In this article, we will discuss the 5 best renewable energy stocks to buy right now. If you want to read about the renewable energy market, current market trends, and its future outlook, you can go to 11 Best Renewable Energy Stocks to Buy Right Now.
5. Sunrun Inc. (NASDAQ:RUN)
Number of Hedge Fund Holders: 31
Here is what Horizon Kinetics had to say about Sunrun Inc. (NASDAQ:RUN) in its Q2 2021 investor letter:
“What this table did not cover is valuation. What’s expensive, what’s cheap? A good business that is too expensive is not a good investment. The most expensive business in the table is Sunrun. Sunrun is the nation’s largest residential rooftop solar panel system seller/installer. Sunrun’s valuation might also shed Thumbnail valuation.
To start at the top of the income statement, Sunrun shares trade at 10.3x revenues. The most profitable company in the S&P 500, Microsoft, trades at 13x revenues. Sunrun operates at a loss. Obviously, not only is tremendous growth anticipated, but tremendous profitability, too.
Let’s simply accept that investors have correctly anticipated Sunrun’s future success and make that the starting point for a valuation exercise.
If, 10 years from now, Sunrun is ultimately valued at 25x net income, and if today’s $9.5 billion valuation is appropriate, that would require $380 million of net income ($9,500 million ÷ 25).
Let’s say Sunrun will have the same net profit margin as the average S&P 500 company, which is 10%. That means it would need $3,800 million of sales to generate that level of earnings ($380 mill ÷ 10%).
Since sales are now $920 million, they would have to rise by 4.1x in the next 10 years. That would require annual sales growth of 15.2%.
You see how neatly that all works: investors accept the company’s 10-year, 15% annual sales growth projections, and if a 10% net profit margin and a P/E of 25x earnings are reasonable, then the company will have a $9.5 billion market cap at that time. Except that is the current price. That means a 10-year
return of zero.In order to get a 10% annualized return from the stock, Sunrun would need to be priced at a P/E of 65x its earnings 10 years from now, if at a 10% net margin. Or it would have to have some combination of lower P/E and higher growth and/or higher profit margin.
In the meantime, this is Sunrun’s recent pattern of revenue growth and profitability (the company did recently increase its estimate of installed-capacity growth in 2021 from 20-25% to a new estimate of 25% to 30%).
For the time being, Sunrun loses an extraordinary amount of money, an amount that has been getting larger. Perhaps there are scale economies that will manifest in the future, so that it will attain profitability. Perhaps from the roughly one-half of Sunrun’s revenues that are from long-term customer service
agreements that run up to 25 years. For now, though, the company would seem to require a lot of external financing, and that is one of the greatest of business risks.”
4. SolarEdge Technologies, Inc. (NASDAQ:SEDG)
Number of Hedge Fund Holders: 34
SolarEdge Technologies, Inc. (NASDAQ:SEDG) is an Israel-based provider of power optimizers, solar inverters, and monitoring systems for photovoltaic arrays. This April, Wells Fargo analyst Michael Blum raised his price target on SolarEdge Technologies Inc. (NASDAQ:SEDG) to $399 from $361 and maintained an Overweight rating on the shares. The analyst sees upside for SolarEdge Technologies Inc. (NASDAQ:SEDG), following the company’s investor day, on which the company presented long-term target revenue and profitability guidance for the solar business along with unveiling new products to be launched in the second half of 2022. Blum commented that the company is bound for growth as global battery adoption rates increase and there is a consistent expansion of the residential and commercial solar markets.
On February 15, SolarEdge Technologies, Inc. (NASDAQ:SEDG) reported that its revenues for the fiscal fourth quarter of 2021 came to $551.92 million, outperforming market consensus by $1.96 million. The company reported earnings per share of $1.10. As of April 3, 2022, SolarEdge Technologies, Inc. (NASDAQ:SEDG) has gained 26.47% over the past six months and boasts a market capitalization of $17.79 billion.
SolarEdge Technologies, Inc. (NASDAQ:SEDG) is becoming a popular renewable energy stock pick among investors. By the end of Q4 2021, 34 hedge funds were bullish on SolarEdge Technologies, Inc. (NASDAQ:SEDG), having stakes worth more than $766.5 million. This is compared to 33 hedge funds in Q3 2021, with stakes worth roughly $594.4 million. It can be concluded from these numbers that the hedge fund sentiment for the stock is positive.
As of March 30, 2022, Impax Asset Management is the most prominent shareholder in SolarEdge Technologies, Inc. (NASDAQ:SEDG), having stakes worth more than $210.83 million in the company, up 1% from its previous stakes of $198.2 million. The investment covers 0.77% of Impax Asset Management’s Q4 2021 investment portfolio.
