The clean energy or the renewable energy market is one of the most largest growing sector globally. Clean energy sources, such as wind, hydropower, biofuel, and solar energy, are gaining momentum due to environmental concerns and government regulations in countries around the world. These factors have significantly boosted the sector, leading to a rise in installed capacity for clean energy sources. Additionally, the growing demand for power and rising energy consumption are driving the expansion of the clean energy market.
The U.S. Energy Information Administration (EIA) forecasts a 17% increase in clean energy deployment in 2024, potentially reaching 42 GW and accounting for nearly a quarter of the nation’s electricity generation. This growth could lead to a temporary rise in clean energy costs due to higher expenses for financing, labor, and land. Despite these challenges, tax credits from the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA) are expected to help maintain the competitiveness of solar and wind energy. The solar and energy storage markets are poised for further growth, supported by tax incentives and government programs such as the DOE’s Loans Program. Conversely, the wind and hydrogen energy sectors face obstacles, with wind energy experiencing higher costs and approval delays, and hydrogen development slowed by a lack of government incentives.
In a recent interview, Bruce Flatt, CEO of Brookfield Asset Management, discussed the transformative impact of decarbonization on industries and investments, describing it as a major trend reshaping the market. The company has launched a renewable energy fund and raised $15 billion, with plans for a second fund to help companies reduce carbon emissions, with solar and wind projects in 15 countries. Brookfield’s strategy includes building renewable infrastructure and directly supplying power to corporate clients to help them meet net-zero goals. Flatt highlighted that the U.S. Inflation Reduction Act (IRA) has provided incentives that accelerate clean energy projects, which will lead to improved completion rates and benefit the sector. Brookfield targets returns of 9-10% for debt products and around 20% for equity investments in the clean energy sector, with optimism for future growth and returns as more capital flows into the market.
As the world shifts towards more sustainable energy solutions, the demand for clean energy is expected to increase significantly, driven by rising environmental concerns and government incentives. Some of the largest players in the energy market are transitioning towards clean energy and are well-positioned to benefit from the ongoing push towards a more sustainable future.
A line of wind turbines against a clear sky, reflecting the companies clean energy efforts.
Our Methodology
For this article, we sifted through several active subreddits to compile an initial list of 30 clean energy stocks that retail investors were bullish on. From that list, we narrowed our choices to 10 stocks according to their hedge fund sentiment, which was taken from our database of 912 elite hedge funds as of Q2 of 2024. We also included the market cap of these companies as of September 4. The list is sorted in ascending order of their hedge fund sentiment, as of the second quarter.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10. Eversource Energy (NYSE:ES)
Number of Hedge Fund Holders: 26
Market Capitalization as of September 4: $24.34 Billion
Eversource Energy (NYSE:ES) is a leading energy provider in New England and operates through subsidiaries such as Connecticut Light and Power (CL&P), NSTAR Electric, Public Service Company of New Hampshire (PSNH), and Aquarion Company, serving over 4 million customers across electric, gas, and water services. Eversource Energy (NYSE:ES) is committed to transitioning towards cleaner energy, with significant investments in offshore wind and geothermal projects.
Eversource Energy’s (NYSE:ES) investment in offshore wind projects, such as the South Fork Wind, Revolution Wind, and Sunrise Wind has positioned it as a major player in the clean energy sector. Notably, the Sunrise Wind project is set to be the largest offshore wind project in the U.S. by 2026 and is expected to generate 924 megawatts of power. Eversource Energy (NYSE:ES) sold 50% of the project to Ørsted which is expected to bring over $1.5 billion by Q3 2024, following similar sales in the South Fork and Revolution Wind projects, which fetched $1.1 billion earlier in 2024.
In the year 2023, Eversource Energy’s (NYSE:ES) operating income increased to $2.4 billion from $2.2 billion in 2022, a 9% year-over-year increase. The company’s ability to reduce its debt is another key strength, the proceeds from its offshore wind project aided in the repayment of $900 million in June, $450 million in fall 2024, and $300 million due in early 2025. Eversource Energy (NYSE:ES) aims to increase its FFO-to-debt ratio from 14% to 50% by 2025, which will significantly enhance its financial health.
Eversource Energy’s (NYSE:ES) stock is trading at a forward PE of 14.86, a 13.87% discount to its sector. Industry analysts have a consensus on the stock’s Buy rating, setting an average share price target at $72.82, which represents a 6.5% upside potential from its current level. As of the second quarter, the stock is held by 26 hedge funds and the stakes amount to $622.20 million. Zimmer Partners is the largest shareholder in the company and owns stocks worth $303.36 million as of June 30.
