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Forget Oil, Renewable Energy Is All Charged Up: 4 Winners

Nilanjan Banerjee

Since the beginning of 2020, the price of West Texas Intermediate (WTI) oil has plunged more than 40%, thanks to the coronavirus pandemic and supply glut. With no immediate respite in sight, it has become risky to invest in oil stocks. Moreover, leading oil companies are considering investment in non-oil businesses like renewable energy to align goals with the Paris Climate Agreement.

Meanwhile, the capacity of renewable energy skyrocketed from 414 gigawatts (GW) to 1,650 GW from 2010 to 2019, according to Bloomberg New Energy Finance. Overall, it seems prospects for renewable energy industry are bright at the moment.

Oil Majors Lead in Energy Transition

Several oil and gas energy majors are setting ambitious goals to significantly lower greenhouse gas emissions. British energy giant BP plc BP has targeted to become a net zero emissions company by 2050. As a result, in the coming years, the integrated energy player is planning to boost investments in non-oil and gas operations.

Royal Dutch Shell plc RDS.A is another key energy firm planning to become a net zero emission energy firm by 2050. Importantly, the company intends to slash the carbon intensity of the products it will sell by roughly 30% by 2035. By 2050, the company plans to lower the carbon footprint by 65%.

Moreover, Eni S.p.A E, headquartered in Rome, Italy, recently announced the purchase of three onshore wind projects in Italy. The company expects the three projects to produce 35.2 megawatts (MW) of power at peak capacity. Eni also anticipates the developments — to be constructed in Comune di Laterza, in the Puglia area — to produce roughly 81 Gigawatt hours (GWh) of power every year. Thus, the energy major expects these wind projects to help eliminate emissions of 33,400 tons of carbon dioxide every year.  

Notably, the company expects the construction of the plants to commence by the third trimester of 2021. Importantly, this is the first time that the energy giant will be producing energy from wind projects in Italy. With this acquisition, Eni has made significant progress in its decarbonization process and estimates this to reduce its net emissions of greenhouse gases by 80% by 2050.

Renewables to Be Fastest Growing Source of Electricity

With the energy transitions in the cards, the year 2020 will see renewables as the fastest growing source of power generation, said U.S. Energy Information Administration (EIA). In 2020, the share of renewable energy for electricity generation in the United States will rise to 21% from 17% in 2019, per EIA. The share will further rise to 23% in 2021, added EIA. On the contrary, EIA projects coal’s share for electricity generation to decline to 17% in 2020 from 24% in 2019.

Hence, with the mounting demand for cleaner energy, there will be more electricity generation from renewable energy sources. In fact, EIA believes that there will be more addition to power generating capacity from wind and solar. In 2020, the electric power sector will see the addition of 12.6 gigawatts of new utility-scale solar capacity and 23.2 gigawatts of wind capacity in the United States, according to EIA projections.

Stocks to Buy

With oil prices still in the bearish territory, crude explorers and producers are curtailing operations and capital expenditures to survive. Also, the future for all the oil and gas companies lies in renewable energy since investors are building pressure on the firms to lower net emissions.

Overall, it seems to be an opportune moment for energy investors to consider stocks from the renewable energy industry. Here, we present one stock carrying a Zacks Rank #1 (Strong Buy) that is well positioned to gain. There are three other stocks with a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Canadian Solar Inc. CSIQ is among the leading solar power companies in the world. The company, founded in 2001 in Canada, is one of the largest providers of solar energy solutions and it also manufactures solar photovoltaic modules. In 2020 and 2021, the Zacks Rank #2 company is likely to see earnings growth of 22.8% and 11.4%, respectively.

First Solar, Inc. FSLR is among the major companies engaged in providing photovoltaic (PV) solar energy solutions across the world. In 2020 and 2021, the #2 Ranked stock is likely to see earnings growth of 93.2% and 20.2%, respectively.

Bloom Energy Corporation BE, through its energy server platform, delivers affordable and clean energy to customers like several Fortune 100 companies. In the next five years, the #1 Ranked stock is likely to see earnings growth of 25%, surpassing the industry’s 13.1%.

Enphase Energy, Inc. ENPH is among the major suppliers of solar microinverters in the world. The Zacks #2 Ranked stock is likely to see earnings growth of 8.4% and 37.5% in 2020 and 2021, respectively.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

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Canadian Solar Inc. (CSIQ) : Free Stock Analysis Report
First Solar, Inc. (FSLR) : Free Stock Analysis Report
Eni SpA (E) : Free Stock Analysis Report
BP p.l.c. (BP) : Free Stock Analysis Report
Royal Dutch Shell PLC (RDS.A) : Free Stock Analysis Report
Enphase Energy, Inc. (ENPH) : Free Stock Analysis Report
Bloom Energy Corporation (BE) : Free Stock Analysis Report
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