With the price of oil creeping over $80 a barrel, investors thinking about investing in energy stocks are looking at the oil and gas sectors. This comes after a year in which all energy stocks were weighed down by high interest rates and concerns about a recession that never materialized. But you don’t have to be a contrarian to consider some of Wall Street’s favorite renewable energy stocks.
In 2023, renewable energy stocks had a rough year. The momentum in the solar sector has stalled. The infrastructure for electric vehicles (EVs) isn’t in place, and many startup EV companies may not be able to achieve scalability.
Nevertheless, the world is transitioning away from fossil fuels. The United States is leading the global effort to invest in climate change technology. And where dollars flow, stock prices usually follow. At this time, several stocks are drawing analysts’ attention. Here are three of their favorite renewable energy stocks.
Clean Energy Fuels (CLNE)
As the world continues to pivot away from fossil fuels, many investors are finding that “clean” gas depends on your definition. Clean Energy Fuels (NASDAQ:CLNE) should fit the bill no matter how you define it. The company is the largest provider of renewable natural gas for heavy-duty trucks, buses and other large vehicles in North America. Specifically, the company makes fuel from organic waste that it cites reduces carbon emissions by an average of 300% versus diesel.
Like many renewable energy companies, 2023 was a rough one for Clean Energy Fuels. Revenue was down sharply, which moved the company further away from profitability. Not surprisingly, CLNE stock is down 42.26% in the last 12 months.
However, analysts consider CLNE to be one of their favorite renewable energy stocks because they expect improvement on both the top and bottom lines. And they’re showing that in their ratings. Eight of nine analysts give the stock a Strong Buy rating. They also give the stock a $7.83 consensus price target which is 209% higher than the stock’s closing price on March 19, 2024.
NexGen Energy (NXE)
After years of disappointing its committed investor base, uranium stocks are beginning to surge. Uranium is an essential component of nuclear fuel. And as the world looks for truly clean energy solutions, many are acknowledging the need for nuclear energy.
If you’re looking for ideas in this sector, there are many speculative choices. Of those stocks, NexGen Energy (NYSE:NXE) is an intriguing choice. The Canadian-based mining company is still in the exploration and development stage. However, as is the case with many mining stocks, location matters. In NexGen Energy’s case, the company holds 100% interest in the Rook 1 project in Saskatchewan’s coveted southwestern Athabasca Basin.
Ten years ago, the company identified the Arrow Deposit within the confines of the Rook Project and recently discovered new “intense uranium mineralization” in an area near the Arrow Deposit.
This checks the box on one of the company’s goals for 2024 and it’s one of several projects the company plans to find, permit and construct in the next 20 years.
Array Technologies (ARRY)
Higher interest rates have put the squeeze on consumers and tanked the solar industry. That makes the revenue and earnings picture for Array Technologies (NASDAQ:ARRY) particularly compelling. The maker of solar trackers (which reposition solar panels to follow the sun) generated $1.57 billion in revenue in 2023. That was down from $1.64 billion in 2022.
However, the company’s adjusted earnings per share for the full year came in at $1.13, almost five times higher than the $0.26 per share it reported in 2022. As the company’s margins and free cash flow improved, it took the opportunity to pay down $87 billion in outstanding debt.
That creates an opportunity for investors as ARRY stock is down 28% in the last 12 months. However, analysts apparently view Array as one of their favorite renewable energy stocks. As evidence, they give the stock a consensus price target of $20.82 which is 66% higher than its closing price on March 19, 2024. Plus, 15 out of 26 analysts weigh in with a Strong Buy rating.
On the date of publication, Chris Markoch 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.
