From driving electric vehicles to eliminating plastics and trying to live a more eco-conscious life, the green revolution is permeating almost every part of our daily lives. For investors, renewable energy is an exciting type of stock that could potentially see big gains over the long term, especially as the adoption of environmentally friendly products and alternative energy sources becomes more common.
As always on the stock market, not every renewable energy company can be a winner. Research, due diligence, risk factors and a thorough understanding of the renewables market are all essential to inform your decision-making. For those who have been monitoring the market, below we are sharing some interesting stocks in the renewable energy sector to watch in Q3 2022.
How to find the best renewable energy stocks
There is no denying that renewable energy is a big focus for our global future — and there has been significant investor interest to back it up. Looking ahead to the future, experts predict that three alternative energy types will lead renewable investments through to 2050, with monumental financial funding in wind power ($US5.3 trillion), solar (US$4.2 trillion) and batteries (US$843 billion).
After some initial strong signs of growth in 2021, we saw a bit of a sell off of clean energy stocks at the end of the year and into early 2022. This was due in part to the potential for rising interest rates in the US as well as President Joe Biden’s inability to get his proposed Build Back Better plan off the ground. Despite the pullback, most analysts are not fearing a clean energy crash like the one we saw over a decade ago. While trends can have varying degrees of influence, this is something to keep in mind when considering if you are going to add renewable energy stocks to your portfolio.
Whether you are a seasoned investor or a relative newcomer to the stock market, you may be interested in how renewable energy stocks can contribute to your wealth-generation strategy. It may not be for everyone, so make sure you understand why you might want to invest in renewables. Maybe you expect the Biden Administration’s energy reform will still positively influence stock prices. Or perhaps you anticipate that alternative energy will become the norm over the coming decades as traditional resources dwindle.
Finding the best renewable energy stocks takes time and research, and not even the most successful investor can promise you that one stock, in particular, will be a long-term winner. However, we have assessed the market and found five interesting renewable energy stocks to watch in Q3 2022.
5 top renewable energy stocks to consider now
In this guide, we will highlight five top renewable energy stocks to consider for Q3 2022. The stocks are:
Hannon Armstrong Sustainable Infrastructure Capital
Plug Power
NextEra Energy
Acuity Brands
Green Plains
Each of these renewables sector companies has its own pros and cons, and they may continue to see a strong growth rate depending on various external factors.
Hannon Armstrong Sustainable Infrastructure Capital (HASI)
Past performance is not an indication of future results
- Hannon Armstrong is the first-ever US public company that is entirely dedicated to renewables and climate solutions investments.
- Unlike many other capital firms, which may only invest in one or two segments of renewable energy, Hannon Armstrong is willing to invest in almost every aspect of renewables.
- Approximately 16% of Hannon Armstrong’s portfolio is the physical land beneath solar projects, which the firm rents out to power plant developers.
- Being a flexible investor, Hannon Armstrong is able to dedicate funding to where the best yields are relative to the associated risks.
- Pipeline grew from $3 billion reported at the end of 2020 to $4 billion reported at the end of 2021.
- Over the past five years, Hannon Armstrong’s stock price has risen from roughly $20 in 2016 and 2017 to a recent high of $72.42 in January 2021. After a drop back down to $45.22 in May, it climbed back to $63.96 in November before diving all the way down to $37.09 in January 2022. As of early June, 2022, the stock has made some ground, valued at $40.04.
- They offer a fairly high dividend yield of 3.89% as compared to other energy stocks.
- Most recent earnings release: May 3, 2022.
Your capital is at risk. Other fees apply.
Plug Power (PLUG)
Past performance is not an indication of future results
- Plug Power is a company that produces sustainable hydrogen fuel cells that can be used instead of traditional batteries and electricity to run equipment and machinery. Right now they are primarily used in fork lifts.
- Plug Power works with some of the biggest names in retail, including Amazon, Walmart, Home Depot and Nike and was busy in Q4 2021, developing new partnerships with Certarus and Spain’s Acciona Energia.
- One factor potential investors will want to keep an eye on is the cost of hydrogen, which can greatly impact Plug’s margins. The company foresees falling hydrogen prices ahead.
