The Green Giants: 3 Stocks Leading the Sustainable Revolution
Scoping out a one-year time horizon, 2024 looks great for the renewable energy industry. Already, large-scale federal investments and a heightened call for decarbonization are anticipated to boost the demand for renewables. For example, The Energy Information Administration expects a 17% increase in renewable deployment in 2024, a rise to nearly a quarter of total electricity generation. While a temporary cost hike is sure to happen, investment tax credits as pushed by the Inflation Reduction Act and Infrastructure Investment and Jobs Act will only help utility-scale solar and onshore wind stay competitive.
Moreover, these increased hydrogen tax credits have already begun to improve the demand for renewable natural gases (RNGs) in biohydrogen production and sustainable aviation fuels.
With this combination of growing investments, regulatory support, and a shifting focus toward renewable technologies serving as terrific growth catalysts, here are three green giant stocks that are bound to capitalize on these trends.
Darling Ingredients (DAR)
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Darling Ingredients (NYSE:DAR) is a leading sustainable resource conversion company that turns food waste into sustainable products, including animal feed, biofuels, and green energy. Its alignment with the growing global environmental focus has put it as a top-rated ESG-rated industry by Sustainalytics, and it has a one-year price range between an average of $68.06 and a high of $120.00.
Currently, its main potential growth driver is Diamond Green Diesel (DGD), a joint venture with Valero Energy (NYSE:VLO) that is poised to capitalize on the growing demand for renewable diesel in sectors like aviation and transportation.
Looking at the financial side of Darling’s development, management expects to see a large enhancement in DGD margins and a continued production of over 1.2 billion gallons in 2024. Although the stock has faced some missed recent earnings per share (EPS) and revenue expectations, its price-to-earnings (P/E) valuation of nearly half the sector median of 18.45x positions Darling Ingredients as an undervalued stock for any investor looking for a green growth pick.
NextEra Energy (NEE)
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NextEra Energy (NYSE: NEE) creates numerous forms of energy infrastructure that produce electricity through nuclear, wind, and solar sources. Yahoo! Finance analysts predict a one-year price range of $43 to $102 with a mean of 71$.
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Although the company has experienced a few setbacks regarding growth and stock price, the company still is incredibly innovative and optimistic, especially with the expansion of its green hydrogen project. Green hydrogen — the process of breaking water into hydrogen and oxygen to generate energy — is NextEra’s next 65 million-dollar expansion project in Florida, providing renewed hope for its green future.
Additionally, because of the company’s recent setbacks, NextEra’s P/E ratio of 15.77x sits well below its five-year average of 41.44x and the industry average of 16.92x. With a strong year-over-year (YOY) EPS growth of 80% to accompany this valuation, NextEra will no doubt be able to recover from these shortcomings and pioneer the green revolution.
First Solar (FSLR)
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First Solar (NASDAQ:FSLR) is one of the largest solar panel producers with massive innovations in sustainable energy, particularly solar. Analysts at Yahoo Finance estimate that the stock will trade within a one-year price range of $158 to $326, averaging at around $221.
Currently, the business has no signs of slowing down at all, with a total booking backlog of 81.8 gigawatts (GW) through 2030. With a healthy influx of orders, First Solar remains a strong leader with recurring revenue and demand. In addition to this, the company has been investing heavily in its research and development. It plans to open a $1.1 billion solar panel factory in Louisiana, marking its fifth factory to further bolster growth.
First Solar is not lacking in its financials either. Not only has it experienced an impressive 400% increase year-over-year in net income, the company is trading at a P/E of 32.7x, considerably lower than the renewable industry’s P/E of 83.88x. All in all, First Solar is a worthy consideration for those looking for a solar power leader.
On the date of publication, Ian Hartana and Vayun Chugh 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.
Chandler Capital is the work of Ian Hartana and Vayun Chugh. Ian Hartana and Vayun Chugh are both self-taught investors whose work has been featured in Seeking Alpha. Their research primarily revolves around GARP stocks with a long-term investment perspective encompassing diverse sectors such as technology, energy, and healthcare.
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