In this piece, we will take a look at the 8 best wind power and solar stocks to buy.
It is arguably one of the best times to pursue investment opportunities around wind power and solar stocks as the United States moves to achieve 100% clean energy use by 2035 and reduce emissions by 50 to 52% by 2030. As the US advocates for various initiatives to help tackle the climate crisis and keep a 1.5 C limit on warming, the case for the best wind power and solar stocks to buy is becoming clear.
The US wind power and solar capacity were more significant than ever last year as part of the country’s long growth trend for renewable energy. A total of 425,235 gigawatts hours of electricity were generated from Wind power, accounting for more than 12% of the country’s grid. Wind power has been the country’s largest renewable energy source since 2019.
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On the other hand, solar energy accounted for less than 4% of all the US power generation, affirming plenty of room for growth in the coming years. Likewise, solar power generation is projected to grow by 75%, from 163 billion kWh in 2023 to 286 billion kWh by 2025. Wind power is projected to increase by 11%.
Nevertheless, clean energy stocks had one of the worst runs in 2023 as they posted an average annual return of -10.5%, slightly improving from an average return of -11% a year ago. The underperformance of 2022 was attributed to the high inflation levels that saw investors’ sentiments take a significant hit.
Likewise, the underperformance of wind and solar energy stocks persisted in 2023 owing to the rising interest rates as the US Federal Reserve tried to tame runaway inflation. Given that most solar and wind companies must rely on the debt markets to raise capital, most have faced significant challenges amid the high interest rate environment.
The situation was further exacerbated by supply chain problems amid difficulties obtaining renewable energy equipment like wind turbines and solar panels over the past two years. Matthew Donen, equity analyst at Morningstar, said:
“We see several challenges for participants in the wind energy sector. Wind turbine manufacturers have struggled to restore profitability from unprecedented cost inflation in 2021, and developers of wind projects have recorded billions in impairments due to higher equipment costs and an increase in interest rates.”
Fast forward, clean energy stocks are on the move as investors take note of their depressed valuations. The growing demand for wind and solar energy for use in electric vehicles, building heating, and use in industrial settings like data centers are some of the catalysts driving growth in the sector.
In the aftermath of the European Central Bank and the Bank of Canada cutting interest rates, the best wind power and solar stocks again started seeing increase in investor positioning.
However, there are growing concerns that clean energy companies could come under pressure amid uncertainty around the US presidential election. The prospect of Republicans taking over the Whitehouse and Congress, raises the prospects of tax credits under the Inflation Reduction Act (IRA) being affected.
Nevertheless equity analyst Donen believes it would be difficult for a Trump administration to get rid of all favorable tax policies that have bolstered sentiments around wind and solar stocks. Here’s what Donen said:
“We think it would be difficult for Trump to roll back favorable tax policy for renewable energy enjoyed from the 2022 Inflation Reduction Act. A Trump administration might be able to slow implementation of the Act, but that is unlikely to slow renewable energy growth in the short-run.”
With the world focused more than ever on combating the effects of global warming, including a shift from fossil fuels to clean energy, tremendous opportunities are cropping up. With the COP26 targeting net zero emissions by 2050, an investment of $4 trillion would be needed by 2030. This is one of the reasons investors should start paying attention to the best wind power and solar stocks to buy now, and let’s take a look at them now.
Source:unsplash
Our Methodology
To compile the list of the best wind power and solar stocks to buy, we scoured different solar and wind energy ETFs and picked 8 of the top companies with tremendous upside potential. Once we had consolidated the list, we ranked the stocks based on the number of hedge funds that owned it.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
8 Best Wind Power and Solar Stocks to Buy
8. JinkoSolar Holding Co., Ltd. (NYSE:JKS)
Number of Hedge Fund Investors: 7
Stock Upside Potential: 16.52%
JinkoSolar Holding Co., Ltd. (NYSE:JKS) is one of the best wind power and solar stocks to acquire exposure to China’s burgeoning clean energy landscape. It designs, develops, and sells photovoltaic products, including solar modules, silicon wafers, and solar cells. The company serves various power generation projects and energy storage systems while boasting a vast clientele list in the US, Australia, the Middle East, and China.
JinkoSolar Holding Co., Ltd. (NYSE:JKS) offers exposure to the Chinese solar energy market, which is one of the fastest growing, thanks to support from policies and subsidies. Backed by one of the fastest-growing markets, Jinco’s revenues grew from $33.6 billion in 2020 to $118.7 billion in 2023. Its net profit also increased by 618% over the same period.
The robust growth stems from the company leveraging its outstanding N-type technology, extensive global operation network, and advanced integrated capacity structure. The company boasts the largest overseas integrated solar capacity of 12GW, backed by an effective supply chain traceability system.
JinkoSolar Holding Co., Ltd. (NYSE:JKS) has also sought to expand its footprint in the Middle East by forming a joint venture in Saudi Arabia to produce 10GW of solar cells and modules. The investment, expected to cost $1 billion, marks an important step in the company’s globalization plan.
