last five years have been the hottest on record since 1850 and recent rates of sea level rise have nearly tripled compared to 1901-1971.
The report concludes that it is very likely, 90% certain, that human influence is the main driver of retreating glaciers since 1990 and decreasing arctic sea ice.
The alarming conclusions of the report were tempered by news that it isn’t too late to reverse the damage. UN Secretary General Antonio Guterres was clear: “If we combine forces now, we can avert climate catastrophe. But, as today’s report makes clear, there is no time for delay and no room for excuses.”
ESG investors know that there are multiple ways to direct their investment capital in order to help. One such way is to invest in the clean energy sector at large. So, for those investors alarmed by the findings in that report, here are several clean energy stocks to buy to help make a change.
- Brookfield Renewable Corp. (NYSE:BEPC)
- Hannon Armstrong Sustainable Infrastructure Capital (NYSE:HASI)
- Renewable Energy Group (NASDAQ:REGI)
- Enphase Energy (NASDAQ:ENPH)
- Sunrun (NASDAQ:RUN)
- Ameresco (NYSE:AMRC)
- Array Technologies (NASDAQ:ARRY)
Clean Energy Stocks for ‘Code Red’: Brookfield Renewable Corp. (BEPC)
Brookfield Renewable Corporation is a business structure that issues securities designed to provide returns similar to those in its parent company, Brookfield Renewable Partners (NYSE:BEP).
The primary difference here is that Brookfield Renewable Corporation shares provide more flexible access than Brookfield Renewable Partners shares do. Both BEPC stock and BEP stock grant investors access to the company’s portfolio of hydroelectric power assets. Hydropower comprises 62% of the parent company’s portfolio.
However, BEPC shares can be exchanged for BEP shares on a one-for-one basis. It requires further research, but it does appear that there is some potential for arbitrage here.
In any case, it would be fairer to characterize BEPC stock as a conservative, dividend bearing stock rather than a trader’s type of stock. Indeed, the shares do bear a 30 cent dividend.
For investors interested in Brookfield Renewable Corporation, one of the main metrics to be aware of is energy production by gigawatt hours. The more energy it can produce the higher its revenues will rise.
The company increased its total gigawatt hours of production in the first six months of 2021. The figure rose from 13,716 hours to 14,388 hours in the period, while per unit funds from operations increased from 77 cents to 79 cents.
Hannon Armstrong Sustainable Infrastructure Capital (HASI)
Hannon Armstrong Sustainable Infrastructure Capital just posted strong quarterly results, so let’s start there before outlining its clean energy operations.
Several of the figures underpinning the company looked very strong. In particular, net income improved greatly. In the second quarter of 2020 the company posted a net income of $12.058 million. A year later net income increased by 36%, to $16.408 million.
Results were even stronger through the first half of the year on a net income basis. Hannon Armstrong recorded an 85% increase in net income in that period, which rose from $36.469 million to $67.624 million.
So clearly Hannon Armstrong is doing well financially. But what does the company actually do? It provides capital to companies within the renewable energy and sustainable infrastructure markets. The company bills itself as the first U.S. public listed company that provides capital to those markets.
The company’s two primary markets include behind-the-meter solar storage and grid connected storage, making up 99% of its $2.9 billion portfolio.
Clean Energy Stocks for ‘Code Red’: Renewable Energy Group (REGI)
It’s probably best to start with analyst expectations around price when discussing Renewable Energy Group right now. REGI stock is arguably in a buy-the-dip situation currently.
The current price of REGI stock is $51. However, the 13 analysts covering the stock give it an average target price of about $82. Further, 10 of those 13 analysts believe REGI stock is buy worthy.
The company supplies renewable fuels including biodiesel, renewable diesel and other renewable chemicals.
Share prices have been volatile for several reasons.
On one hand, Renewable Energy Group managed to increase revenues based on its latest earnings report. Total revenues in the second quarter increased 50.1% year-over-year, from $543.9 million in 2020 to $816.22 million in the second quarter of this year.
On the other hand, the company sold 10.9% less Ultra Low Sulfur Diesel between the two periods. The higher revenue was directly attributable to an increase in prices from 98 cents to $2.00, not because they sold more fuel.
