13 Best Renewable Energy Stocks To Buy According to Hedge Funds
In this article, we will be taking a look at the 13 best renewable energy stocks to buy according to hedge funds. To skip our detailed analysis of the renewable energy sector, you can go directly to see the 5 Best Renewable Energy Stocks To Buy According to Hedge Funds.
Clean Energy: A Significant Investing Space
It's no secret that the global community today is facing one of the greatest challenges imaginable in the form of the global climate crisis. With global temperatures on the rise and emissions adding fuel to the fire, climate activists have been on the offensive, trying to call attention to the gravity of the climate crisis and what it may mean for future generations. In the midst of this growing concern regarding the planet and climate change, many businesses are attempting to push forward a renewable energy agenda, with investors taking note. As such, many renewable energy companies are beginning to occupy more of investors' portfolios than they ever did before, making this area of energy an important and increasingly popular space to keep an eye on.
An example of an increasingly popular renewable energy company comes in the form of Avangrid, Inc. (NYSE:AGR). This American company has just been recognized by JUST Capital in its JUST 100 Companies list - a list ranking the best corporate citizens of the US. Avangrid, Inc. (NYSE:AGR) has ranked first among utilities in the 2024 JUST 100 list, and number 12 overall. The company's CEO, Pedro Azagra Blazquez, joined CNBC's "Squawk Box" on February 7 to discuss Avangrid, Inc.'s (NYSE:AGR) position in the renewable energy space and overarching trends within the sector. On being asked about the impact of government funding on the success of the renewable energy sector, Blazquez said the following:
"Part of the development has to be helped, that already happens. But also, for part of the assets you do PPAs, you go straight to the market, you have customers, big customers, you know, people that you interview quite often, we have PPAs with them as well. So, you have a combination of just the market but also some help from the production point of view, for the major projects we are doing."
Challenges Faced by Renewable Energy Companies Today
On the hurdles faced by renewable energy companies in the industry these days, Blazquez made the following comments:
"The first one is permitting. I mean, the amount of permitting you need, it takes years. It takes probably five, eight years, for an offshore wind park. It takes three, four, five years to do an offshore park of solar. The permitting is critical, so that's one of the issues. The second one is... what I would call litigation. I think in the US, everybody litigates. It's quite normal to have litigation for everything. That also delays the projects. So, from our point of view, it's not access to capital. It's just predictability and permitting. Regulation is key. If you change regulation every year, thing's will not work. If you have a predictable framework, then things will be invested, and you'll have reality in the assets."
The importance of predictable regulations in the renewable energy space cannot be highlighted enough, as investors are pouring billions of dollars into the space. For such an inflow of capital to continue, predictability in regulation will be key, as Blazquez put it.
Is Sustainability Slipping Down The Agenda for Investors?
On January 18, Mark Carney, the Chairman of Brookfield Asset Management and United Nations special envoy on climate action and finance, joined CNBC to discuss the scope of sustainability in investors' agendas this year. Here's what he had to say:
"It [sustainability] hasn't slipped down the agenda for investors. If you look at the growth in investment in clean energy, it grew by 50% last year, and not from a small base. In 2022, it was $1.2 trillion, so that means it got to $1.8 trillion dollars. That's almost twice as much investment as in conventional energy. So there's a huge surge in investment in clean energy, in EVs, in the whole supply chain."
Carney later moved on to discuss the role Brookfield Asset Management is playing in the renewable energy space, and the importance of the US government placing a higher priority on clean energy. Here's what he had to say:
"Brookfield does a number of things but it's one of the biggest investors, developers of renewable energy around the world, and those are all economic decisions. And so when we look at new power around the world, and again, I'm gonna appeal to the AI revolution that's just beginning, all of that demands clean energy alongside. For the data centers, for the compute, that comes with the AI explosion. Now, over 90% of the investment, the ads worldwide, were clean energy. That's the future, that's where the investment is, and that is not investment, whether it's wind, solar, batteries, that require subsidies. What's more at issue, more at risk, are the next phase of climate technologies. Think hydrogen, carbon capture, and storage, which are areas where the United States could world leaders. But if the US isn't world leaders in that, somebody else is going to be. And those countries are going to grab that market share, and the returns of that are going to be felt over following decades, long after whoever wins the next US presidential election."