9. Bloom Energy (NYSE:BE)
Number of Hedge Fund Holders: 29
Market Capitalization as of September 4: $2.55 Billion
Bloom Energy (NYSE:BE) designs, manufactures, and sells solid oxide fuel cells (SOFC). The company’s fuel cells can run on different energy sources such as natural gas, hydrogen, or a blend of both and are used to produce clean electricity on-site, through a chemical reaction without burning fuel.
In Q2, Bloom Energy’s (NYSE:BE) revenue increased 11.5% year-over-year to $335.8 million, and gross margin improved by 1.7% year-over-year to 20.4%. Bloom Energy (NYSE:BE) is not profitable yet and reported an operating loss of $23.1 million, which is a major improvement by $31.3 million year-over-year. Bloom Energy (NYSE:BE) recently issued 3% convertible green notes to raise finance and entered into a partnership with CoreWeave to supply clean electricity to its data center in Illinois. Additionally, Bloom Energy (NYSE:BE) received approval from Silicon Valley Power to power AWS data centers in Santa Clara, California. The company reaffirmed its outlook and projects revenue between $1.4 billion and $1.6 billion and a gross margin of approximately 28% for the financial year 2024.
On August 5, Bloom Energy (NYSE:BE) announced an advancement in its SOFC technology and introduced a hydrogen-powered fuel cell that achieves 60% electrical efficiency and 90% efficiency in Combined Heat and Power applications. Bloom Energy’s (NYSE:BE) SOFC technology emits nitrogen oxides (NOx) as pollutants in negligible amounts compared to traditional combustion-based systems.
Hydrogen is currently more expensive than traditional fuels, however, Bloom Energy’s (NYSE:BE) advancement in achieving efficiency could make hydrogen more economically viable and make its fuel cells a cleaner alternative for electricity production.
As of September 4, Bloom Energy (NYSE:BE) has a market cap of $2.55 billion. Analysts expect the company to grow its earnings by 100% this year and have a consensus on the stock’s Buy rating, setting an average share price target at $17.67, which represents a 46% upside potential from its current level. As of the second quarter, the stock is held by 29 hedge funds with stakes worth $190.76 million. Graham Capital Management is the largest shareholder in the company with stocks worth $51.41 million as of June 30.
8. Clearway Energy (NYSE:CWEN)
Number of Hedge Fund Holders: 30
Market Capitalization as of September 4: $5.48 Billion
Clearway Energy (NYSE: CWEN) boasts a diverse portfolio, including wind and solar projects, as well as conventional power generation assets across the United States. The company has partnered with Global Infrastructure Partners (GIP), an independent infrastructure investment fund, and TotalEnergies (EPA:TTE), a multinational energy and petroleum firm, to harness their expertise in advancing clean energy initiatives in the U.S.
Clearway Energy (NYSE: CWEN) is developing several large-scale clean energy projects in California such as Luna Valley and Daggett I which are expected to be completed by 2025. The Daggett I is a 113.5 MW battery energy storage facility in San Bernardino County which has a 482 MW Daggett Solar along with a 394 MW Storage complex. Whereas, the Luna Valley Solar Project is a 200 MW solar project located in Fresno County that once completed, can provide enough electricity to power over 80,000 homes. These projects are backed by long-term agreements with investment-grade entities and are expected to generate significant earnings for the company.
Clearway’s (NYSE:CWEN) diversified portfolio and strategic focus on clean energy assets position it well to capitalize on the ongoing trend of global energy transition and offer long-term growth potential. As of September 4, Clearway Energy (NYSE:CWEN) is valued at $5.48 billion. As of the second quarter, the stock is held by 30 hedge funds, with stakes valued at $139.80 million. As of June 30, Point72 Asset Management is the largest shareholder in the company and owns stocks worth $25.10 million.
7. American Electric Power (NASDAQ:AEP)
Number of Hedge Fund Holders: 35
Market Capitalization as of September 4: $54.46 Billion
American Electric Power (NASDAQ:AEP) is one of the largest electric utilities in the United States and distributes electricity through its vast network of power plants, transmission, and distribution lines to over 5 million customers across 11 states.
American Electric Power’s (NASDAQ:AEP) focus on clean energy investments has emerged it as a key player in the evolving energy landscape, especially with the rise in electricity demands driven by generative AI and data centers. American Electric Power (NASDAQ:AEP) stands to benefit from this demand, especially as large corporations continue to increase their capital expenditures on data centers. For instance, Amazon, Microsoft, Google, and Meta are projected to collectively invest $150 billion annually in data center infrastructure. The demand for electricity is expected to surge, with data centers contributing almost 30% of this growth. Blackstone estimates that investments in generative AI-related data centers could approach $2 trillion over the next five years. American Electric Power (NASDAQ:AEP) expects to expand its clean energy business by a 15-20% annual growth rate.
