The significance of clean energy is increasing every passing day. The corporate world is diving into it with the government’s new policies based on green energy. Clean energy stocks have a bright future ahead and investing in this segment will reap massive returns in the longer run.
The new U.S. administration promises to put the country on track to zero emission by 2050. That’s the long-term goal. The near-term goal is to collaborate with world economies to reduce the world’s methane emissions by 30% from 2020 levels by 2030.
With the new multi-trillion-dollar infrastructure bill on board, many clean energy stocks stand a fair chance to become emerging leaders in the stock market. The devoted innovators in this space can enjoy strong growth in the next few years.
Brookfield Renewable (BEP)
Brookfield Renewable (BEP) is a global leader in renewable energy. It’s one of the world’s largest producers of hydroelectric power, which made up more than 62% of its portfolio in 2021. The company has been expanding its clean energy sources including growing wind, solar, and energy storage expertise. BEP also sells the bulk of its power under long-term PPAs that generate steady cash flow.
Brookfield has an excellent track record. Since its inception, the company has generated an annualized total return of 20%. Powering its growth has been the steady expansion of its portfolio through acquisitions and development projects. Those two factors have increased Brookfield’s earnings at a more than 10% compound annual rate over the past decade, fueling 6% compound annual growth in its dividend payments since 2012. That adds an extra plus for BEP investors.
The company projects even more growth ahead – up to 20% annually through 2025. Brookfield has an extensive pipeline of renewable energy development projects and is working in acquisitions as well.
BEP stock price has dropped to 52-week lows. That puts the stock in a great buy position for the long-term, considering its fundamentals and developments ahead.
Brookfield Renewable estimates the push for decarbonization is creating the need for over $150 trillion in total investments over the next 30 years. That opportunity, along with the recent drop in the share price, makes now a good moment to invest in these clean energy stocks. BEP’s current dividend payout of 3.27% is also a major plus.
Bloom Energy (BE)
One of the leading hydrogen energy companies, Bloom Energy (BE), is a promising clean energy firm for long-term growth. Hydrogen could be one of the most disruptive advances in energy in a century, allowing energy from clean sources like wind and solar to be stored in massive quantities and used later. Companies like Bloom Energy will be one of the major drivers of hydrogen energy.
Bloom Energy generates more revenue and has a better margin than its competitors that including Plug Power and Ballard Power Systems. BE’s sales over the past five years have soared over 35%. This is in the time when the industry has just emerged on the surface. Therefore, Bloom Energy has a long way to go and make massive sales from its clean energy stocks.
Moreover, the company is working on powering ships with hydrogen, adding backup power for the grid, and even building microgrids that could disrupt the energy infrastructure we know today.
Recently, Bloom Energy collaborated with Conrad Energy and Electricity North West to integrate into the U.K. market. The three companies will develop and operate behind-the-meter projects for Bloom Energy’s solid oxide power generation platform in the U.K. This collaboration will help the UK achieve its net-zero carbon emission goals by 2050. That also includes a hydrogen strategy that aims at five gigawatts of low carbon hydrogen production capacity by 2030.
Bloom Energy could lead to decades of growth, which is why BE is a buy-and-hold long-term stock.
Capstone Green Energy (CGRN)
Capstone Green Energy (CGRN) specializes in carbon reduction and green energy solutions. Comparatively speaking, Capstone Renewables and Bloom Energy are much smaller. Much of Capstone’s business focuses on its microturbine energy and battery storage systems. That helps customers reduce their carbon footprint and save on energy costs.
Capstone has a strong board and solid management team and has embarked on a “great turnaround story with the right plan.” CGRN’s microturbines can burn “green waste,” such as methane gas from landfills, wastewater treatment facilities, and food-processing operations. The company has much potential and its stock has massive upside in the green energy sector.
The company is expanding across the globe and its services rendered are increasing. Recently, Capstone’s Austrian distributor, Wels Strom, signed a contract with IFG Asota to provide a Combined Heat and Power, along with a 10-year Factory Protection Plan for their fiber manufacturing plant in Linz, Austria. This long-term deal will bring massive revenue to the company.
CGRN is a penny stock as it trades just under $5. Therefore, it’s a pretty decent investment considering the long-term. Capstone’s stock is all-balanced and has decent fundamentals, which puts it in a great clean energy stocks list.
NextEra Energy Inc. (NEE)
A foundational pick for new energy investors, NextEra Energy (NEE) is the largest producer of solar and wind energy in North America. The company has plans to invest $34.5 billion in different projects in the 2022-2025 time period.
These investments will be directed toward modernizing and strengthening the existing infrastructure and generating more electricity from clean sources to lower carbon emissions. NextEra expects to reduce its carbon emission intensity by 67% within 2025 from the 2005 levels. NEE’s current dividend yield is 1.77%, which is better than the Zacks S&P 500 Composite group’s average of 1.34%.
Moreover, NextEra’s capital appreciation and dividend growth upside potential are quite substantial. The fair value estimate for shares of NEE stands at $102 per share with room for upside, as the top end of the fair value estimate range sits at $124 per share. Based on NEE’s investments in the sector, we can expect strong growth in its share price.
The company’s industry-leading position, growth, and dividend make it a well-rounded energy stock. NEE stock’s buy zone is around $77 where its major support lies. It’s one of the stocks that investors should keep under their watch when engaging with clean energy stocks.
Azure Power Global Ltd. (AZRE)
Azure Power (AZRE) is one of India’s leading renewable energy companies. India is likely to be among the biggest markets for solar energy. As of August, the country had 100.68GW of renewable energy capacity. India aims to increase this capacity to 450GW by 2030. Over 60% of the capacity is expected to be solar.
This is a key reason to be bullish on Azure Power so, the company is well-positioned to benefit from positive industry tailwinds in the coming decade.
AZRE stock has been bearish since the start of 2021. Currently, it is trading at its 52-weeks low and If we foresee the next decade, the demand for renewable energy will spike in India. That puts Azure Power in a sublime growth position.
Currently, Azure Power has the second-largest solar portfolio in India at 6,955MW. Of this, only 2,102MW is operational. Once the current backlog is serviced, the company will be positioned to deliver robust EBITDA and cash flows.
From a financial perspective, Azure has total debt of $1.2 billion and net debt to EBITDA of 6.6. While leverage seems high, the company has steady cash flow visibility, making it to the list of clean energy stocks list to consider for investment.
Recently, Azure signed a power purchase agreement with Solar Energy Corporation of India for 600MW. Azure will be supplying power for 25 years at a fixed tariff of 3.4 cents/kWh and these agreements are likely to ensure that cash flow visibility remains robust over the long term. Therefore, we don’t see any debt servicing concerns.
As Azure expands its presence in more states in India, it’s likely that the backlog will swell. AZRE stock, therefore, looks attractive after under-performing in the last 12 months.
