In this article, we will discuss the 5 most profitable renewable energy stocks. If you want to see more companies in this selection, go to the 13 Most Profitable Renewable Energy Stocks.
5. Eni S.p.A. (NYSE:E)
Trailing 12 months Net Income: $18.01 billion (€16.78 billion)
Eni S.p.A. (NYSE:E) is a Rome, Italy-based integrated energy company that intends to achieve carbon neutrality by 2050.
The company aims to play a part in goal 7 of the United Nations (UN) 2030 Agenda which focuses on providing affordable and cleaner energy. Eni S.p.A. (NYSE:E) has a 2 GW installed capacity of renewable energy as of 2022. The company intends to increase it to 6 GW by 2025 and to 15 GW by the end of this decade. Eni S.p.A. (NYSE:E) has established a completely owned subsidiary called Plenitude that plans to use renewable energy sources for the supply of electricity and gas. Presently, the subsidiary provides electricity to around 10 million customers in Europe.
Follow E N I Spa (NYSE:E)
Follow E N I Spa (NYSE:E)
4. TotalEnergies SE (NYSE:TTE)
Trailing 12 months Net Income: $20.53 billion
TotalEnergies SE (NYSE:TTE) is a Courbevoie, France-based integrated energy company with a headcount of 105,000 employees and a presence in over 130 countries.
The company is working on achieving its target of installed capacity of 35 GW by 2025 and target 100 GW installed capacity through renewable energy sources by the end of this decade. TotalEnergies SE (NYSE:TTE) plans to become one of the top five players in the renewable energy market in the future. Furthermore, the company intends to achieve carbon neutrality by 2050. During the 2017 to 2021 period, TotalEnergies SE (NYSE:TTE) increased its installed capacity of renewable energy from 800 MW to 10 GW. The company is also working on developing electricity storage capacity as well.
Artisan Partners shared its outlook on TotalEnergies SE (NYSE:TTE) in its Q3 2022 investor letter. Here’s what the firm said:
“We added one new position this quarter, TotalEnergies SE (NYSE:TTE). TTE is one of the world’s largest energy companies. It develops and produces oil and gas, produces and sells refined products, is one of the largest producers and traders of LNG, and owns a large portfolio of renewable power generating assets. TTE has one of the lowest cost portfolios of oil and gas assets and therefore one of the lowest breakeven points in the industry. It also has one of the best balance sheets in the industry. We estimate it will reach a net cash position sometime in 2023.
The valuation of TTE—and that of Shell—is fascinating. TTE sells at approximately 4X earnings and has a 5% dividend yield. With its current buyback program and a recently announced special dividend, the owners yield is more than 10%. The valuation and owners yield are not dissimilar to those of Shell, which we also own and which trades at just under 5X earnings. To say that a discount is attached to European oil companies relative to US peers is an understatement. Exxon Mobil sells at 8X earnings, Chevron 9X and Conoco 8X. If TTE and Shell redomiciled to the US, their share prices would probably double.
We have a few theories for the valuation anomaly. First, as mentioned above, Europe generally trades at a big discount to the US. In the case of TTE and Shell, this makes no economic sense. The oil and gas business is a global one, and TTE and Shell have attractive assets. The main explanation, we believe, is that large sections of the European asset management industry will not invest in oil and gas because of ESG restrictions. Yet if the recent war in Ukraine and the current energy crisis have shown us nothing else, the supply of energy is an enormous social good. Indeed, it is an existential good. Moreover, it is companies such as TTE that will invest billions to supply the LNG that Europe desperately needs to restore its economy and reduce the crushing cost burden on families who must now choose between heating their homes and eating. Finally, TTE is also investing billions per year in renewable power generating assets such as wind and solar. Such assets will likely never replace clean burning natural gas and nuclear as base power suppliers, but they are a valuable and clean adjunct to modern grids. We believe TTE’s renewable portfolio is worth between $25 billion and $35 billion and is moving from almost no profit contribution toward meaningful levels of profit over the next few years. We wonder how it makes sense for investors to disinvest from these kinds of assets on ethical grounds.”
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Follow Totalenergies Se (NYSE:TTE)
3. Equinor ASA (NYSE:EQNR)
Trailing 12 months Net Income: $28.75 billion
Equinor ASA (NYSE:EQNR), formerly known as Statoil, is a Stavanger, Norway-based energy company that is pursuing high-value growth in renewable energy.
Equinor ASA (NYSE:EQNR) intends to invest as much as $9.9 billion (NOK 100 billion) to accelerate the transition towards green energy under the Norway Energy hub plan. The company plans to achieve 10 GW of installed capacity through wind energy by the end of this decade to ensure the profitable export of power to Europe. Furthermore, under the electrification process that transitions fossil-based power supply to renewable energy, Equinor ASA (NYSE:EQNR) intends to reduce its emissions at the Norwegian Continental Shelf by 70% by 2040.
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Follow Equinor Asa (NYSE:EQNR)
1. Exxon Mobil Corporation (NYSE:XOM)
Trailing 12 months Net Income: $55.74 billion
With a rich history in the energy sector, Exxon Mobil Corporation (NYSE:XOM) is one of the biggest oil and gas firms in the world. Exxon Mobil Corporation (NYSE:XOM) has been mostly focused on traditional fossil fuels. However, in recent years, the business has also made significant efforts in the direction of renewable energy.
Exxon Mobil Corporation’s (NYSE:XOM) renewable energy projects have mostly concentrated on research and development of new technologies. The business has contributed to numerous research initiatives to create biofuels, hydrogen fuel cells, and other sustainable energy sources. Exxon Mobil Corporation (NYSE:XOM) has additionally made investments in carbon capture and storage (CCS) technology, which attempts to seize and underground store carbon emissions from fossil fuel power stations. The National Renewable Energy Laboratory and FuelCell Energy are two of the institutions the company has collaborated with to conduct research and develop CCS technology.
Here’s what First Eagle Investments said about Exxon Mobil Corporation (NYSE:XOM) in its Q2 2022 investor letter:
“Integrated oil and gas giant Exxon Mobil performed well in the second quarter as continued high prices for energy products supported the stock. As the largest refiner in the US, the company has benefitted from wide “crack spreads,” or the margin between the cost of crude oil and the petroleum products extracted from it. Exxon continues to invest in refining capacity in the US, which industrywide has been in steady decline since 2019. We are pleased that Exxon has been using its strong cash flows to reduce debt and to return cash to shareholders through dividends and stock repurchases.”
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Follow Exxon Mobil Corp (NYSE:XOM)
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