It hasn’t been a good season for the clean energy sector. As interest rates have risen, companies have struggled to manage rising production and operation costs as well as long-term contracts.
Earlier this week, The Financial Times reported that The S&P Global Clean Energy Index, a benchmark for the sector’s success, has slumped more than 20% over the past two months. These trends are hardly encouraging, especially as the fossil fuel sector continues making progress.
However, it should be noted that the news isn’t all bad for clean energy stocks. The index is in the green today and has been trending upward all week. This may be a sign that market momentum is slowly starting to shift in favor of the sector, though the transition will likely be slow. As Earth911 reports:
“Global fossil fuel emissions are expected to peak in the middle of the 2020s and fall back to near 2015 levels by 2030, according to a new report from the International Energy Agency. The rapid progress in renewable energy technology and construction have kept open a path to limiting global, though the agency said faster progress is needed to meet the goals of the Paris Climate Accord.”
If that is true, companies helping power the green revolution will have ample room to grow. Demand for clean energy solutions isn’t likely to slow down. The International Energy Agency (IEA) predicts that by 2025, renewable energy producers will generate more than one-third of electricity across the globe.
But even as we wait for that to happen, investors shouldn’t be spooked by rising interest rates. The most stable clean energy stocks can stand their ground against unfavorable macroeconomic conditions. Here are a few important names to watch.
Clean Energy Stocks: Clearway Energy (CWEN)
This firm doesn’t receive as much attention as some of its larger peers. But that’s exactly why Clearway Energy (NYSE:CWEN) is a name that investors should be following.
The company describes itself as “one of the largest renewable energy owners in the US with over 5,500 net MW of installed wind and solar generation projects.” That puts it in an excellent position to help the clean energy boom as the economy continues shifting toward a more sustainable future. While CWEN has spent the past two quarters trending downward, the future could be rosier for the stock.
As InvestorPlace contributor Muslim Farooque notes, Clearway has spent most of the year battling macroeconomic headwinds, like many of its peers. But he also highlights that it boasts strong financials with a “remarkable 79% EBITDA and a dividend yield of 6.1%.”
Farooque flags it as a high-yield dividend stock that investors should be monitoring. The stock’s current discounted price should serve as an attractive entry point for anyone who believes in clean energy stocks and doesn’t mind waiting for the sector to rebound.
SolarEdge Technologies (SEDG)
If you’re looking to acquire more clean energy stocks on the sector-wide dip, SolarEdge Technologies (NASDAQ:SEDG) should be high on your radar. This solar tech innovator has been trending downward all year, underperforming next to sector leader First Solar (NASDAQ:FSLR). And while it’s true that rising interest rates have made things difficult for SEDG stock so far, investors should be careful not to write it off.
SolarEdge produces the type of technology that helps homeowners harness the power of the sun, exactly what we need to keep moving forward in a green energy-centric economy. However, the company has also ventured into the electric vehicle (EV) charging space, giving investors exposure to another fast-growing market.
This dynamic edge should make SEDG stock a tempting play for investors who understand that the current rate hikes won’t last forever. Experts have recognized it as an undervalued growth play that could be too valuable to ignore. InvestorPlace contributor Alex Sirois reports:
“SEDG shares are very undervalued at their current price of just below $120. Those shares have ranged from $200 to $365 over the past 3 years. They’re so cheap currently because of Q3 guidance. The company basically stated that its revenues would be about 10% lower than the $1.05 billion Wall Street had anticipated.”
Clean Energy Stocks: Bloom Energy (BE)
While clean energy stocks have struggled, companies in the fuel cell energy sector have demonstrated an impressive resilience. At the forefront is Bloom Energy (NYSE:BE), a green tech innovator with significant potential for growth.
The Silicon Valley-based firm is known for producing solid oxide fuel cells. This technology can generate electricity on site, making it an important part of the clean energy revolution. Demand isn’t slowing down. According to recent data, the global fuel cell market is expected to reach a valuation of $7.2 billion this year and expand to $35 billion by 2033. That’s a compound annual growth rate (CAGR) of more than 17%.
Bloom has strong enough fundamentals to make a strategic bet, even as macro forces work against the sector. As InvestorPlace contributor Chris MacDonald notes, it has “showed consistent growth in revenue and earnings over the past four quarters,” despite profitability concerns. In his view, this makes it a standout among clean energy stocks and other experts seem to share this take.
BE stock currently holds a moderate buy consensus rating on TipRanks, with seven analysts rating it as a buy and none maintaining sell ratings.
On the date of publication, Samuel O’Brient 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.
