Renewable energy stocks haven’t been able to withstand the market pressure and have shown high volatility over the past few quarters. Besides the surplus inventory, the political environment and macroeconomic situations have led to a profit drop. The high rates have hit the companies hard. However, we are all transitioning towards renewable energy adoption and although it may not happen in the next few years, it will occur over the coming decades. This is your chance to bag renewable energy stocks that have the potential to generate steady returns.
Considering the upcoming presidential elections and policymakers’ aggressive shift toward renewable energy, renewable energy stocks are set to benefit. This article discusses the three reliable renewable energy stocks that could generate steady returns for you.
First Solar (FSLR)
Up 20% year-to-date (YTD), First Solar (NASDAQ:FSLR) stock is trading for $207 and is a great long-term buy. It is one of the hottest stocks in the renewable energy sector and has a lot of room to run.
There has been a significant rise in electricity demand, which will boost First Solar’s business. The company manufactures photovoltaic power plants and solar panels. Solar energy shattered records in 2023, and the same momentum has continued for the first half of 2024. Solar installations in the U.S. have surpassed the 100 GW milestone, and the steady rise in demand has helped First Solar.
In the second quarter, the company reported net sales of $1 billion and an EPS of $3.25. It ended the quarter with an expected sales backlog of 75.9 GW. The management has maintained the full-year guidance and aims for net sales in the range of $4.4 billion to $4.6 billion and an EPS of $13 to $14.
If we only look at the solar industry, First Solar remains the biggest company with the ability to cater to a massive market. It is also expanding its manufacturing capacities, has opened a new manufacturing facility in India and plans to invest $1.1 billion in the fifth manufacturing unit in the United States.
Linde (LIN)
Linde (NASDAQ:LIN) is an often overlooked renewable energy stock. The company is making the most of the massive hydrogen demand and has invested in the sector, which shows its commitment to being a strong player in the emerging market.
One solid reason to bet on the stock is the diversified business. Since Linde does not rely on a particular renewable energy source, it enjoys steady revenue growth. Although 2024 hasn’t been kind to renewable energy companies, Linde has managed to survive and beat expectations.
While the company missed revenue estimates for the second quarter, it beat EPS expectations. The revenue came in at $8.27 billion and the EPS stood at $3.85. For the full year, the management aims for an EPS of $15.40 to $15.60, representing about 9% to 11% YOY growth.
Linde builds equipment for the production of industrial gases and offers processing services. It generates solid cash flow without taking on too much debt. It rewards shareholders through dividends and has a yield of 1.25%. Trading at $443, the stock is up 8% YTD and 15% in the past 12 months. As the economy improves, we could see the renewable energy sector pick up pace; until then, you can benefit from the dividends.
NextEra Energy (NEE)
A renowned name in the renewable energy sector, NextEra (NYSE:NEE) is known for the utility business. It is one of the largest utilities and enjoys steady revenue growth through this segment. On the other hand, it is expanding the renewables segment with a backlog of 22.6 GW of renewable projects and an operating capacity of 34 GW.
For the second quarter, it reported revenue of $6.07 billion and an EPS of 96 cents. It has the largest backlog in the industry. Management has increased the guidance for new solar and wind projects to 46.5 GW and 36.5 GW. Its steady cash flow allows investment in new projects while also rewarding shareholders.
As one of the industry leaders, NextEra Energy will be the first to benefit if the new government lays out favorable policies for the renewable sector. Last week, management announced a quarterly dividend of $0.515 per share. It aims for annual growth of 6% to 8% through 2027.
NextEra Energy is a top renewable energy stock because the company already has a successful utility business and is building a renewable energy business over it. This brings stability to your investment. NEE stock is up 24% YTD and exchanging hands for $76. It is inching closer to the 52-week high of $80 and could keep moving higher.
On the date of publication, Vandita Jadeja 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.