American Electric Power’s (NASDAQ:AEP) consistent dividend growth remains a key attraction for investors. The company has increased its dividend by an average of 5.6% over the past five years and aims for an 8% growth rate over the next years. As of the second quarter, the stock is held by 35 hedge funds and the stakes amount to $1.57 billion. GQG Partners is the largest shareholder in the company with stocks worth $840.74 million as of June 30.
6. Nextracker (NASDAQ:NXT)
Number of Hedge Fund Holders: 39
Market Capitalization as of September 4: $5.48 Billion
Nextracker (NASDAQ:NXT) provides solar tracking solutions for utility-scale and distributed generation projects. Since its IPO in 2023, the company has delivered impressive double-digit returns due to its robust market position and the overall growth of the solar energy market.
According to Precedence Research, the global solar power market was valued at $269.07 billion in 2024 and is forecasted to reach around $495.12 billion by 2034, expanding at a CAGR of 6% from 2024 to 2034. Nextracker’s (NASDAQ:NXT) financial health is strong as of June, the company held $472 million in cash and short-term investments, and its debt-to-capital ratio has improved from 24% in 2023 to 11% in 2024. Given the solar power sector’s projected growth, Nextracker (NASDAQ:NXT) is well-positioned to continue its strong performance, providing potential for sustained revenue growth and profitability in the coming years.
Nextracker (NASDAQ:NXT) stock is trading at a forward PE of 12.12, a 37% discount to its sector. Industry analysts have a consensus on the stock’s Buy rating, setting an average share price target at $59.93, which represents a 46.14% upside potential from its current level. As of the second quarter, the stock is held by 39 hedge funds and the stakes amount to $672.68 million.
5. Enphase Energy (NASDAQ:ENPH)
Number of Hedge Fund Holders: 42
Market Capitalization as of September 4: $15.3 Billion
Enphase (NASDAQ:ENPH) is a global energy technology company specializing in solar microinverters, energy storage solutions, and energy management systems. Its microinverters convert direct current (DC) from solar panels into alternating current (AC) for practical use, playing a vital role in optimizing solar energy systems by improving efficiency, reliability, and ease of installation. Enphase is a market leader in residential solar, with a strong presence in the United States, Europe, and Asia.
Enphase (NASDAQ:ENPH) is strategically poised to benefit from the U.S. Inflation Reduction Act (IRA), as its microinverters can help customers qualify for a 10% Investment Tax Credit (ITC) through the Domestic Content Bonus Credit provisions. This credit applies to solar products that incorporate a specified percentage of components made in the United States. This advantage is expected to drive higher sales and improve gross margins for the company, especially in Q4 2024.
In Q2, Enphase (NASDAQ: ENPH) reported revenue and earnings slightly below expectations due to weaker sales in Europe. However, the company exceeded expectations with a gross margin of 47.1%. Despite growing competition, Enphase’s microinverter technology remains a top choice among consumers, successfully expanding its market presence. The new California policy, “Net Energy Metering 3.0,” which encourages homeowners to use their solar energy rather than selling it back to the grid, has driven a significant rise in demand for its energy storage systems. In Q2, Enphase reported a 32% revenue increase from the U.S. and has already secured 85% of its Q3 revenue through booked orders.
Enphase (NASDAQ:ENPH) is expected to see continued growth driven by its range of products, including microinverters, energy management software, and battery storage solutions. Industry analysts maintain a consensus Buy rating on the stock, with an average price target of $126.17, reflecting a 7.55% upside potential from current levels. As of September 4, the company has a market valuation of $15.3 billion. The stock is held by 42 hedge funds, with stakes totaling $505.91 million in the second quarter. Citadel Investment Group is the largest shareholder, holding shares worth $141.66 million as of June 30.
4. Chevron (NYSE:CVX)
Number of Hedge Fund Holders: 66
Market Capitalization as of September 4: $260.54 Billion
Chevron (NYSE:CVX) is an integrated energy company involved in global oil and gas exploration, production, and refining. Chevron (NYSE:CVX) also offers energy services and invests in R&D for clean energy innovations.
