Many renewable energy stocks are going to take a long time to develop into serious growth plays. With the market as bad as it is, it’s unlikely to find short-duration plays to invest in. In fact, I’d avoid them at all costs and opt to invest in longer-term plays.
By investing in renewable energy stocks, you’re essentially allocating capital in the hope of securing a big payday ten to twelve years from today. Also, by implementing this strategy, we’re essentially conceding that we don’t know what the market will end up doing for the next quarter, year, or even three years.
However, we’re quite certain that we’ll hit the big time in the long run. I know this might sound a bit counterintuitive, but the central aim is to time the industry while staying invested throughout economic cycles (usually 4 to 5 years), in turn eliminating systemic price cyclicality.
I firmly believe that renewables will come good in the long run and think it’s an excellent play at the moment as they’re overlooked. Here are 3 renewable energy stocks that could hit the big time!
| CSIQ | Canadian Solar | $28.23 |
| LAC | Lithium Americas Corp | $28.23 |
| RUN | Sunrun | $21.13 |
Canadian Solar (CSIQ)
Canadian Solar (NASDAQ:CSIQ) exhibits a stronghold over the solar modules and storage solutions space.
Currently, Canadian Solar has the capacity to ship between $2.2 billion to $2.3 billion worth of products per annum. Its product mix capacity includes 22 Gigawatts module shipments and up to 1.9 Gigawatt hours of battery storage shipments.
CSIQ operates in a market that’s forecast to grow by a compound annual growth rate (CAGR) of 13.6% between now and 2027, providing it with a massive tailwind.
CSIQ is significantly undervalued after a near 25% year-over-year decline, making it one of the renewable energy stocks to take a chance on here. The company trades at a 2.94x discount to sales and a 1.16x discount to its forward book value.
Lithium Americas Corp (LAC)
Lithium Americas (NYSE:LAC) could be a dominant figure in the primary sector.
The company operates as a Lithium exploration company with operations in the U.S. and Argentina.
Used in batteries, Lithium is a fundamental renewable energy push beneficiary. Thus, LAC could definitely benefit from an industry-wide scal-up in the coming years. After all, it’s linked to a domain (renewable batteries) that’s set to grow at a CAGR of 37.29% for the next six years.
Furthermore, LAC presents juicy growth metrics. For instance, during the past year, the firm’s book value has surged by 47.33%, its diluted earnings-per-share has increased by 89.06%, and its operating income has proliferated by 93.80%.
LAC is definitely a long-term buy, in my opinion.
Sunrun (RUN)
My interest in Sunrun (NASDAQ:RUN) stock stems from the rising energy costs in the United States and abroad. I know inflation will eventually cool down as rates rise.
However, the inflationary pressure during the past year has caused many Americans to doubt the government’s ability to curb their future energy costs. Thus, I believe many households will sure up by installing solar-powered energy.
Sunrun owns much of the residential market and follows a direct-to-consumer approach, which could translate into illustrious profit margins.
Furthermore, RUN stock is significantly undervalued at a price-to-book ratio of a mere 0.78. Additionally, Sunrun sports a three-year normalized net income growth (CAGR) worth 31.57%, prompting me to go for it on this one!
On the date of publication, Steve Booyens did not hold any position (either directly or indirectly) 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.
