5 Most Undervalued Renewable Energy Stocks To Buy According To Hedge Funds

In this article, we discuss the 5 most undervalued renewable energy stocks to buy according to hedge funds. To read the detailed analysis of the renewable energy sector, go directly to the 11 Most Undervalued Renewable Energy Stocks To Buy According To Hedge Funds.

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

Number of Hedge Fund Holders: 50

First Solar, Inc. (NASDAQ:FSLR) is an American solar power company headquartered in Arizona, US. The company provides utility-scale solar power plants and related services including end-of-life panel recycling.

On July 27, First Solar, Inc. (NASDAQ:FSLR) announced that it is going to build a fifth manufacturing facility in the United States worth $1.1 billion. On August 10, the company selected the Acadiana Regional Airport in Iberia Parish, Louisiana, to build the facility and it is expected to generate 3.5 gigawatts of electricity. First Solar, Inc. (NASDAQ:FSLR) plans to complete this facility by the first half of 2026.

On August 16, Roth MKM analyst Philip Shen reaffirmed a Buy rating on First Solar, Inc. (NASDAQ:FSLR)’s stock with a $230 price target. At the time of writing on August 21, the company’s stock price declined by over 14% since August 15 as an independent review found subcontractors were involved in forced labor through foreign migrant workers at First Solar, Inc. (NASDAQ:FSLR)’s Malaysian facility. Shen believes that the company’s stock will recover and will “move beyond this issue quickly.”

4. PG&E Corporation (NYSE:PCG)

Number of Hedge Fund Holders: 51

PG&E Corporation (NYSE:PCG), also known as Pacific Gas and Electric Company, is a California-based utility company. The company provides electricity to over 5 million customers in California. The company generates electricity through natural gas, solar plants, hydropower, and nuclear energy.

On August 7, UBS analyst Gregg Orrill upgraded PG&E Corporation (NYSE:PCG)’s stock from Neutral to Buy and raised the company’s price target to $21 from $19. The analyst revised his rating and price target on the company stock as he believes that PG&E Corporation (NYSE:PCG) has reduced the risk of a major wildfire with its equipment by 90% since 2017-18.

In Q2 2023, PG&E Corporation (NYSE:PCG)’s stock was owned by 51 hedge funds. Dan Loeb’s Third Point Management was the most prominent stakeholder in the company with 54 million shares worth $933.120 million.

Third Point Management made the following comment about PG&E Corporation (NYSE:PCG) in its Q1 2023 investor letter:

“Our strategy is to preserve liquidity and buying power to take advantage of markets when they “break”. While overall indices remain elevated, we are finding more chances to provide liquidity across all three asset classes in which we invest – credit, structured credit, and equity – opportunities which have been key drivers of performance for the fund. Our portfolio is balanced across industries with a focus on event-driven names including companies involved in spin-offs, significant cost-cutting, or other types of under-appreciated business transformation. PG&E Corporation (NYSE:PCG), which is still our largest position, continues to deliver strong performance, down 50bps in the first quarter but up 6.2% for the year to date after the Fire Victims Trust sold another 60 million shares in a block trade.”

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

Number of Hedge Fund Holders: 59

NextEra Energy, Inc. (NYSE:NEE) is one of the global leaders in clean energy. The company has 67 gigawatts of generation capability and a majority of it is through renewable sources. The company plans to completely eliminate its carbon emissions by 2045 according to its ‘Real Zero’ plan.

NextEra Energy, Inc. (NYSE:NEE) inked two deals in August to supply a combined 335 megawatts of solar energy to two companies. The first one was signed with Nucor Corporation (NYSE:NUE) for 250 megawatts and the second was signed with Ingevity Corporation (NYSE:NGVT) for 85 megawatts.

In the second quarter, NextEra Energy, Inc. (NYSE:NEE)’s revenue increased by 42% year-over-year to $7.35 billion, beating the market expectations by $1.18 billion. The company reported a non-GAAP EPS of $0.88, compared to $0.82 estimates.

2. General Electric Company (NYSE:GE)

Number of Hedge Fund Holders: 71

General Electric Company (NYSE:GE) is an American conglomerate headquartered in Boston, Massachusetts. The company’s subsidiary, GE Renewable Energy, develops energy systems that use wind, hydroelectric, and solar power.