According to the Insider Monkey database, the number of hedge funds holding stakes in JinkoSolar Holding Co., Ltd. (NYSE:JKS) dropped to 7 in Q2 2024 from 10 at the end of Q1 2024. Paul Marshall And Ian Wace’s Marshall Wace LLP is the most significant shareholder of the company, with shares worth $9.28 million. Based on 2 Wall Street analysts, JinkoSolar is rated as a ‘Buy’ with an average price target of $22.50, representing a 16.52% change from current levels.
7. Brookfield Renewable Partners L.P. (NYSE:BEP)
Number of Hedge Fund Investors: 15
Stock Upside Potential: 31.83%
Brookfield Renewable Partners L.P. (NYSE:BEP) owns one of the biggest renewable power-generating facilities, including solar and wind. Therefore, it stands out as one of the best wind power and solar stocks for anyone looking to diversify their portfolio around renewable energy.
Its competitive edge stems from its 32.5 GW of operating assets, which includes 8.3 GW of hydroelectric power, 11.3 GW of wind, and 87.2 GW of solar. Brookfield Renewable Partners L.P. (NYSE:BEP) also boasts a sustainable platform for carbon capture and renewable energy storage.
The company has moved to strengthen its wind power generating business by acquiring Leap Green, a leading wind-focused renewal business in India. With the acquisition, it will gain access to 500MW of operating assets with the prospect of 3GW in development.
The push to grow its operating assets around renewable energy is one of the catalysts driving free cash flow generation, allowing the company to boost its dividend offering. Brookfield Renewable Partners L.P. (NYSE:BEP) boasts a dividend yield of 5.93%, which is one of the highest in the sector.
In its first quarter of the year, Brookfield Renewable Partners, with over 34GW of operating assets, delivered an 8% year-over-year increase in funds from operations to $296 million. The company remains on course to provide a 10% increase in FFO for the year.
Currently, analysts on Wall Street rate Brookfield Renewable Partners L.P. (NYSE:BEP) as a Buy with an average price target of $31.48, implying a 31.83% upside potential from current levels. As of the end of Q2 2024, 15 out of 912 hedge funds tracked by Insider Monkey held stakes in the company.
Here is what Parnassus Value Equity Fund said about Brookfield Renewable Partners L.P. (NYSE:BEP) in its first quarter 2024 investor letter:
“Brookfield Renewable Partners L.P. (NYSE:BEP) shares were impacted by below-average generation within the renewable energy investment company’s hydroelectric portfolio. Despite this short-term variation, the company remains well-placed to benefit from the growing demand for renewable power.”
6. Clearway Energy Inc (NYSE:CWEN)
Number of Hedge Fund Investors: 30
Stock Upside Potential: 19.95%
Clearway Energy Inc (NYSE:CWEN) is a renewable energy company with 6,000 net MW of installed wind, solar, and energy generation projects. It also boasts 2.5GW of natural gas generating facilities. The facilities offer the company a reliable cash flow stream, allowing it to reward investors with a 6% dividend yield.
Clearway Energy Inc (NYSE:CWEN) has grown by purchasing wind and solar power plants from developers. It also boasts several investments in the pipeline that should strengthen its revenue stream and are expected to lead to further dividend growth with an 8% target by 2026.
Clearway Energy Inc (NYSE:CWEN) delivered solid second-quarter results, with earnings growing 30.3% year over year to $43 cents a share, even as revenues dropped 9.8% to $366 million.
In the first quarter, Clearway Energy spent $117 million in cash to acquire the Cedar Creek wind project. With the acquisition, it has bolstered its wind generating capacity by 160 MW. The project achieved commercial operations in the second quarter of 2024 and sells its power under a 25-year PPA with an investment-grade utility. Additionally, the project is expected to achieve a five-year average annual basis return of $13 million.
Clearway Energy Inc (NYSE:CWEN) also spent $44 million to acquire Dan’s Mountain wind project, adding a 55 MW wind project to its portfolio. The project is expected to achieve commercial operations in the first half of next year.
Clearway Energy Inc (NYSE:CWEN) is currently rated as a Buy on Wall Street with an average price target of $34.75, implying a 19.95% upside potential from current levels. According to the Insider Monkey database, 30 hedge funds out of 912 held stakes in the company as of the end of the second quarter. Steve Cohen’s Point72 Asset Management is the company’s largest shareholder, holding 1.02 million shares valued at $25.11 million.
5. Sunrun Inc. (NASDAQ:RUN)
Number of Hedge Fund Investors: 35
Stock Upside Potential: 14.78%
Sunrun Inc. (NASDAQ:RUN) is one of the best wind power and solar stocks to buy as it is focused on solar energy systems. The company designs, manufactures, and sells solar energy systems like panels and battery storage solutions. While the company’s primary customers are residential homeowners, it also deals with commercial developers.
Sunrun Inc. (NASDAQ:RUN)’s competitive edge stems from its focus on becoming a home electrification partner rather than offering home solar. Consequently, it has set out to offer home batteries, vehicle charging, and grid services as it diversifies its revenue streams.