3. First Solar, Inc. (NASDAQ:FSLR)
Number of Hedge Fund Holders: 36
First Solar, Inc. (NASDAQ:FSLR) manufactures solar panels and provides utility-scale photovoltaic power plants and supporting services that include finance, construction, maintenance, and end-of-life panel recycling. This January, Raymond James analyst Pavel Molchanov upgraded First Solar, Inc. (NASDAQ:FSLR) to Market Perform from Underperform without a price target. On March 31, 2022, SunPower Corporation (NASDAQ:SPWR) announced that it is in talks with First Solar, Inc. (NYSE:FSLR) jointly to develop residential solar panels, after which First Solar, Inc.’s (NYSE:FSLR) share price spiked by 2%. As of April 3, 2022, the company is worth $8.93 billion on the open market.
On March 1, 2022, First Solar, Inc. (NASDAQ:FSLR) released its earnings report which detailed the company’s earnings for the fiscal fourth quarter of 2021. According to the report, First Solar, Inc. (NASDAQ:FSLR) generated revenues of over $907.32 million, up 48.93% year over year. The company’s earnings per share were valued at $1.23, beating EPS estimates by $0.17.
First Solar, Inc. (NASDAQ:FSLR) is growing in popularity among elite hedge funds. As of March 11, 2022, Renaissance Technologies is the top shareholder in First Solar, Inc. (NASDAQ:FSLR), having stakes worth more than $46.5 million in the company. In addition to Renaissance Technologies, 35 other hedge funds held stakes in the company by the end of the fourth quarter of 2021. The total value of these stakes was roughly $200 million.
2. Enphase Energy, Inc. (NASDAQ:ENPH)
Number of Hedge Fund Holders: 50
Enphase Energy, Inc. (NASDAQ:ENPH) operates as an energy technology company headquartered in California. The company provides software-driven home energy solutions for solar generation, home energy storage, and web-based monitoring and control systems. On March 31, 2022, Enphase Energy, Inc. (NASDAQ:ENPH) announced its plans to expand battery storage in Oklahoma. The company is witnessing growing demand for its energy systems in Oklahoma and is offering residents and homeowners the option to install its IQ8 Microinverters, which can provide solar power during power outages.
This February, Enphase Energy, Inc. (NASDAQ:ENPH) reported its earnings for the fiscal fourth quarter of 2021. The company generated revenues of $412.72 million, up 55.84% year over year, and outperformed market consensus by $12.84 million. The company’s earnings per share for the quarter came to $0.73, beating expert EPS estimates by $0.14. As of April 3, 2022, Enphase Energy, Inc. (NASDAQ:ENPH) has gained 41.96% over the past six months and has a market capitalization of $27.58 billion.
Enphase Energy, Inc. (NASDAQ:ENPH) is gaining popularity among analysts and investor circles. On March 14, 2022, Piper Sandler analyst Kashy Harrison raised her price target on Enphase Energy, Inc. (NASDAQ:ENPH) to $237 from $227 and maintained an Overweight rating on the shares. Moreover, By the end of the fourth quarter of 2021, 50 hedge funds held stakes in Enphase Energy, Inc. (NASDAQ:ENPH) worth more than $763.2 million.
As of March 23, 2022, D E Shaw is the largest shareholder in Enphase Energy, Inc. (NASDAQ:ENPH) having stakes worth more than $182.92 million in the company. The investment covers 0.15% of D E Shaw’s Q4 2021 investment portfolio.
1. NextEra Energy, Inc. (NYSE:NEE)
Number of Hedge Fund Holders: 55
NextEra Energy, Inc. (NYSE:NEE) is the largest renewable energy company by market capitalization. The company boasts a power generation capacity of more than 58 gigawatts and generates power through its wind, solar, nuclear, coal, and natural gas facilities. As of April 3, 2022, NextEra Energy, Inc. (NYSE:NEE) has a market capitalization of $168.23 billion and has gained 8.00% over the past six months. This March, KeyBanc analyst Sophie Karp gave NextEra Energy, Inc. (NYSE:NEE) an $87 price target, and upped her rating on the shares to Overweight from Sector Weight.
On January 25, 2022, NextEra Energy, Inc. (NYSE:NEE) released its earnings report for the fiscal fourth quarter of 2021, in which the company beat EPS by $0.01. The company reported earnings per share of $0.41 and generated quarterly revenues of $5.05 billion, up 14.81% year over year.
Insider Monkey’s database tracks 924 elite hedge funds as of the fourth quarter of 2021, of which 55 hedge funds held long positions in NextEra Energy, Inc. (NYSE:NEE) at the close of Q4 2021. The total value of these funds’ stakes amounted to roughly $2.61 billion, up from $2.37 billion in the third quarter of 2021 when 53 hedge funds held stakes in the company. The hedge fund sentiment for NextEra Energy, Inc. (NYSE:NEE) is positive.
As of March 29, 2022, Ken Fisher’s Fisher Asset Management is the dominating stakeholder in NextEra Energy, Inc. (NYSE:NEE). The fund’s stakes in the company were valued at over $1.4 billion, a 4% increase from the fund’s previous stakes of $1.14 billion in the company. NextEra Energy, Inc. (NYSE:NEE) represents 0.78% of Fisher Asset Management’s 13F portfolio.
You can also take a look at 15 Biggest Renewable Energy Companies and Stocks and 10 Best Renewable Energy Stocks to Buy Now.
