Renewable energy is the future. Solar capacity across the world will grow by 600 gigawatts by 2024 and renewable energy resources will make up for 30% of the world’s electricity today by 2030, as per data from earth.org. This also means that the demand and adoption of renewable energy will be increasing over the coming years, benefitting renewable energies and their investors.
It might be in the early stages today, but the future of renewable energy will transform our lives. Smart investors know that now is the time to invest in renewable energy stocks that show growth potential. Here are the three renewable energy stocks to buy while they are trading at a discount.
NextEra Energy (NEE)
NextEra Energy (NYSE:NEE) is the largest electricity provider in the U.S. and Canada and an operator of solar, wind, and renewable energy projects. The company enjoys a steady income through its utilities business while also focusing on the renewables segment. Essentially two businesses merged into one, the company has reported stellar financials in the second quarter of this year. It saw a whopping 100% jump in net income, hitting $ 2.8 billion, while the income from its renewable energy projects was up by over 10 times.
Overall, it is a low-risk stock with a strong balance sheet. However, management has recently announced a reduction in its dividend growth targets to a range of 5% to 8% due to a tight cash position. This could be due to the tighter monetary policies that are affecting all companies. They aim to stick to the target of 6% through at least 2026. Earlier, it was aiming for a dividend growth of at least 11% annually.
That said, the company aims to hit the project EPS, and the numbers will be interesting. Even if the dividends drop for a short period, the stock will continue to generate returns for you.
When it comes to renewable energy, NextEra Energy is enjoying an early mover advantage here in the growing sector. If you are waiting for a dip in the stock to make your move, now is the right time to do so. NEE stock is down 28% year to date and is close to $59 today. It is also an elite dividend stock with a yield of 3.12%.
First Solar (FSLR)
Solar power in particular is high in demand and the momentum is contributing to the growing success of First Solar (NASDAQ:FSLR). The company manufactures solar panels and covers the complete life cycle of the products, down to handling the recycling aspect of the panels that are sold to commercial and residential clients.
A big player in the solar space, First Solar hit net sales of $811 million last quarter, a 30.6% year-over-year rise, and holds a cash balance of $1.5 billion. For the full year, it expects sales in the range of $3.4 billion and $3.6 billion, with EPS to come in at $7 and $8. With a new manufacturing unit in the U.S. coming up by 2026, the company is literally on fire, thus ensuring FSLR remains one of the best renewable energy stocks to buy.
One of the most important reasons to invest in First Solar is the rising demand for solar energy across the globe. As a result, First Solar’s backlog now stands at 71.6 gigawatts which is enough to go into 2027.
Down 24% in the past six months, the stock is trading at $158 today. However, it is up 8% year to date, making this dip is a good chance to add the stock to your portfolio. Yes, the stock isn’t cheap but it currently has a price target of $200 from Citi and $226 from Morgan Stanley. This is one solar company that is thriving in the industry.
An ideal fuel cell stock, Bloom Energy (NYSE:BE) is set to benefit from the shift towards renewable energy. While itt specializes in electrolyzers that can help split water into oxygen and hydrogen, it found the spotlight thanks to the solid oxide fuel cell technology used across multiple industries. This technology is highly efficient and can produce about 25% more hydrogen as compared to the other similar technologies.
The company’s financials prove that it is making the right moves. Although it is not profitable yet, it did see a 24% year-over-year rise in revenue and hit $301 million. The net loss went from $118 million to $66 million from the same quarter YoY. I believe the company will report a profit by mid-2024.
Trading at $13 today, the stock is down 30% year to date. HSBC recently initiated coverage for the stock with a buy rating and a price target of $22. Out of 12 analysts on Tipranks, 7 have a buy rating for the stock and 5 have a hold rating with an average price target of $23.70, about a 77% upside from the current level.
On the date of publication, Vandita Jadeja did not have (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.