The clean energy stocks listed below offer the opportunity to multiply an investor’s capital. They’re high-risk investments, but that risk is balanced by significant return potential. Clean energy is a breakthrough sector investors are looking over the long-term. As the transition away from fossil fuels continue, momentum in this sector should continue. This rising tide has been helped along by the Biden administration, which recently passed a large infrastructure bill in 2021 that included substantial green energy investment.
Most people are on board with this shift, and the recent government investment and political will to further this sector is reflective of that. That implies that smaller, upstart clean energy firms offer a lot more upside than downside currently. A little bit of capital can go a long way here.
With that said, here are three small cap clean energy stocks I think have big upside potential.
Fuel Tech (FTEK)
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Fuel Tech (NASDAQ:FTEK) is a small company with less than 100 employees. However, it is among the top small cap clean energy stocks, trading for $1.25, but with a whopping price target of $4.00 per share. That target price implies a triple-up in value over the next 12-18 months, if analysts are correct.
The company works to make industrial machinery more efficient through the optimization of combustion systems, emissions control, and via water treatment.
Fuel Tech’s results speak volumes about the company. In the first quarter, the company’s revenue grew by 32% to $7.3 million. Additionally, Fuel Tech’s net loss narrowed to $0.4 million from $1 million a year earlier.
The company boasts $33.8 million in cash and no long-term debt. In March, the Environmental Protection Agency (EPA) ruled that it would reduce nitrogen oxides from power plants and other industrial plants in 23 states. Fuel Tech is engaged in meaningful talks with utility and industrial clients in connection to that ruling.
In short, it’s growing quickly, has no debt, and appears to be on the brink of breaking even with future growth prospects immediately ahead. It’s seemingly a solid company overall. Yet, at the same time, it isn’t exciting, which could impact its ability to attract investor capital.
Source: shutterstock.com/Alexander Steamaze
Broadwind (NASDAQ:BWEN) is a componentry fabricator that covers the renewables and non-renewables sectors. On the clean energy front, it works in wind power, producing 100-meter wind turbine towers.
What’s encouraging about Broadwind is that its share price could roughly double, if analyst price targets are correct. That said, shares of BWEN stock have traded all over the place over the last few years. Shares peaked above $11 in 2021, fell to $2 by 2022, and doubling again since then. The term volatility certainly comes to mind when thinking about stocks like Broadwind. However, volatility, as dangerous as it is, can be your friend when the market turns around.
Broadwind also makes parts used in conveyors, cranes, and gears. Overall, the company’s revenues increased by 17% to $48.9 million in the first quarter. Management expects that 2023 sales should be between $205 to $220 million. Demand seems to be strong at Broadwind, as the company grew its backlog by $170.7 million to $287.8 million.
Emeren Group (SOL)
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Emeren Group (NYSE:SOL), the company formerly known as ReneSola, is a pure-play solar company. Emeren is developing projects globally with operations in Europe, North America, and China. That diversity in operations is arguably a reason to consider investing in SOL stock. There are other compelling reasons as well.
Emeren is especially interesting as it relates to its momentum relative to other clean energy stocks. Although revenues were flat in 2022, growing just 2% year-over-year to $81.4 million, the fourth quarter was strong. That quarter accounted for $40.8 million in sales. Not only was that a 79% increase year-over-year, but it also accounted for more than half of 2022 revenues.
Emeren Group boasts a large pipeline of projects measured at more than 3 gigawatts, 2.1 gigawatts of which is in Europe. Its pipeline stood at 2.1 gigawatts in 2021, so it effectively grew by 50% in 2022. Rapid growth combined with a rapidly-growing industry can produce strong results in a short period of time. Further, Emeren Group produced a $1.6 million net loss in Q4 2021. That became a $4.8 million net gain 12 months later.
It’s a high-upside solar stock that could truly produce strong long-term returns for investors.
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On the date of publication, Alex Sirois 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.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.
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