In the second quarter, 71 hedge funds had a stake worth nearly $10.2 billion in General Electric Company (NYSE:GE). In the previous quarter, the company was a part of 59 hedge fund portfolios with a combined stake of $7.6 billion. The most prominent stake in Q2 was held by Chris Hohn’s TCI Fund Management with 41.65 million General Electric Company (NYSE:GE) shares worth $4.575 billion.

In Q2, General Electric Company (NYSE:GE) reported a non-GAAP EPS of $0.68 and revenues of $16.7 billion, outperforming the estimates by $0.22 and $1.5 billion, respectively. The company raised its FY 2023 organic revenue growth outlook to a low-double-digit range from the prior high-single-digit range and expects an adjusted EPS of $2.10 to $2.30, up from the previous outlook of $1.70 to $2.00.

Vulcan Value Partners made the following comment about General Electric Company (NYSE:GE) in its Q1 2023 investor letter:

“General Electric Company (NYSE:GE) was a material contributor during the quarter. With the successful spin-off of GE HealthCare in early January, the company operates in two major markets: GE Aerospace and GE Vernova. GE Aerospace powers three out of every four commercial flights. GE Vernova helps generate 30% of the world’s electricity and has a meaningful role to play in the energy transition. The company’s service activities, which are higher margin and more resilient, represent approximately 60% of revenue and 85% of its backlog. The company reported strong fourth quarter 2022 results and management’s 2023 outlook is positive.”

1. Tesla, Inc. (NASDAQ:TSLA)

Number of Hedge Fund Holders: 79

Tesla, Inc. (NASDAQ:TSLA) is primarily known for its electric vehicles and has captured the biggest market share in the electric vehicle industry. The company also operates battery storage solutions and provides solar energy solutions to its consumers.

According to the Insider Monkey database, Tesla, Inc. (NASDAQ:TSLA) was held by 79 hedge funds in the second quarter of 2023, making it the most undervalued renewable energy stock to buy according to hedge funds. Cathie Wood of ARK Investment Management has been bullish on Tesla, Inc. (NASDAQ:TSLA) for a long time and was the most prominent hedge fund holder of the company. ARK believes that the company’s stock price could reach $2000 by 2027.

Baron Funds made the following comment about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2023 investor letter:

“Tesla, Inc. (NASDAQ:TSLA) designs, manufactures, and sells EVs, related software and components, and solar and energy storage products. Following a sharp decline at the end of 2022, Tesla’s stock rebounded in the first quarter of 2023 on investor expectations that Tesla will continue to grow vehicle deliveries and maintain solid gross and operating margins despite a potential recession, competition in China, and vehicle price reductions. We wrote a long piece on Tesla last quarter and refer readers back to it, because for long-term investors not much has changed over the last three months. Tesla did hold its first Investor Day in March, and several Baron analysts and portfolio managers attended. We toured the Austin Gigafactory, drove in a Cybertruck, boarded a Semi truck, and spoke with a wide swath of Tesla senior managers. During the formal presentation, Tesla highlighted, among other things: (1) its broad and deep bench of executive talent supporting CEO Elon Musk; (2) its “Master Plan 3–Sustainable Energy for All of Earth,” which featured EVs, renewable power from solar and wind, and stationary electric storage; (3) its vehicle assembly innovations, including massive casted parts (building Model Y bodies with single front and rear castings, replacing a substantial number of parts and fastening steps), a stainless steel exoskeleton (for Cybertruck), and its next-generation highly efficient “unboxed process” for its next-gen $25,000 vehicle; (4) a future permanent[1]magnet electric motor that will not require any rare earths; and (5) the massive untapped market opportunity for commercial stationary electric storage, branded Megapack, as the world steadily shifts to renewable energy. As long-term shareholders, we have witnessed Tesla exploit its innovative Model 3/Y now-global mass-market platform to increase vehicle deliveries from barely a standing start to over 1.3 million units, while achieving industry-leading margins and reinforcing its iron-clad balance sheet to almost $23 billion in cash (and effectively no recourse debt). We expect Tesla’s next-generation EV and Megapack products to have a similar impact on company results.”

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