The global alternative or renewable energy market is growing at a stellar pace. This implies ample opportunity for investors in the form of high-return alternative energy stocks. I believe that some of the quality names in the industry can deliver 5x to 10x returns through 2030. However, even in a long-term bull market, there are intermediate corrections. Some of the potential multi-bagger alternative energy stocks have declined in the last few quarters. This provides a good accumulation opportunity.
Talking about the growth potential, the solar power capacity was approximately 750GW in 2020. It’s expected that capacity will increase to over 2,500 GW by 2030. Projections are equally robust for wind power. Overall, it’s expected that the renewable energy market size will swell to $1.9 trillion by 2030.
Given the impending growth potential, high-return alternative energy stocks should be a part of the core portfolio. Let’s discuss three stocks for multi-bagger returns potential.
Plug Power (PLUG)
Among high-return alternative energy stocks, Plug Power (NASDAQ:PLUG) is the top name to consider. PLUG stock has trended lower in the last 12 months and it’s a golden opportunity for long-term investors to accumulate.
With the company providing end-to-end solutions in the hydrogen economy, the growth visibility is robust. To put things into perspective, Plug Power expects to clock a turnover of $1.3 billion for the year.
With significant expansion plans, revenue is likely to increase to $5 billion in 2026 and further to $20 billion by 2030. Additionally, Plug Power expects an operating income margin in excess of 20% by the end of the decade. These estimates look realistic if the company can expand into the electric vehicle, aerospace, and stationary power industry.
Further, considering the prospects of multi-fold growth in revenue, I believe that PLUG stock is poised for multi-bagger returns.
First Solar (FSLR)
First Solar (NASDAQ:FSLR) stock has surged by 135% in the last 12 months. However, considering the growth momentum, FSLR stock remains undervalued at a forward price-earnings ratio of 27.1.
Just to put things into perspective, First Solar reported total bookings of 77.8GW that extend through 2030. Further, the company has booking opportunities of 78.3 GW. As the backlog swells, there will be clear cash flow visibility for the coming years.
It’s worth noting that even with capital expenditure of $2 billion (guidance), First Solar expects to end the year with a cash buffer of $1.4 billion. This provides flexibility for investments well into the next year.
On the back of receivables and inventory, operating cash flow has been negative. Once OCF accelerates, there will be flexibility for investment through internal cash flows. I, therefore, expect the order intake and growth momentum to remain robust.
Enphase Energy (ENPH)
Enphase Energy (NASDAQ:ENPH) stock has been trending lower and I see this downside as a good accumulation opportunity. At a forward price-earnings ratio of 30.5, the growth stock looks attractive with an investment horizon of five years.
As an overview, Enphase identifies itself as the world’s leading supplier of microinverter-based solar-plus-storage systems. Last year, Enphase clocked revenue of $2.3 billion and the company has already installed 3.5 million systems in 145 countries.
An important point to note is that Enphase delivered an operating cash flow of $745 million for 2022. With the visibility of sustained growth, the business is a cash flow machine. My view is underscored by the point that the total addressable market for the company’s products is $23 billion by 2025.
It’s important to note that Enphase has 365 patents globally. With innovation-driven growth, Enphase is positioned to benefit in the current phase of the global energy transition.
On the date of publication, Faisal Humayun did not hold (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.
