5 Best Renewable Energy Stocks To Buy According to Hedge Funds

2. NextEra Energy, Inc. (NYSE:NEE)

Number of Hedge Fund Holders: 58

NextEra Energy, Inc. (NYSE:NEE) was seen in the portfolios of 58 hedge funds in the third quarter, with a total stake value of $1.4 billion.

Based in Juno Beach, Florida, NextEra Energy, Inc. (NYSE:NEE) is an electricity generation company. It generates electricity through wind, solar, nuclear, coal, and natural gas facilities.

RBC Capital’s Shelby Tucker reiterated an Outperform rating and a $74 price target on NextEra Energy, Inc. (NYSE:NEE) on January 30.

ClearBridge Investments said the following about NextEra Energy, Inc. (NYSE:NEE) in its third-quarter 2023 investor letter:

“Many businesses are threatened by a higher cost of capital, but one where reality has set in, and which also touches many other growth areas of the market, is the utility company NextEra Energy, Inc. (NYSE:NEE). Over the past few years, the company developed into a growth darling thanks to its strong track record in renewable energy development and tailwinds from the global energy transition and incentives in the Inflation Reduction Act. The problem for NextEra, and the transition broadly, is that this transformation is immensely capital intensive and many renewables projects offer lower returns on that capital. This requires high capital expenditures – often resulting in negative free cash flow – to meet the growth and financing needs of companies like NextEra. To help, the company leaned on financial engineering by using a publicly traded limited partnership called NextEra Energy Partners, providing further capacity for its parent to continue its development plans. NEP used layers of its own financial engineering to fund its own negative free cash flow and a large, growing dividend yield that we believe it could not sustain organically. Ultimately, the higher cost of debt from rising rates led NEP to lower its own growth ambitions, driving concerns about whether NextEra can execute on its extensive backlog. As a result, the stock has declined by approximately 30% year to date.”