In light of the above, it's apparent that clean energy stocks such as General Electric Company (NYSE:GE), NextEra Energy, Inc. (NYSE:NEE), and First Solar, Inc. (NASDAQ:FSLR) are going to be occupying a more important position in investing portfolios. As such, we have compiled a list of some of the best renewable energy stocks to buy according to hedge funds. These include some of the top clean energy stocks in the US and abroad, alongside some of the best clean energy stocks for the long term.
Solar panels in an agricultural field, highlighting the company's commitment to renewable energy.
Our Methodology
We selected the names for our list of the best renewable energy stocks to buy by consulting Insider Monkey's hedge fund data for the third quarter. The stocks are ranked based on the number of hedge funds holding stakes in them, from the lowest to the highest. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
Best Renewable Energy Stocks To Buy According to Hedge Funds
13. Daqo New Energy Corp. (NYSE:DQ)
Number of Hedge Fund Holders: 18
Daqo New Energy Corp. (NYSE:DQ) is a Chinese company. It manufactures and sells polysilicon to photovoltaic product manufacturers in China to be used in ingots, wafers, cells, and modules for solar power solutions.
There were 18 hedge funds long Daqo New Energy Corp. (NYSE:DQ) in the third quarter, with a total stake value of $281 million.
Ariose Capital was the largest shareholder in Daqo New Energy Corp. (NYSE:DQ) at the end of the third quarter, holding 800,124 shares in the company.
Like General Electric Company (NYSE:GE), NextEra Energy, Inc. (NYSE:NEE), and First Solar, Inc. (NASDAQ:FSLR), Daqo New Energy Corp. (NYSE:DQ) is a top clean energy stock to buy now.
12. Avangrid, Inc. (NYSE:AGR)
Number of Hedge Fund Holders: 19
Anthony Crowdell at Mizuho holds a Neutral rating and a $34 price target on Avangrid, Inc. (NYSE:AGR) as of January 3.
Avangrid, Inc. (NYSE:AGR) is an energy services holding company based in Orange, Connecticut. It engages in the renewable energy generation business in the US, focusing on onshore wind power, solar, biomass, and thermal.
We saw 19 hedge funds long Avangrid, Inc. (NYSE:AGR) in the third quarter, with a total stake value of $117 million.
11. Clearway Energy, Inc. (NYSE:CWEN)
Number of Hedge Fund Holders: 23
Clearway Energy, Inc. (NYSE:CWEN) was spotted in the portfolios of 23 hedge funds at the end of the third quarter, with a total stake value of $111.7 million.
Clearway Energy, Inc. (NYSE:CWEN) is a renewable electricity company based in Princeton, New Jersey. It has about 5,500 net megawatts of installed wind and solar generation projects and is among the best clean energy stocks to buy today.
Oppenheimer's Noah Kaye maintains an Outperform rating and a $37 price target on Clearway Energy, Inc. (NYSE:CWEN) as of January 19.
10. Green Plains Inc. (NASDAQ:GPRE)
Number of Hedge Fund Holders: 24
At the end of the third quarter, Aubrey Capital Management was the largest shareholder in Green Plains Inc. (NASDAQ:GPRE).
Green Plains Inc. (NASDAQ:GPRE) is an energy company based in Omaha, Nebraska. It produces, stores, distributes, and sells clean fuel.
On January 30, Goldman Sachs analyst Adam Samuelson maintained a Buy rating and a $34 price target on Green Plains Inc. (NASDAQ:GPRE).
A total of 24 hedge funds held stakes in Green Plains Inc. (NASDAQ:GPRE) in the third quarter. Their total stake value was $306.3 million.
White Brook Capital Partners mentioned Green Plains Inc. (NASDAQ:GPRE) in its fourth-quarter 2023 investor letter:
“Mosaic (MOS) and Green Plains Inc. (NASDAQ:GPRE), our commodity-sensitive investments, remain substantial positions in the portfolio. The companies are a natural hedge to each other in some ways, as the price of corn is a feedstock for Green Plains while it bolsters the purchasing power of Mosaic’s customers. On the other hand, higher oil prices are a positive for Green Plains, while the opposite is true for Mosaic.
