In this article we will take a look at the top 10 best renewable energy stocks to buy now. You can skip our comprehensive analysis of the alternative energy industry and go directly to the 5 Best Renewable Energy Stocks to Buy Now.
Energy usage around the world is rising as emerging economies in Asia become the drivers of the manufacturing power in the global economy. According to statistics released by the United States Energy Information Administration, the energy usage on the planet is expected to grow by 50% in the next three decades, largely due to the rising demand from China, India, and other nations in the East. However, diminishing fossil fuel sources and global warming concerns around the burning of coal, oil, and gas have led to a shift in governmental priorities.
Global Shift to Renewable Energy
This shift is marked by policy changes at the international and national level that reward businesses for switching to renewables and incentivize research and development into alternative energy. Already, the results of this shift are evident. The International Energy Agency estimates that renewable energy will overtake coal to become the largest source of electric power in the next four years. In 2020, alternative energy sources accounted for almost 28% of the total electricity generation in the world, up from 26% the previous year.
In 2021, the share of renewables in power generation is expected to rise by 8%, the largest year-on-year growth on record in absolute terms. The trends on the ground mirror the overall market direction on renewable stocks. The S&P Global Clean Energy Index was expanded earlier this month to include 52 new stocks. The iShares Global Clean Energy ETF (NASDAQ: ICLN), which tracks the results of investments in clean energy, has outperformed the wider market by posting a total return of 75.9% compared to the total return of 33.4% by the Russell 1000 over the past year.
Even big economic powers like China and Australia, who depend on coal for power and manufacturing needs, are taking steps towards a shift to cleaner sources. In 2019, China spent more than $83 billion on renewable energy compared to the $55 billion spent by the US on the same sector that year. However, as President Biden assumes charge, Washington is planning to allocate $1.3 trillion to build a power capacity mostly built on clean energy by 2030, with large sections of the investment going towards wind and solar power plants.
All market indicators point towards the growth of the renewable energy sector in the coming years. But there should be clarity in the minds of investors with regards to the overall business model and the balance sheets of companies involved in clean energy. There is fierce market competition and much of the growth in the industry is driven by innovative firms operating on thin margins. But there is little doubt that the clean energy sector will transform the power market in the coming years even as fossil fuel demand rises and leads to hedge fund interest.
The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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With this context in mind, here is our list of 10 best renewable energy stocks to buy now.
Best Renewable Energy Stocks to Buy Now
10. SunPower Corporation (NASDAQ: SPWR)
SunPower Corporation (NASDAQ: SPWR) is a California-based company that offers solar solutions to residential, commercial and industrial clients. The firm also sells directly to a network of third-party dealers and resellers. The products that the company markets include commercial roof, carport, and ground mounted systems, as well as post-installation operations and maintenance services. SunPower Corp was founded in 1985 and is placed tenth on our list of 10 best renewable energy stocks to buy now.
The shares of the firm have been soaring since last month after President Biden announced a plan last month to extend tax credits offered to clean energy firms by ten years and promised increased spending on research and development in the sector. On March 23, investment bank Goldman Sachs upgraded the stock rating on SunPower to Buy from Neutral. At the end of the fourth quarter of 2020, 24 hedge funds in the database of Insider Monkey held stakes worth $345 million in the firm, up from 14 in the preceding quarter worth $91 million.
9. Brookfield Renewable Partners L.P. (NYSE: BEP)
Brookfield Renewable Partners L.P. (NYSE: BEP) is a Bermuda-based firm that owns several renewable power energy generating plants. The firm operates in the United States, Canada, Colombia, Brazil, Europe, India, and China. It owns a total of 19,000 megawatts of power generation capability globally through hydroelectric, wind, solar, distributed generation, pumped storage, cogeneration, and biomass sources. The company was founded in 1999 and is ranked ninth on our list of 10 best renewable energy stocks to buy now.
Last month, financial services firm Wells Fargo upgraded Brookfield stock to Equal Weight from Underweight with a price target of $42. In February, the clean energy firm hiked its quarterly dividend by 5% to $0.30 per share. Out of the hedge funds being tracked by Insider Monkey, London-based investment firm Ecofin Ltd held the most shares in the firm - 280,135 – worth more than $12 million. NewGen Asset Management was 2nd with more than 71,000 shares worth almost $3 million.
8. Canadian Solar Inc. (NASDAQ: CSIQ)
Canadian Solar Inc. (NASDAQ: CSIQ) is a Guelph-based solar energy company. The products that the firm markets include solar ingots, wafers, cells, modules, and other solar power products. The company designs, develops, and sells these products while also offering repair and management services related to these products. The firm also equips and operates electricity-generating solar power plants. It has a fleet of solar power plants in operation with an aggregate capacity of approximately 880 megawatt.
The firm was founded in 2001 and is placed eighth on our list of 10 best renewable energy stocks to buy now. After dipping on the back of proposed changes to laws related to solar companies in California earlier this year, the stock of the firm has bounced since President Biden announced a plan to cut the cost of solar energy-related products by 60% over the next decade. At the end of the fourth quarter of 2020, 14 hedge funds in the database of Insider Monkey held stakes worth $118 million in the firm, down from 25 in the preceding quarter worth $245 million.
7. Plug Power Inc. (NASDAQ: PLUG)
Plug Power Inc. (NASDAQ: PLUG) is a New York-based company that is involved in development and selling of hydrogen fuel cell systems that replace conventional batteries in equipment and vehicles powered by electricity. The products that the firm makes include GenDrive, a hydrogen fueled PEM fuel cell system that powers electric vehicles, and GenFuel, a hydrogen fueling delivery, generation, storage, and dispensing system. The firm was founded in 1997 and is placed seventh on our list of 10 best renewable energy stocks to buy now.
On April 20, financial advisory firm Evercore launched coverage on Plug Power stock with an Outperform rating, noting that pouring money into alternative energy would be an investment mega theme over the coming months. Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm DE Shaw held the most shares in the firm- 15.3 million – worth more than $522 million. Citadel Investment Group was 2nd with more than 1.5 shares worth almost $53 million.
6. Tesla, Inc. (NASDAQ: TSLA)
Tesla, Inc. (NASDAQ: TSLA) is a California-based automaker that develops and sells electric vehicles around the world. The firm also has stakes in the clean energy business. It makes batteries, solar panels and other energy-related products as well. It has a market cap of over $649 billion and posted more than $31 billion in annual revenue in December 2020. Earlier this month, Vancouver-based investment firm Canaccord Genuity upgraded Tesla to a Buy rating and set the price target of shares at $1,071.
At the end of the fourth quarter of 2020, 68 hedge funds out of 887 in the Insider Monkey database held stakes in Tesla, up from 67 out of 817 in Q3 2020. The total value of the shares held by these funds in Q4 was over $12.3 billion, up from $8.1 billion in the preceding quarter. Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group held the most shares - 28 million – worth more than $20 billion.
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Disclosure: None. 10 Best Renewable Energy Stocks to Buy Now is originally published on Insider Monkey.