10 Best Renewable Energy Stocks To Buy According to Hedge Funds

2. NextEra (NYSE:NEE)  

Number of Hedge Fund Holders: 73  

Market Capitalization as of September 2: $165.47 Billion  

NextEra is the world’s largest producer of wind and solar energy, as well as a leader in battery storage technology. NextEra’s subsidiaries, including Florida Power & Light, serve millions of customers, and the company’s investments in clean energy are helping to drive the transition to a low-carbon economy. The company has divided its operations into two primary businesses. The first is Florida Power & Light (FPL) which is an electric utility company. The second major business is NextEra Resources (NEER) which is the one of the world’s largest producer of renewable energy an a leader in battery storage. NEER focuses on developing, constructing, and operating long-term assets primarily in the United States and Canada.

The company has over two decades of experience in developing and operating renewable projects which gives it a significant competitive edge. The company held 56% of the wind market in 2022 and 38% of the renewable market share from 2019 to 2022. NEER operates a clean energy portfolio of approximately 34 GW of which 24 GW is derived from wind energy, 7 GW from solar energy, and 2 GW from nuclear energy. NEER also has 1 GW of battery storage capacity spanning across 16 states in the United States.

Nearly 93% of the company’s revenues come from long-term Power Purchase Agreements with data centers and tech companies which ensure stable and predictable cash flows. The company’s financial performance remains robust, adjusted earnings increased by 10.8% in Q2 2024, due to investments and a growing renewables portfolio. Looking forward, NEER anticipates its earnings per share (EPS) to rise by 6-8% annually till 2027 and plans to increase dividend payments by 10% annually. In its 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 $163.56 billion as of August 20. The stock is held by 81 hedge funds with stakes worth $2.10 billion as of the second quarter. As of June 30 GQG Partners is the largest shareholder in the company and has stocks worth $884.56 million.