As climate change concerns have taken center stage, green energy sources are the stars and the best renewable energy stocks get the limelight. Improvements in technology, declining costs of renewable energy resources and advances in battery storage have all been providing tailwinds in the shift to alternative energy.
For instance, 2021 saw a record amount of renewable electricity capacity additions — increasing 6% to almost 295 GW. More than $755 billion was invested in the energy transition last year, a 21% year-over-year (YOY) increase that also set a new record. Meanwhile, the decarbonization of the global economy calls for an estimated investment of roughly $100 trillion over the next three decades. It’s a huge opportunity for the best renewable energy stocks.
In addition, Russia’s invasion of Ukraine has highlighted the importance of not depending on other nations for oil or other commodities. Thus, we are increasingly hearing proposals to increase the use of alternative energy sources. The Energy Information Administration estimates that renewable capacity could increase more than 8% in 2022, reaching almost 320 GW.
With that information, here are the seven best renewable energy stocks that could generate lucrative returns for long-term investors:
|BEP||Brookfield Renewable Partners||$34.65|
|HASI||Hannon Armstrong Sustainable Infrastructure Capital||$37.58|
Brookfield Renewable Partners (BEP)
52-Week Range: $30.93 – $41.95
Brookfield Renewable Partners (NYSE:BEP), the first entry on this list of the best renewable energy stocks, is one of the leading renewable energy producers worldwide. It has over 6,000 power generating assets that rely on hydroelectric, wind and solar. Brookfield also operates energy storage facilities.
The renewable energy pure-play released Q1 results on May 6. Revenue declined 11% YOY to $1.14 billion. Funds from operations came in at 38 cents per unit. Cash and equivalents ended the period at $734 million.
Brookfield Renewable Partners finished 2021 with an extensive development pipeline of 62 gigawatts. Management anticipates double-digit growth in the coming quarters, fueled by both acquisitions and organic growth.
Meanwhile, the partnership is targeting increases of 5% to 9% in cash distributions to shareholders. BEP stock currently offers a generous 3.6% dividend yield.
So far in 2022, BEP stock is down almost 3%. Shares are trading at 2.3 times trailing sales. The 12-month median price forecast for BEP stock stands at $43.
Clearway Energy (CWEN)
52-Week Range: $25.39 – $39.75
Electric utility Clearway Energy (NYSE:CWEN) is one of the leading renewable energy pure-plays stateside, which makes it a natural fit in this list of the best renewable energy stocks. It operates more than 10 gigawatts of renewable energy generating assets secured by long-term contracts.
The utility issued Q1 metrics on May 5. Revenue declined 10% YOY to $214 million. Net loss stood at 28 cents per diluted share, compared to earnings of 3 cents per diluted share a year ago. Cash and equivalents ended the period at $574 million.
In late May, Clearway announced a strategic partnership with the global energy giant TotalEnergies (NYSE:TTE). Global Infrastructure Partners, its controlling investor, agreed to sell half its stake in the company to TotalEnergies. Clearway is expected to receive $1.6 billion in cash and a 50% interest in a TotalEnergies subsidiary with a 51% stake in SunPower (NASDAQ:SPWR).
On Jun. 29, the company also announced the acquisition of a portfolio of wind energy projects from Capistrano Wind Partners. The deal is worth for $255 million in cash. Clearway will also assume the $160 million in debt.
CWEN stock is down 2% year-to-date (YTD), but generates a dividend yield of 4%. Shares are trading at 42.9 times forward earnings and just 3.3 times sales. The 12-month median price forecast for CWEN stock stands at $39.
First Solar (FSLR)
52-Week Range: $59.60 – $123.13
The alternative energy company announced Q1 financials on April 28. Revenue declined 46% YOY to $367 million. Net loss came in at 41 cents per diluted share, compared to earnings of $1.96 per diluted share a year ago. Cash and equivalents ended the quarter at $1.6 billion.
In 2023, two new plants should start operations for manufacturing the company’s Series 7 panels. The 3.3 gigawatt Ohio facility will make it the largest fully integrated solar manufacturing complex outside China.
Meanwhile, its second Series 7 plant in India could start operations as early as the second half of 2023. Investors will be watching how these two plants will contribute to First Solar’s top-line growth. Wall Street is paying close attention to First Solar, as its production process does not rely on Chinese supply chains.
FSLR stock is down 24% YTD, trading at 2.9 times sales. Wall Street’s 12-month median price forecast for FSLR stock stands at $80.55.
