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Renewable Stocks in Focus on Decarbonization Urgency

Zacks Equity Research

The rapid change in weather conditions is compelling climate watchers and especially the United Nations to harp on decarbonization. This may be the only solution to check atmospheric changes that are catastrophic to our planet.

Coming to the commercial aspect, decarbonization gives the renewable energy space an opportunity to grow uninterruptedly, making its near-term prospects brighter.

Climate Change to Push Demand for Alternative Energy

The United Nations’ General Secretary António Guterres, at the Climate Change Conference COP25, highlighted that by the end of the coming decade, nations might reach a “point of no return,” jeopardizing the health and safety of the planet’s inhabitants. Guterres also emphasized a “path of hope” and “sustainable solutions” in his speech.

In this context, decarbonizing has a huge and urgent role to play in curbing global carbon emissions before climate change becomes irreversible.

But what instills fear is that from the beginning of this year, renewables growth has slumped year over year for the first time since 2001. However, per the International Renewable Energy Agency (Irena), “7.7TW of operational renewable capacity will be needed by 2030” to limit global warming.

On a brighter note, decarbonization is technologically possible and a potential driver of economic growth. But the real question remains, is the global economy ready to switch at the rate needed to overcome climate change?

Bright 2020 Prospects

Recently, solar and wind power have become significantly less expensive. In fact, alternative sources of energy are now cheaper than coal in most parts of the world. In other words, renewables have turned more profitable as a standalone sector. The iShares Global Clean Energy ETF has added 33.3% on a year-to-date basis compared to the Energy Select Sector SPDR Fund gain of only 2.2%.

Global investment in the renewable energy space exceeded $250 billion in 2018, per the Global Trends’ Renewable Energy Investment report. Wind energy has made remarkable progress in the United States and is expected to generate 100 gigawatts of energy by the end of third-quarter 2019, per the American Wind Energy Association.

What’s more, the space has a bright outlook since energy companies and other multi national firms are shifting to renewables at a faster pace. The low cost of generating and storing alternative energy is the main driver of this change. 

One of the most eye-catching examples is that of Apple Inc. AAPL. The iPhone maker announced on April 2018, that its global facilities, including retail stores, offices, data centers and co-located facilities in 43 countries, are powered with 100% clean energy. In fact, the company now has 25 operational renewable energy projects globally, with a generation capacity of 626 megawatts.

Further, per a Deloitte report, in April, renewable energy outpaced coal. U.S. power generation compromised 23% renewable energy compared to coal’s 20%. In fact, in the first half of 2019, wind and solar energy accounted for nearly 50% of total U.S. renewable electricity generation.

Watch Out for These Renewable Energy Stocks

Given the rising demand for renewable energy, investors should keep a close watch on these stocks.

Bloom Energy Corporation BE is a Zacks Rank #2 (Buy) company that designs, manufactures and sells solid-oxide fuel cell systems for on-site power generation. Its stationary power generation platform converts standard low-pressure natural gas or biogas into electricity through an electrochemical process without combustion.

Bloom Energy’s expected earnings growth rate for the current quarter is more than 100% against the Alternative Energy - Other industry’s projected earnings decline of 55.5%. The Zacks Consensus Estimate for the company’s current-year earnings has advanced 9.4% over the past 60 days. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Charah Solutions, Inc. CHRA is a Zacks Rank #2 company that provides environmental and maintenance services to the power generation industry in the United States. Charah Solutions’ expected earnings growth rate for the next quarter is more than 100% against the Alternative Energy - Otherindustry’s projected earnings decline of 20%. The Zacks Consensus Estimate for the company’s current-year earnings has advanced 2.4% over the past 60 days.

FuelCell Energy, Inc. FCEL is a Zacks Rank #2 company that designs, manufactures, sells, installs, operates and services stationary fuel cell power plants for distributed power generation. The company’s expected earnings growth rate for the current quarter is 96.1% against the Alternative Energy - Other industry’s projected earnings decline of 95.9%. The Zacks Consensus Estimate for FuelCell Energy’s current-year earnings has advanced 1% over the past 60 days.

Evergy, Inc. EVRG is a Zacks Rank #3 (Hold) company that engages in the generation, transmission, distribution and sale of electricity in Kansas and Missouri. It generates electricity from renewable sources like, uranium, natural gas and oil, hydroelectric, landfill gas, and solar energy sources The company’s expected earnings growth rate for the current quarter is more than 100% against the Alternative Energy - Other industry’s projected earnings decline of 55.5%. The Zacks Consensus Estimate for the Energy’s current-year earnings has advanced 0.4% over the past 60 days.

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 >>

Click to get this free report Apple Inc. (AAPL) : Free Stock Analysis Report FuelCell Energy, Inc. (FCEL) : Free Stock Analysis Report Charah Solutions, Inc. (CHRA) : Free Stock Analysis Report Bloom Energy Corporation (BE) : Free Stock Analysis Report Evergy Inc. (EVRG) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research