Europe’s huge, pressing need for new electricity sources — along with the Inflation Reduction Act, which was recently signed into law in the U.S. — has created many no-brainer growth stocks to buy for long-term investors.
Several companies are sure to benefit tremendously from one or both of those very powerful, positive catalysts, making their stocks buys at this point. Names that fit this description, have strong business models and attractive valuations meet the criteria as a no-brainer pick.
Among the sectors that are poised to get the biggest boost from these new positive drivers are hydrogen, electricity infrastructure, wind energy and solar energy. Here are three growth stocks to buy to benefit from these trends.
Growth Stocks to Buy: Plug Power (PLUG)
It seems like every month or two brings new evidence supporting the idea Plug Power (NASDAQ:PLUG) will, in the not-too-distant future, become a very large energy company.
The latest good news for Plug Power was the company’s new deal with Amazon (NASDAQ:AMZN). Under the agreement, the green hydrogen maker will provide 10,950 tons per year of the fuel starting in 2025. Green hydrogen is generated using electricity derived from renewable sources, primarily wind energy and solar energy
What’s more, the deal has strongly incentivized Amazon to both buy a large amount of green hydrogen from Plug Power and take additional steps to boost PLUG stock.
That’s because under the contract, the e-commerce giant will receive a warrant to acquire up to 16 million common shares with an exercise price of $22.98 for each of the first 9 million warrant shares. In other words, Amazon stands to make a significant amount of money if it meets the procurement target and PLUG stock has climbed tremendously by that time.
Meanwhile, two of Plug’s largest customers — Amazon and Walmart (NYSE:WMT) — have signed deals to buy large volumes of green hydrogen from Plug. I think there’s an excellent chance a high proportion of its remaining huge customers will sign similar deals.
Also definitely worth noting is the tremendous, positive impact that both the IR Act and the situation in Europe will have on PLUG stock. CEO Andy Marsh recently commented on the benefits of both. Its profit margins should surge tremendously over the longer term, eliminating a key weapon in the bears’ arsenal.
Finally, as I’ve noted in past columns, there’s a great deal of evidence that the European Union is rapidly embracing green hydrogen. The shares’ market capitalization continues to greatly underestimate the company’s huge opportunities.
General Electric (GE)
General Electric (NYSE:GE) will benefit on multiple fronts from the IR Act and Europe’s tremendous hunger for cheaper electricity.
With Europe and Japan looking to boost their reliance on nuclear power, GE’s related business should boom over the next year or two. Additionally, due to the EU’s increased utilization of liquid natural gas, or LNG, from sources other than Russia, GE’s Gas Power unit is going to be able to sell a meaningful amount of its LNG equipment to them in the coming months and years.
And in many cases, GE’s gas turbines can be used to generate electricity from hydrogen. That will make the equipment very valuable as hydrogen is much more widely adopted in Europe and other regions.
Finally, GE’s wind-turbine business will get a boost from the huge growth of offshore wind power in Europe and the U.S., as well as the renewal of the investment tax credit for all wind power that was included in the U.S. climate bill.
The trailing operating cash-flow-to-revenue ratio of GE stock is a very attractive 12x, even before it benefits from the catalysts I’ve described along with the continued rebound of the aviation sector.
Growth Stocks to Buy: JinkoSolar (JKS)
JinkoSolar’s (NYSE:JKS) recently released second-quarter results and the comments the company made on its earnings calls show its business is booming. Given the rapidly increasing utilization of solar energy in much of the world and JinkoSolar’s status as one of the leading makers of solar panels, that’s not surprising.
In Q2, Jinko’s revenue soared an incredible 129% year-over-year (YOY) to $2.81 billion, beating analysts’ average estimate by a huge $544 million. And its earnings per share, excluding certain items, came in at $1.11 versus analysts’ mean estimate of just 73 cents. Finally, its shipments soared 25% versus Q1 and 102% compared with the same period a year earlier.
In its earnings call, the company cited the accelerating energy transition in several countries and businesses and the energy crisis caused by the Russian invasion of Ukraine as the main drivers of demand for its solar products. It continued to grow in many markets as the industrywide push for solar energy in Europe and China jumped 137% YOY and 136% YOY, respectively.
Additionally, the company is in the process of transitioning to selling solar modules that generate more power and are consequentially more profitable. Finally, Jinko expects positive demand trends going forward in the U.S. due to the government’s climate initiatives.
The forward price-to-earnings ratio of JKS stock is a very attractive 15.9x.
On the date of publication, Larry Ramer held long positions in PLUG, GE and JKS. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.