3 Undervalued Clean Energy Stocks for Long-Term Gains
The renewable energy sector is one of the most promising industries with a market size valued at $1.09 trillion in 2023 and expected to reach $2.45 trillion by 2032. As the global consciousness for climate change has increased over the last decade, the industry has been continuously growing with major subsidies from the government. The growth has led to the creation undervalued clean energy stocks.
In the U.S., the federal incentives to support renewable energy were almost 5 times higher than those for fossil energy in FY22, making investors feel optimistic about renewable energy stocks. Below are three undervalued clean energy stocks to buy.
Clearway Energy (CWEN)
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Clearway Energy (NASDAQ:CWEN) is the 5th largest American renewable energy company. CWEN owns more than 8,000 MW of assets, including 5,500 MW of solar energy and wind generation projects and 2,500 MW of green natural gas production facilities. In the first three quarters of last year, Clearway Energy has generated more than $112 million in total income from its renewable energy facilities. This showcases strong growth in revenue from $26 million in the same period of 2022.
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On top of its existing renewable energy facilities, the company has recently announced that it will build a new solar farm in Texas by 2026. The new facility is expected to generate over 70,000 megawatt-hours per year. With this project, Clearway Energy has already successfully found its customer, a tobacco company named Universal Corporation (NYSE:UVV). Furthermore, the world’s largest bearing manufacturer SFK has agreed to a 12-year renewable energy certificate purchase contract. With numerous partnerships and newest projects across the country, Clearway Energy showcases much potential for expansion and growth.
Plug Power (PLUG)
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Plug Power (NASDAQ:PLUG) is an American company developing hydrogen fuel cell systems that replace conventional batteries powered by electricity. Despite its concerning Q3 report in November of last year, the company has successfully rebounded with its new green hydrogen plant operation in Georgia. This new plant, which is the largest liquid green hydrogen facility in the nation, allows Plug Power to cut costs and improve its financials. Following the announcement, Roth MKM upgraded Plug Power’s share to “buy” from “neutral” while doubling the price target to $9.
In addition, Plug Power has finalized an enormous 1.6 billion loan from the U.S. Department of Energy to launch six U.S. green hydrogen production plants. The company hopes to produce more than 200 tons of hydrogen every day by the end of next year. And construction is set to begin as early as the second half of 2024. The new production plan combined with improving financials displays an optimistic future for Plug Power.
Array Technologies (ARRY)
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Array Technologies (NASDAQ:ARRY) is an American renewable energy company that provides utility-scale solar tracking solutions. The company is the largest solar tracker company in the world. It boasts operations all over the globe such as: Arizona, Australia, Brazil, England, South Africa and Spain. ARRY produces an integrated system of electric motors and controllers that maximizes energy production by PV panels. In November 2023, the firm announced a new $50 million investment into a solar tracker manufacturing facility in New Mexico, which will the be company’s second facility in the state, and a 22-acre expansion. In terms of financials, Array Technologies reduced its debt from $772 million in 2022 to under $700 million by the end of September 2023 alongside positive cash flow. Despite the short-term pessimism around the solar industry and market volatility, Array Technologies appears a good buy position for investors.
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 Publishing 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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