3 Strong Buy Renewable Energy Stocks to Add to Your February Must-Watch List
Renewable energy has been one of the fastest-growing sectors over the past decades. The federal energy subsidies and incentives for renewable energy companies have more than doubled from 7.4 billion in FY 2016 to 15.6 billion in FY 2022. This backdrop has led to this list of strong buy renewable energy stocks for investors to consider.
Currently standing at 1.21 trillion in global market size in 2023, the industry is expected to grow at a compound annual growth rate (CAGR) of 17.2% between 2024 and 2030. Below are the three stocks investors should look into as they keep their eyes on renewable energy stocks.
NextEra Energy (NEE)
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NextEra Energy (NYSE:NEE) is one of the world’s largest producers of renewable wind and solar energy based in Juno Beach, Florida. NextEra Energy is also the owner of Florida Power & Light Company, the nation’s leading power utilities in sales.
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As solar generation is expected to increase rapidly in Florida and FPL makes up two-thirds of the company, NextEra Energy showcases a promising future despite its stock plummeting 24.86% YoY. For almost a decade, NextEra Energy has consistently achieved a compound annual growth rate (CAGR) of 10% while all the other top 10 power companies averaged 2%, making the company the fastest growing in the industry.
NextEra Energy has also displayed a long track record of dividend growth since 2014, making the stock a reliable dividend achiever. This trend is expected to continue for the next 5 years with a suggested dividend growth rate (DGR) of 14.70% per year.
Clearway Energy (CWEN)
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Clearway Energy (NASDAQ:CWEN) is an independent renewable power producer that controls all stages of the renewable energy process from greenfield development to customers.
The company has reported solid Q3 FY 2024 financials as they generated 371 million in revenue, beating expectations by 5.5 million and showing an increase of 9.1% YoY. While the stock is down 31% YoY, the improving conditions and new projects suggest a path for a rebound.
Clearway currently has a net capacity power generation of 8.1 GW, where around three-fourths comes from solar and wind energy and the remaining quarter comes from natural gas-powered production. The company is expected to launch a 113.5-MW battery storage facility in Daggett, California as well as a new solar farm in Texas that will generate 70,000 MW. The new project in the Daggett complex is projected to bring in 18.5 million in tax revenues. This makes it one of those strong buy renewable energy stocks for investors to consider.
Because Clearway belongs to the fast-growing renewable energy industry, alongside solid financials and expansion plans, the long-term profitability of the stock seems likely despite its recent price drop due to volatility and high interest rates.
Nextracker (NXT)
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Nextracker (NASDAQ: NXT) is the leading American solar tracker company that specializes in providing software solutions for utility-scale solar projects worldwide. Last week, the company released its Q3 FY2024 earnings reports, indicating a surprising yet pleasant outperformance.
The company earned 96 cents per share on sales of 710 million while the analysts anticipated earnings of 49 cents on sales of 619 million. The revenue has grown 38% YoY as the demand for large utility-scale customers that the company serves continues to increase.
Following the earnings report, several Wall Street analysts predicted a positive forecast for the company’s stock. From its current stock price of $56.16, JPMorgan raised target prices ranging from $61.00 to $73.00. Furthermore, Truist Financial emphasized its “Buy” rating on NXT while analysts from Goldman Sach rated its price objective from $62 to $70
It has only been a year since Nextracker went public, yet the company has successfully doubled its stock price from its IPO price of $24. Although a lot of competitors in the solar industry have been struggling with rising interest rates, Nextracker continues to outperform and shows high growth potential.
On the date of publication, Tomas Levani 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 guidelines.
Tomas is a self-taught investor with a passion for ESG investing. He has managed the portfolio of a small investment fund, interned at a Fortune 500 investment company, and started his own research firm. Through his freelance writing, he now aims to find favorable investments in companies with a mission of bettering the world.
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