Chevron (NYSE:CVX) is actively pursuing various clean energy sources, including wind, solar, and biofuels. The company’s Casper Wind Farm in Wyoming has a 16.5 MW capacity and powers 13,000 homes annually. Additionally, Chevron (NYSE:CVX) has a 49 MW geothermal facility in California that powers 40,000 homes each year. Chevron (NYSE:CVX) has been distributing renewable diesel made from non-petroleum sources such as vegetable oils and animal fats, with California terminals supplying diesel containing 6-20% renewable diesel.
In May, Chevron (NYSE:CVX) achieved a significant milestone by successfully operating a gas turbine on a 60% hydrogen fuel blend, for multiple days. This marks the first time a lower-emissions power turbine ran continuously with such a high proportion of hydrogen. The turbine, located at Chevron’s (NYSE:CVX) Pipeline & Power Business Unit facility in California, generates power and steam to be used in oil fields in surrounding areas.
Chevron’s (NYSE:CVX) achievement is notable for its potential to reduce carbon emissions in industrial applications such as manufacturing and data centers. By blending hydrogen with natural gas, Chevron (NYSE:CVX) is making strides toward lowering the carbon intensity of its operations. The success of this pilot project could encourage broader adoption of hydrogen technologies.
Industry analysts have a consensus on the stock’s Buy rating, setting an average share price target at $159.49, which represents a 12.35% upside potential from its current level. As of the second quarter, the stock is held by 66 hedge funds and the stakes amount to $122.40 billion. Berkshire Hathaway is the largest shareholder in the company with stocks worth $18.55 billion as of June 30.
3. Constellation Energy (NASDAQ:CEG)
Number of Hedge Fund Holders: 71
Market Capitalization as of September 4: $56.38 Billion
Constellation Energy (NASDAQ:CEG) provides natural gas, energy products, and related services to residential, commercial, and industrial customers throughout North America. As a key player in nuclear energy, Constellation Energy (NASDAQ: CEG) is dedicated to delivering clean, affordable energy. The company is responsible for generating 10% of the carbon-free clean energy consumed in the United States.
In Q1, Constellation Energy (NASDAQ:CEG) issued a $900 million, 30-year corporate green bond for its nuclear plant upgrades, clean hydrogen production, and energy storage systems. The company secured long-term sustainable energy contracts with major tech companies such as Microsoft and Google to provide a reliable and stable revenue stream. Constellation Energy (NASDAQ:CEG) is also investing $800 million to enhance equipment at its Byron and Braidwood nuclear plants in Illinois, which will increase their energy output by 158 megawatts. Additionally, Constellation Energy (NASDAQ:CEG) is allocating $350 million to upgrade the Criterion wind project in Maryland, which will add 79,000 megawatt-hours (MWh) of clean energy production. In their second quarter investor letter, ClearBridge stated the following regarding Constellation Energy (NASDAQ:CEG):
“On a regional basis, the U.S. and Canada were the top contributors for the quarter, with U.S. electric utility Constellation Energy Corporation (NASDAQ:CEG) and U.S. rail operator CSX the lead performers. Constellation Energy is primarily a nuclear generation company and is the largest producer of carbon-free electricity in the U.S., serving states including New York, Illinois, Maryland, Pennsylvania, and New Jersey. The company’s combined generation capacity is more than 32 GW and 90% of annual output is carbon-free. Constellation has been a beneficiary of AI and subsequent power demand as its 24/7 baseload nuclear generation can get premium contracts.”
Constellation Energy (NASDAQ:CEG) is well-positioned to capitalize on the recent trend of clean energy and presents a compelling opportunity for long-term investors. The company is expected to grow its earnings by 45.84% this year. Industry analysts have a consensus on the stock’s Buy rating, estimating an average share price target at $225.03, which represents a 16% upside potential from current levels. As of the second quarter, Constellation Energy’s (NASDAQ:CEG) stock was held by 71 hedge funds, with stakes worth $3.78 billion. Coatue Management is the largest shareholder in the company and owns stocks worth $982.90 million as of June 30.
2. NextEra Energy (NYSE:NEE)
Number of Hedge Fund Holders: 73
Market Capitalization as of September 4: $166.83 Billion
NextEra Energy (NYSE:NEE) is the world’s leading producer of wind and solar energy and a pioneer in battery storage technology. Through its subsidiaries, such as Florida Power & Light, the company serves millions of customers and plays a key role in advancing the transition to a low-carbon economy through its investments in clean energy.
NextEra Energy (NYSE:NEE) operates two main businesses: Florida Power & Light (FPL), an electric utility, and NextEra Energy Resources (NEER), one of the world’s largest clean energy producers and a leader in battery storage. NEER focuses on developing, constructing, and operating long-term clean energy assets, primarily in the U.S. and Canada.
