Green Energy Transition to Boost Renewables: 3 Stocks to Buy
In just the first six months of 2020, at least 207 natural disasters were recorded globally. In fact, the numbers have exceeded 27% compared to that recorded between January and June 2019. Per the Aon catastrophe report, as of Jun 23, these disasters occurring across the globe cost the world $75 billion. Increasing human footprint and massive usage of fossil fuels are leading to depletion of the ozone layer, building pressure on biodiversity, melting ice caps and also causing significant temperature disruptions.
This has forced many to consider transitioning to cleaner and renewable forms of energy. In fact, this transition is no longer driven by subsidies or government policies. Rather, decline in cost of wind and solar power has pushed businesses to shift to these renewables. Additionally, availability of newer models of electric vehicles each year, with better performance and lesser cost, has attracted customers.
Rooftop Solar Installations Bump Up
The U.S. solar industry has been able to thrive despite unprecedented headwinds like the coronavirus pandemic, import tariffs and expensive photovoltaics (PV). In the first three quarters of 2020, renewable energy (that includes solar and wind) accounted for 70% of new U.S. power capacity, per data from FERC and small-scale solar power estimates from CleanTechnica. And solar energy accounted for 43% of the new power capacity.
Demand for solar rooftops has drastically increased in the past year as the advancement in technology has led to decline in cost. In fact, it can now compete with coal and gas-based electricity providers. Moreover, these rooftop modules have now become more compact, easy to operate and self-sustainable. For instance, in May, Enphase Energy, Inc. ENPH rolled out its all-in-one solar panel systems for residential and commercial use that has three base Encharge 3 storage units with a total usable capacity of 10.08kWh, and 12 embedded grid-forming microinverters.
According to a Reuters article, the U.S. Solar Energy Industries Association (SEIA) and energy research firm Wood Mackenzie estimated that there will be more than 19 gigawatts of solar installations this year. The installations can power more than 3.6 million homes compared with13.3 GW of capacity installed in 2019.
Rapid Adoption of Electric Vehicles
In the transportation sector, electric vehicles are grabbing people’s attention as newer models keep hitting the market each year. As price of fossil fuels continues to grow, these cheaper alternatives not only reduce CO2 emission but also have a lower and less frequent maintenance. Companies like General Motors plan to invest $27 billion in battery electric vehicles (BEVs) over the next five years and launch 30 different models of EVs over the same time frame.
Adoption of electric vehicle will also boost demand for more charging stations. With incentives flowing in from the government, several energy companies are expanding their charging network for electric cars. Recently, Blink Charging signed a deal to deploy 26 EV chargers at Burger King locations and a five-year deal with Illinois' Blessing Health System to deploy 20 of its IQ 200 EV chargers at four health care facilities.
Per a Prnewswire article, a Frost & Sullivan's recent analysis estimates that the EV market in the United States could “register a nearly five-fold growth, reaching almost 7 million unit sales by 2025 from 1.4 million unit sales in 2020.”
3 Top Choices
Renewable energy stocks will also receive an additional push in the upcoming months from President-elect Joe Biden’s $2-trillion plan to combat climate change. His administration plans to spend the amount in supporting solar energy installations, development of battery technology, renewable energy and electric vehicles. Given such a scenario, we have shortlisted three renewable energy stocks that carry a Zacks Rank #2 (Buy) and are poised to grow. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
SunPower Corporation SPWR offers commercial solar rooftop and ground-mounted solar power systems, and residential mounting systems. The company’s expected earnings growth rate for the next quarter is more than 100% against the Zacks Solar industry’s projected earnings decline of nearly 46%.
The Zacks Consensus Estimate for the company’s next-year earnings has been revised 58.6% upward over the past 60 days.
Azure Power Global Limited AZRE engages in the development, construction, ownership, operation, maintenance and management of solar power plants. The company’s expected earnings growth rate for the current quarter is 72.7% against the Zacks Solar industry’s projected earnings decline of nearly 12%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 62.2% upward over the past 60 days.
Ameresco, Inc. AMRC offers energy efficiency, infrastructure upgrades, energy security and resilience, asset sustainability, and renewable energy solutions. The company’s expected earnings growth rate for the currentyear is 21.7% against the Zacks Alternative Energy - Other industry’s projected earnings decline of 1.8%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 8.6% upward over the past 60 days.
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