That instability is likely sparking hesitancy over REGI stock. As the economy continues to reopen and price predictability becomes clearer, investors should return. ESG investors are keen to find well-run biofuel companies that remove pressure on fossil fuel depletion.
Renewable Energy Group stock certainly fits that bill.
Enphase Energy (ENPH)
A cursory glance at the price chart of Enphase Energy throughout 2021 points, again, to a buy-the-dip opportunity. ENPH stock prices have risen steadily out of a trough in May, going from $114 to $164 currently. Share prices were well above $200 in early 2021. The good news is that ENPH shares are currently riding upward momentum. That momentum should continue based on its July 27 earnings report.
Those results suggest that Enphase Energy could retrace $200 levels as analysts predict, on average, a $199 target price. It wouldn’t be outlandish to assume that share prices could exceed their $229.04 high this year based on earnings.
So let’s look at those results in order to understand what’s so intriguing about Enphase Energy.
Essentially, investors are interested where Enphase will go after a stellar first half of 2021. Enphase Energy posted net revenues of $617.811 million in the first half of this year. Last year it posted a significantly lower $331.083 million.
In the same time frame net income increased from $21.642 million to $71.049 million. The company is also experiencing sequential growth within 2021. Between Q1 and Q2 net income increased by 24.14%.
All of that suggests that an investment in the designer, developer and manufacturer of microinverter solar storage systems makes a lot of sense now.
Clean Energy Stocks for ‘Code Red’: Sunrun (SUN)
Investors worried by climate change data will undoubtedly be interested in SunRun.
The company is undergoing a period of change, which is arguably creating a boon for investors. The end-to-end residential solar company designs, installs, sells and maintains its systems within a direct-to-consumer business model.
The company is still working out the kinks after acquiring Vivint Solar back in October of 2020. It’s also growing, as measured by customer addition metrics. It added 26,110 new customers in Q2, and now counts 599,743 total customers. That indicates that it has experienced 19% growth in customer base even after accounting for its Vivint Solar acquisition.
The company remains highly optimistic following all of this news, with CFO Tom vonReichbauer giving the following positive guidance:
“We remain on track to deliver a break-out year and are increasing our full-year growth guidance to 30%. Given the advantages of our broad-reach and multi-channel strategy, our team is capturing the accelerating consumer interest, while executing the ongoing integration of Vivint Solar and navigating a dynamic supply chain environment.”
Ameresco (AMRC)
Ameresco is more of a qualitative buy, meaning investors shouldn’t consider it based on price and potential returns. That sounds antithetical to investing in general, but let me explain.
Ameresco probably won’t “wow” investors based on things like price targets. The average analyst target price is $73.45, not much higher than its $64.51 share price. Yet, 10 of the 13 analysts covering the company give it a “buy” rating. So, what gives?
One of the main drivers here is Ameresco’s position within its market. It operates within energy services and is focused on energy efficiency, infrastructure upgrades, asset sustainability and renewable energy solutions.
The important thing to note here is that Ameresco was recently ranked as the market leader by revenue for 2020-2022 among energy service companies by Atlas Energy Intelligence.
Ameresco commands a 16.9% share of that market based on revenue. While it may not be poised to spike in price immediately, it certainly is in a strong position to do so over a longer period.
Clean Energy Stocks for ‘Code Red’: Array Technologies (ARRY)
You probably guessed that Array Technologies operates within the solar power industry based on its name. The New Mexico company manufactures ground mounting systems used for solar panels. Succinctly put, its mounting systems angle solar panels to best absorb the sun’s energy.
Those systems include integrated steel supports, electric motors, gearboxes, and electronic controllers. Although the company has experienced declining share prices through 2021, there’s strong reason to believe they are ready to rebound.
On Aug. 11 the company announced a $500 million capital commitment from Blackstone (NYSE:BX). That capital should allow Array Technologies to establish itself as an industry consolidator moving forward. It probably isn’t hyperbolic to suggest that the capital infusion sets the company on a new, improved corporate trajectory.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.