Green Plains is a troubled investment. The stock did not perform as expected in 2023 and has had a difficult start to 2024. The Company continues to be well positioned, generating solid margins on each kernel of corn as the corn crush margin stays meaningfully positive. Furthermore, the industry’s progression is clear. There is an opportunity for ethanol producers to increase short and long term profitability by deriving higher amounts of corn oil, specialty alcohols, and high-density feed protein from each kernel of corn. It’s also increasingly clear that the required capital will prevent many current operators from transitioning. Green Plains was fortunate to begin its conversion relatively early and to have the scale necessary to complete the transition.
During the year, the regulatory environment bent towards ethanol producers as the federal government stopped preventing several midwestern states from blending a higher percentage of ethanol into gasoline and included their substrates in Inflation Reduction Act climate change subsidies…” (Click here to read the full text)
9. Sunrun Inc. (NASDAQ:RUN)
Number of Hedge Fund Holders: 26
Sunrun Inc. (NASDAQ:RUN) designs, develops, installs, and sells residential solar energy systems in the US. It is based in San Francisco, California, and is among the top renewable energy stocks to buy, according to hedge funds.
Our hedge fund data shows 26 hedge funds long Sunrun Inc. (NASDAQ:RUN) in the third quarter, with a total stake value of $460 million.
A Buy rating and a $28 price target were maintained on Sunrun Inc. (NASDAQ:RUN) on January 3 by Mizuho's Maheep Mandloi.
8. SolarEdge Technologies, Inc. (NASDAQ:SEDG)
Number of Hedge Fund Holders: 27
Impax Asset Management was the most prominent shareholder in SolarEdge Technologies, Inc. (NASDAQ:SEDG) at the end of the third quarter, holding 954,264 shares in the company.
Christopher Souther at B. Riley Securities maintains a Buy rating and a $133 price target on SolarEdge Technologies, Inc. (NASDAQ:SEDG) as of February 5.
SolarEdge Technologies, Inc. (NASDAQ:SEDG) designs, develops, and sells direct current optimized inverter systems for solar photovoltaic installations. It is based in Herzliya, Israel.
was seen in the 13F holdings of 27 hedge funds in the third quarter. Their total stake value was $375 million.
Here's what ClearBridge Investments said about SolarEdge Technologies, Inc. (NASDAQ:SEDG) in its third-quarter 2023 investor letter:
“Solar energy technology companies SolarEdge Technologies, Inc. (NASDAQ:SEDG) and Shoals, meanwhile, saw headwinds from destocking in the U.S. and Europe. U.S. demand could slow further due to new net metering rules that reduce the value to consumers from sending excess residential solar energy back to the grid. SolarEdge, which makes inverters for solar systems as well as residential and commercial battery systems, is also facing rising battery competition in the U.S. from Tesla.”
7. Algonquin Power & Utilities Corp. (NYSE:AQN)
Number of Hedge Fund Holders: 28
On January 8, Ben Pham at BMO Capital upgraded Algonquin Power & Utilities Corp. (NYSE:AQN) from Market Perform to Outperform and placed a $7.50 price target on the stock.
Algonquin Power & Utilities Corp. (NYSE:AQN) had 28 hedge funds long its stock in the third quarter, with a total stake value of $541.1 million.
Based in Oakville, Ontario, Canada, Algonquin Power & Utilities Corp. (NYSE:AQN) is a renewable energy and utility company. It owns and operates hydroelectric, wind, solar, renewable natural gas, and thermal facilities.
6. Enbridge Inc. (NYSE:ENB)
Number of Hedge Fund Holders: 35
In total, 35 hedge funds were long Enbridge Inc. (NYSE:ENB) in the third quarter. Their total stake value was $401.5 million.
Enbridge Inc. (NYSE:ENB) is an energy company with a proactive Renewable Power Generation segment that operates assets such as wind, solar, geothermal, and waste heat recovery. It is based in Calgary, Canada.
Like General Electric Company (NYSE:GE), NextEra Energy, Inc. (NYSE:NEE), and First Solar, Inc. (NASDAQ:FSLR), Enbridge Inc. (NYSE:ENB) is one of the best clean energy stocks to buy now.
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Disclosure: None. 13 Best Renewable Energy Stocks To Buy According to Hedge Funds is originally published on Insider Monkey.
