The sooner we transition toward a greener and cleaner economy, the better for all human beings. The future is green, and it is fast approaching. Governments worldwide are committing investments to increase the usage of renewable energy sources. Whether you like it or not, the future will be full of renewable energy.
The U.S. government offers grants, tax credits and subsidies to boost production and help renewable energy companies expand. While the industry has been in a slump since 2023, the elections could give it a much-needed push. This is when renewable energy companies will thrive.
The transition to clean energy could take a few more years, but smart investors who want to make the most of the shift need to move now. If you are ready to make the most of the renewable energy shift, here are the three strong buy renewable energy stocks to watch out for in Q2. While the three stocks are trading at a discount today, there is ample upside potential and these stocks could reward you with passive income. Let’s dive deep into them.
NextEra Energy (NEE)
A blend of two businesses, NextEra Energy (NYSE:NEE) has rewarded investors for many years. The company owns the largest regulated utility in Florida and makes up about 70% of its business. While investors might look at it as a boring business, it ensures steady business and revenue growth.
Another aspect of the business is the renewables segment, the world’s largest producer of wind and solar power. The company already has 64 gigawatts of generating capacity and aims to increase it by 2026. The company is aiming for a small increase in EPS growth this year and then in the range of 6% to 8% EPS growth in 2025 and 2026.
The elections and the government’s decisions to move towards renewable energy sources will mean bigger business for NextEra Energy. Trading at $63 today, the stock has been up 11% over the past six months but is down 15%, which means now is a good time to buy.
There is a long runway for growth, which means higher dividends in the years to come. NEE stock enjoys a dividend yield of 3.23% and is an ideal choice for passive income investors. It is a dividend aristocrat who can survive in any season.
First Solar (FSLR)
A producer of solar panels, First Solar (NASDAQ:FSLR) has been a hot stock since it reported quarterly results. The company makes thin-film cadmium Telluride designs, which increases efficiency at a low cost.
This makes the company stand out amongst the competition. It beat estimates in the recent quarterly results and increased guidance from $13 per share to $14 per share.
It soared to highs of $231 in May 2023, driven by high demand for solar panels and power. However, due to the slump in the renewable energy sector, the company has seen a slowdown in demand and is working to clear the inventory. FSLR stock is trading for $167 today and is down 20% yearly. This dip is a good chance to buy this renewable energy stock.
First Solar has proved its financial worth, and I believe it will report in another strong quarter. It is investing $1.1 billion in the fifth manufacturing unit in Louisiana, which will boost its capacity by 3.5 gigawatts. It reported a net income of $3.25 for the fourth quarter and $7.74 for the year.
The company aims for net sales between $4.4 billion to $4.6 billion for the year. As one of the best solar stocks in the industry, First Solar can be an ideal addition to your investment portfolio before the renewable energy sector picks up.
Brookfield Renewable Partners (BEP)
Next on my list of strong buy renewable energy stocks is Brookfield Renewable Partners (NYSE:BEP). It is one of the biggest renewable energy businesses across the U.S., and the stock is trading at a discount today. Down 11% year-to-date, the stock is exchanging hands for $23 and has been moving from $22 to $27 over the last six months.
It is a diversified business with assets in several renewable energy sectors, including solar energy, wind and hydroelectric. The company enjoys a global presence and is steadily working to increase capacity.
It has a strong balance sheet and reported $1.1 billion in funds from operations for 2023. While the overall renewable sector might be in a slump today, Brookfield Renewable has the potential to bounce back shortly.
It enjoys strong liquidity and is committed to rewarding shareholders. It hiked the dividend by 5% in the fourth quarter and thrived on acquisitions. Brookfield Renewable is investing $1.5 billion in investments,estimated to add about $200 million in funds from operations in the coming years.
The company has an extensive development pipeline that will boost revenue and income in the coming quarters. Buying the stock in a dip will mean higher returns as the sector improves.
On the date of publication, Vandita Jadeja did not hold (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.