3 Clean Energy Stocks That Can Survive Anything
Clean energy stocks haven’t performed well in 2023. In fact, the iShares Global Clean Energy ETF (NASDAQ:ICLN) plummeted more than 30% since the start of the year. The reason for the lackluster performance is perhaps due to relatively lower oil prices. This has made renewable energy alternatives less competitive.
Nonetheless, the Ukraine-Russia War and the Israel-Hamas War could potentially make clean energy stocks attractive again. The ongoing geopolitical events may disrupt the supply of oil and gas, raising their prices and increasing the demand for alternative energy sources.
Importantly, the global shift to clean energy is widening. Supported by governments, investors, and consumers, concerns about climate change and environmental sustainability are ever-growing.
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Let’s delve into three clean energy stocks that can survive anything and deliver strong returns in the long run.
Brookfield Renewable Partners (BEP)
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Brookfield Renewable Partners (NYSE:BEP) is one of the largest renewable power companies in the world. Its portfolio boasts over 21,000 megawatts (MW) of capacity across hydroelectric, wind, solar, and storage facilities.
The company is majority owned by Brookfield Asset Management, an alternative investment manager equity firm. It functions by deploying capital through a variety of funds.
The company operates in 15 countries, generating stable cash flows from long-term contracts with customers. BEP has built up an immense energy capacity at a combined 166,000 MW from both developing and currently operating assets. Despite the large portfolio of renewable energy assets, higher interest rates have negatively impacted BEP’s near-term share price growth.
However, as clean energy stocks come back into favor, buying BEP now is a smart move. Currently, shares trade at 2.1x forward sales, which could be a great bargain for potential long-term holders.
First Solar (FSLR)
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A number of earnings beats throughout 2023 should keep First Solar (NASDAQ:FSLR) on clean energy investors’ watchlists.
Last week, First Solar reported its Q3 earnings results, which saw the solar energy firm beating bottom-line estimates. While revenue figures came in slightly smaller than expected, the company increased full-year earnings guidance. Despite a difficult solar energy demand, First Solar has proven it can thrive.
The solar panel manufacturer has been able to meaningfully increase earnings while also growing revenue by double-digits percentage points. The company appears quite confident in its future prospects. Specifically, it announced a new manufacturing site in the U.S., adding to manufacturing capacity.
Most importantly, First Solar will play a pivotal role in the broader shift to renewable energy. Government support from the Inflation Reduction Act of August 2022 extended the federal investment tax credit (ITC) for solar projects to 26% through 2025. Thus, First Solar could see its intrinsic growth rate boosted in the long term.
Even though FSLR started to look a bit oversold after releasing its earnings print, shares have tumbled nearly 10% since then. The company now trades at 11.8x forward earnings.
Ormat Technologies (ORA)
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Ormat Technologies (NYSE:ORA) primarily engages in the geothermal and recovered-energy power business in the U.S., Indonesia, Kenya, Turkey, Chile, Guadeloupe, Guatemala, Ethiopia, and Honduras. Last year, Ormat derived approximately 86% revenue from generating electricity through its geothermal plants and recovered energy-based power plants.
From a year-to-date (YTD) perspective, investors have largely shied away from the stock. In essence, they couldn’t justify the company’s expensive valuation early in the year. ORA’s shares have fallen more than 21% YTD, despite strong earnings and guidance in the second quarter. Also, with valuation multiples essentially halved since January, ORA looks like an attractive investment opportunity.
On the date of publication, Tyrik Torres 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.
Tyrik Torres has been studying and participating in financial markets since he was in college, and he has particular passion for helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.
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