- After climbing to $66.82 in January 2021, the stock fell and spent the majority of 2021 under $40.00. After a brief climb back up to $44.52 in mid-November, it, like many renewables, dropped back down to $18.75 in January. As of early June, 2022, the stock had risen slightly to $18.85.
- The company has laid out an ambitious growth plan for 2022, estimating its revenues to climb above $900 and goals of working with the federal government to develop a hydrogen hub in New York. The company’s ability to tap into the $8 billion set aside by the government for such projects could play a major factor in stock price in the coming months.
- In Q1 2022, Plug Power recorded revenue totalling $140.8 million, up from $72 million in Q1 2021. The company reaffirmed its targets of 30% gross margin and 17% operating margin by 2025 in its Q1 earnings release, outlining improvements to fuel, service and equipment margins.
- Most recent earnings release: May 9, 2022.
Your capital is at risk. Other fees apply.
NextEra Energy (NEE)
Past performance is not an indication of future results
- NextEra Energy is an electric utility company as well as one of the global leaders in producing wind and solar power, which it then sells on to utility companies and end users.
- NextEra owns the Florida Power & Light Company, which merged with Gulf Power in January 2021 and is the largest vertically integrated rate-regulated electric utility in the US, as well as NextEra Energy Resources and NextEra Energy Partners.
- In a January 2022 earnings report call, chairman and CEO James Robo said he did not believe NextEra’s plans were dependent on the success of President Biden’s Build Back Better plan.
- In 2020, the company announced a goal of 10% annual dividend growth for shareholders through 2022. In February 2022, NextEra announced it had reached that goal, with the board approving an extension of the policy through at least 2024.
- In its Q4 2021 earnings report, NextEra reported 11.9% year-on-year growth (up to $1.45 billion, or $0.74 per share).
- As of early June, 2022, NextEra stocks were valued at $79.78, down from an all-time high of $93.73 in late December 2021.
- Most recent earnings release: April 21, 2022.
Your capital is at risk. Other fees apply.
Acuity Brands (AYI)
Past performance is not an indication of future results
- Acuity Brands is a broad scope lighting solutions provider for various applications — commercial, industrial, institutional, residential and infrastructure. They service international markets, especially throughout North America.
- The company has a long history dating back to the 19th century, but its stock’s performance in 2021 is the reason why investors sat up and took notice of this company.
- In December 2020, the share price closed at $121.09, whereas in November 2021, the price had soared to above $223 per share. The stock has since fallen as low as $164.33 in May 2022, recording $185.49 as of early June, 2022.
- In April 2022, Acuity Brands reported 22.4% year-on-year per-share earnings for Q2 of the 2022 fiscal year, rising to $2.13. Sales in that period jumped 17.1% to $909.1 million.
- Most recent earnings release: April 5, 2022.
Your capital is at risk. Other fees apply.
Green Plains (GPRE)
Past performance is not an indication of future results
- Green Plains is a leading agri-tech company that focuses on transforming renewable crops into sustainable and high-value ingredients.
- Based in Omaha, Nebraska, Green Plains is the third-largest Ethanol fuel producer in the world, shipping approximately one billion gallons every year.
- Ranked among the best-performing renewable energy stocks of 2021, with the stock price nearly tripling from January to August last year and reaching as high as $43.78 in November before seeing pullback.
- Despite three years of shrinking revenue from 2019-2021, share price consistently grew year on year in that span, showing investors’ positive long-term outlook for the company.
- Some cautious investors might have seen the consistent growth of Green Plains’ share price as one to avoid for fear it had already reached — or exceeded — its true value. After the pullback in late 2021 and early 2022, some suggested it was a chance to invest in the company at a more advantageous price point. As always, conduct your own due diligence before investing in any new stock.
- From late May 2022, the stock showed some positive growth, reaching $37.13 in early June, 2022.
- Most recent earnings release: May 2, 2022.
Your capital is at risk. Other fees apply.
Unlike many other industries on the share market, renewables and alternative energy companies are a relatively new area for investors. That brings with it risks as well as potential rewards. As is clear from the recent price activity of some of the companies mentioned above, it may be an intriguing investment, depending on your risk tolerance and your long-term growth outlook.
Charts sourced from TBanque platform 20/06/2022. All trading carries risk. Only risk capital you can afford to lose.
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