Hannon Armstrong Sustainable Infrastructure Capital (HASI)
52-Week Range: $33.61 – $65.74
Hannon Armstrong Sustainable Infrastructure Capital (NYSE:HASI) is a real estate investment trust (REIT) that makes loans backed by renewable energy assets. Management finances a diverse range of renewable energy projects and claims to be the first public U.S. company dedicated only to investing in climate solutions.
On May 3, the company reported Q1 metrics. Revenue increased 13% YOY to $58.5 million. Net income came in at 51 cents per diluted share, down from 61 cents a year ago. Distributable earnings increased 28% YOY. Cash and equivalents ended the period at $133.3 million.
The REIT closed $331 million worth of deals in Q1, nearly double the $188 million a year ago. As a result, total portfolio size grew by 28% YOY to $3.7 billion.
Meanwhile, management expects distributable earnings per share to increase at a compound annual growth rate (CAGR) of 10% to 13% from 2021 to 2024.
So far in 2022, HASI stock is down 29%. And the dip has pushed the current dividend yield to a robust 4%. Forward P/E and P/B ratios stand at 18.5x and 2.1x. Meanwhile, Wall Street’s 12-month median price forecast for HASI stock stands at $55.
Nextera Energy (NEE)
52-Week Range: $67.22 – $93.73
NextEra Energy (NYSE:NEE) is the largest generator of wind and solar energy worldwide. It’s also one of the largest publicly traded utilities.
The energy infrastructure giant announced Q1 financials on April 21. Revenue declined 23% YOY to $2.89 billion. On an adjusted basis, net earnings came in at 74 cents per share, compared to 67 cents a year ago. Cash and equivalents ended the period at $2.74 billion.
NextEra recently announced its Real Zero plan to eliminate carbon emissions from its business by 2045. It will deploy millions of solar panels to generate more than 90 gigawatts of energy. In addition, over the next two decades, management will increase the group’s battery storage capacity to 50 gigawatts.
Meanwhile, NextEra is also building a regulated water business through the acquisition of a wastewater system in Pennsylvania. It will invest around $85 billion to $95 billion through 2025 to expand its renewable energy operations.
Passive income seekers may be interested to know that this dividend aristocrat has increased payouts for more than 25 consecutive years. The current price generates a dividend yield of 2.1%.
NEE stock is down 15% YTD. Shares are trading at 28.3 times forward earnings and 9.8 times sales. The 12-month median price forecast for NextEra stock stands at $89.50.
Ormat Technologies (ORA)
52-Week Range: $60.32 – $88.52
Ormat Technologies (NYSE:ORA) has a broad portfolio of geothermal and solar energy assets. The company generates roughly 80% of its revenue from operating geothermal plants.
The alternative energy group released Q1 results on May 2. Revenue increased 10.4% YOY to $183.7 million. Adjusted earnings came in at 35 cents per diluted share, down 17% from 42 cents in the prior-year quarter. Cash and equivalents ended the period at $130 million.
Electricity segment revenues increased 12.1% YOY in the first quarter. This growth was driven by contributions from the acquired TerraGen geothermal assets, the McGinness Hills expansion, and the recovery of the Puna power plant.
Wall Street is pleased that most plants boast long-term contracts with local utilities. Management is anticipating FY22 revenues of between $710 million and $735 million.
So far in 2022, ORA stock is down 3%. Shares are trading at 60.6 times forward earnings and 6.6 times sales. The 12-month median price forecast for Ormat Technologies stock stands at $79.
SolarEdge Technologies (SEDG)
52-Week Range: $200.86 – $389.71
The last of this list of the best renewable energy stocks, SolarEdge Technologies (NASDAQ:SEDG), manufactures power optimizers and inverter systems that maximize the power generated by solar panels. In addition, its technology manages monitoring and energy storage systems, and can also integrate with electric vehicle charging stations.
The solar power play released Q1 financials on May 2. Revenue increased 62% YOY to a record $655 million. Non-GAAP net earnings came in at $1.20 per diluted share, up from 98 cents in the prior-year quarter. Cash and equivalents ended the period at $979 million.
In early June, U.S. President Joe Biden suspended tariffs on certain solar panels imported from a number of several Southeast Asian countries. Investors now expect a boost in utility-scale solar development projects, which would boost solar inverter suppliers like SolarEdge.
Management is anticipating revenues to come in within the range of $710 million to $740 million in the second quarter. It also expects non-GAAP gross margins of 26% to 29%.
SEDG stock is down 4% YTD. Shares are trading at 42.2 times forward earnings and 7 times sales. Wall Street’s 12-month median price forecast for SEDG stock stands at $360.
On the date of publication, Tezcan Gecgil, Ph.D., 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.