The company has over two decades of experience in developing and operating clean energy projects, NextEra Energy (NYSE:NEE) holds a strong competitive advantage. In 2022, the company held 56% of the wind energy market and 38% of the overall renewable market from 2019 to 2022. NextEra Energy Resources (NEER) operates a clean energy portfolio totaling around 34 GW, consisting of 24 GW from wind energy, 7 GW from solar energy, and 2 GW from nuclear energy. Additionally, NEER has 1 GW of battery storage capacity spread across 16 U.S. states.
Approximately 93% of NEER’s revenue is generated from long-term Power Purchase Agreements with data centers and tech companies which provide a stable and predictable cash flow. The company’s financial performance remains strong, with adjusted earnings growing by 10.8% in Q2 2024, driven by strategic investments and an expanding clean energy portfolio. Looking ahead, NEER expects its earnings per share (EPS) to grow by 6-8% annually through 2027 and plans to increase dividend payments by 10% per year. In their second quarter investor letter, ClearBridge stated the following regarding NextEra (NYSE:NEE):
“AI-related momentum was a key driver of performance in the second quarter, lifting the enablers in technology as well as holdings like renewable power producer NextEra, Inc. (NYSE:NEE) that supply the increasing energy needs of data centers. Parts of the market lacking an AI connection, like our medical device holdings, underperformed despite no change to fundamentals. We have managed through several similar momentum periods over our tenure and have delivered long-term results for shareholders by staying true to an approach that emphasizes diversification across three buckets of growth companies (select, stable and cyclical) and seeks to take advantage of attractive entry points into quality growth businesses.”
NextEra’s (NYSE:NEE) is valued at $166.83 billion as of September 4. The stock is held by 73 hedge funds with stakes worth $2.10 billion as of the second quarter. GQG Partners is the largest shareholder in the company and has stocks worth $884.56 million as of June 30.
1. GE Vernova (NYSE:GEV)
Number of Hedge Fund Holders: 92
Market Capitalization as of September 4: $54.81 Billion
GE Vernova (NYSE:GEV) has over 130 years of experience in the production of electrical equipment, natural gas turbines, wind turbines, hydropower turbines, and high-voltage electrical transmission products. The company plays a a crucial role in clean energy and its technology is used in around 55,000 wind turbines and 7,000 gas turbines across more than 100 countries which generate approximately 25% of the world’s electricity.
GE Vernova (NYSE:GEV) is uniquely positioned to benefit from several global megatrends, including the increasing demand for electricity, natural gas, and clean energy solutions. According to the International Energy Agency (IEA), global electricity demand is expected to grow by 4% in 2024 and 2025, up from 2.5% in 2023. This growth is largely driven by the electrification of transportation, including the adoption of EVs, and the rising need for power-intensive technologies such as AI systems. In their Q2 2024 investor letter, Carillon Tower Advisers stated the following regarding GE Vernova Inc.
“GE Vernova Inc. (NYSE:GEV) is a global electric power company that was recently spun out of a much larger industrial conglomerate. The company’s shares performed well in their first quarter as a standalone company, primarily as a result of the increasing outlook for power demand growth, both domestically and abroad. We believe GE Vernova is well positioned to capitalize on this growing trend across its various products and services, but most notably within its large-scale gas turbine equipment and related services, as well as in its high-voltage electrical transmission products.”
In Q2, GE Vernova (NYSE:GEV) reported a net income of $1.3 billion, a remarkable turnaround from a loss of $100 million in the same period the previous year. This represents a year-over-year increase of $1.4 billion, highlighting the company’s growing profitability. Additionally, GE Vernova’s (NYSE:GEV) net income margin increased by 17.4% year-over-year, due to improved operational efficiency. The company’s Power unit, which includes its gas and steam turbines, experienced a 30% growth in orders compared to Q2 2023. The backlog for GE Vernova’s (NYSE:GEV) electrification business grew by 35% year-over-year.
The global energy sector is expected to experience robust growth over the next several years. According to a report by Business Research Company, the market for electrical equipment is projected to grow at a CAGR of 6.1% from 2024 to 2028. Additionally, the International Energy Agency (IEA) forecasts that the installed capacity of wind power is anticipated to double between 2023 and 2029 which will further drive the demand for GE Vernova’s (NYSE:GEV) wind turbines and related products. As of the second quarter, GE Vernova’s (NYSE:GEV) stock is held by 92 hedge funds and the stakes amount to $5.70 billion.
While we acknowledge the potential of GE Vernova (NYSE:GEV) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than the stocks on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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