5 Best Renewable Energy Stocks To Buy According to Hedge Funds

In this article, we will be taking a look at the 5 best renewable energy stocks to buy according to hedge funds. To read our detailed analysis of the renewable energy sector, you can go directly to see the 13 Best Renewable Energy Stocks To Buy According to Hedge Funds.

5. Enphase Energy, Inc. (NASDAQ:ENPH)

Number of Hedge Fund Holders: 40

Enphase Energy, Inc. (NASDAQ:ENPH) designs and manufactures home energy solutions for the solar photovoltaic industry in the US and internationally. It is based in Fremont, California.

A Buy rating and a $140 price target were maintained on Enphase Energy, Inc. (NASDAQ:ENPH) on February 1 by Philip Shen at Roth MKM.

A total of 40 hedge funds were long Enphase Energy, Inc. (NASDAQ:ENPH) in the third quarter, with a total stake value of $521.1 million.

ClearBridge Investments mentioned Enphase Energy, Inc. (NASDAQ:ENPH) in its third-quarter 2023 investor letter:

“Against this backdrop the Strategy underperformed, with the majority of detractors renewable- or utility-related companies suffering largely from cyclical interest rate pressures that have pushed up financing costs for the companies and weighed on income-producing sectors such as utilities. Most acutely, higher interest rates have dampened near-term U.S. residential solar demand, hurting Enphase Energy, Inc. (NASDAQ:ENPH) in particular. As a result, we sold Enphase, and invested proceeds into SolarEdge Technologies, which has greater exposure to European and utility-scale end markets, which are under comparatively less pressure.”

4. Constellation Energy Corporation (NASDAQ:CEG)

Number of Hedge Fund Holders: 45

There were 45 hedge funds long Constellation Energy Corporation (NASDAQ:CEG) in the third quarter, with a total stake value of $1.5 billion.

Constellation Energy Corporation (NASDAQ:CEG) is a producer of carbon-free energy with about 32,355 megawatts of generating capacity consisting of nuclear, wind, solar, natural gas, and hydroelectric assets. It is based in Baltimore, Maryland.

Neil Kalton at Wells Fargo maintains an Overweight rating and a $150 price target on Constellation Energy Corporation (NASDAQ:CEG) as of February 6.

Here’s what Sound Shore Management said about Constellation Energy Corporation (NASDAQ:CEG) in its third-quarter 2023 investor letter:

“On the plus side of the ledger, we had strong contributions from independent power producers Vistra and Constellation Energy Corporation (NASDAQ:CEG). Both stocks surged with higher US electricity prices as strong summer demand exposed reliability issues in many regions of the nation’s electric grid. Meanwhile, Midwest focused Constellation is the biggest producer of carbon-free electricity in the US with nuclear power plants representing the majority of its capacity. We added the name in January 2023 when the stock was trading at a below normal 15 times earnings. Our research identified an upside to earnings power from maturing hedges and regulatory changes, including the Inflation Reduction Act’s nuclear credit. A recent spinout from Exelon Corp, we viewed the strength of Constellation’s clean, reliable baseload power model as an appealing and high potential offering for residential and commercial customers. The company’s recent contract to supply Microsoft at premium power prices is evidence of the opportunity. Constellation is yet another example of an industry undergoing tremendous change that can offer attractive investment opportunities for investors with patience and a research process to uncover specific companies that are well positioned.”

3. First Solar, Inc. (NASDAQ:FSLR)

Number of Hedge Fund Holders: 49

First Solar, Inc. (NASDAQ:FSLR) is a provider of photovoltaic solar energy solutions. It is based in Tempe, Arizona.

We saw 49 hedge funds holding stakes in First Solar, Inc. (NASDAQ:FSLR) in the third quarter. Their total stake value was $1.1 billion.

On January 3, Maheep Mandloi maintained a Buy rating on First Solar, Inc. (NASDAQ:FSLR) alongside a $196 price target.

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.”

1. General Electric Company (NYSE:GE)

Number of Hedge Fund Holders: 76

General Electric Company (NYSE:GE) is an energy company that provides green energy solutions by combining onshore and offshore wind, blade manufacturing, grid solutions, hydro storage, hybrid renewables, and more. It is based in Boston, Massachusetts.

In the third quarter, 76 hedge funds were long General Electric Company (NYSE:GE). Their total stake value was $10.4 billion.

An Overweight rating and a $153 price target were maintained on General Electric Company (NYSE:GE) on January 24 by Julian Mitchell at Barclays.

Longleaf Partners mentioned General Electric Company (NYSE:GE) in its fourth-quarter 2023 investor letter:

“General Electric Company (NYSE:GE) – Industrial conglomerate General Electric (GE) was the top performer for the year. We exited this multi-year investment as its price went above our appraisal. In 1Q23, GE spun out GE Healthcare, which we sold as it traded at our value. The share price continued its strong performance throughout the spring and summer, and we ultimately sold the position in the third quarter when we no longer saw a margin of safety for the business. CEO Larry Culp was a great partner who created significant value for shareholders by reducing leverage, cutting costs, streamlining operations, improving company culture and simplifying the structure with plans to split the company into three businesses. We hope to have the opportunity to partner with him again in the future.”

See also Top 20 Renewable Energy Companies in the World and Top 20 Renewable Energy Companies in USA by Revenue.