The company has already inked a strategic partnership with Ford to act as the primary installer of its Intelligence backup power and installation of Ford Charge Station Pro and Home Integration System. Sunrun Inc. (NASDAQ:RUN) has also signed a deal to help Puerto Rico rebuild its energy system through a 17-megawatt virtual power system.
In Q2 2024, Sunrun Inc. (NASDAQ:RUN) registered 26,687 customer additions, including 24,984 subscriber additions. Annual Recurring Revenue from Subscribers was approximately $1.5 billion as of June 30, 2024
“In the second quarter, we again set new records for both storage installation and attachment rates, further differentiating Sunrun in the industry, beating the high-end of our storage installation guidance and delivering solid quarter-over-quarter growth for solar installation, Cash Generation, and Net Subscriber Value. Our primary focus is on expanding our differentiation, launching additional products and services to expand customer lifetime values, and remaining a disciplined, margin-focused leader in the sector to drive meaningful Cash Generation, ” said Mary Powell, Sun Run’s Chief Executive Officer.
Analysts on Wall Street have a Buy rating on Sunrun Inc. (NASDAQ:RUN) with an average price target of $20.50, potentially implying a 14.78% upside. Additionally, 35 hedge funds held stakes in the company as of the end of the second, according to the Insider Monkey database. Of those, William B. Gray’s Orbis Investment Management is the company’s top shareholder, with positions worth $164.80 million.
4. Enphase Energy, Inc. (NASDAQ:ENPH)
Number of Hedge Fund Investors: 42
Stock Upside Potential: 5.8%
Enphase Energy, Inc. (NASDAQ:ENPH) is one of the best wind power and solar stocks to buy, as it offers exposure to the design, manufacturing, and sale of microinverter systems for the solar industry. It is these devices that the solar industry relies on to convert direct power produced by solar panels into alternating current for use in household and industrial settings.
While Enphase Energy, Inc. (NASDAQ:ENPH) is best known for its microinverters, it is also expanding its footprint into other growth areas. Its long-term plan is to serve the entire home energy system market through IQ8 series microinverters and IQ batteries to serve the entire home energy system. It’s also developing electric vehicle charge systems to tap the opportunity around electric vehicles.
Enphase Energy, Inc. (NASDAQ:ENPH)’s competitive edge stems from being one of the largest solar companies by market value, which allows it to enjoy economies of scale. While the company did feel the full effects of rising interest rates that dampened demand for residential solar, it is benefiting from a strong recovery in US demand.
Its revenue in the second quarter of 2024 totaled $303.5 million compared to $263.3 million delivered in the first quarter. The increase was driven by 11% increases in the United States amid strong demand for the company’s products.
Analysts on Wall Street rate the stock as a Buy with an average price target of $123.77, implying a 5.80% upside potential. Additionally, a total of 42 out of 912 hedge funds tracked by Insider Monkey held stakes in the company as of the end of the second quarter.
3. First Solar, Inc. (NASDAQ:FSLR)
Number of Hedge Fund Investors: 66
Stock Upside Potential: 30.26%
First Solar, Inc. (NASDAQ:FSLR) is one of the largest solar companies in the world, specializing in providing photovoltaic solar energy solutions. It manufactures and sells PV solar modules using thin semiconductor technology. It stands out as one of the best wind power and solar stocks to buy owing to its deep relations and long reach with investors in the clean energy sector.
First Solar, Inc. (NASDAQ:FSLR) was one of the few solar energy stocks that did not crash last year amid rising interest rates and changes in solar policy. Its resilience in the market underscores why it is one of the most sought-after stocks in the clean energy space.
Its resilience stems from its unique technology and utility-scale market. First Solar, Inc. (NASDAQ:FSLR)’s thin-film solar panels have cost and efficiency advantages over many competitors. The superior technology is the catalyst behind strong demand for the company’s solar panels, and the company is well poised to sell 11.8 gigawatts to 12.3 gigawatts of solar panels this year.
The company delivered solid second-quarter financial results whereby earnings came in at $3.25 a share, beating consensus estimates of $2.69 a share. Revenues totaled $1.01 billion, up 24% year over year, above estimates of $941.5 million.
While there have been concerns that First Solar, Inc. (NASDAQ:FSLR) would be one of the companies hard hit with Donald Trump winning the upcoming presidential elections, Morgan Stanley analyst Andrew Percoco believes the risk of the IRA act being repealed is overblown.
“In a scenario where Trump wins the 2024 election, we would expect FSLR to benefit from greater pricing, enabled by additional tariffs on solar equipment imported into the US, or even the perceived risk of incremental tariffs under a potential Trump administration,” Percoco said
First Solar, Inc. (NASDAQ:FSLR) commands an average Buy rating on Wall Street with an average price target of $290, implying a 30.26% upside potential. Additionally, 66 hedge funds out of 912 tracked by Insider Monkey held stakes in the company as of the end of Q2 2024.
2. NextEra Energy Inc. (NYSE:NEE)
Number of Hedge Fund Investors: 73
Stock Upside Potential: 1.02%
NextEra Energy Inc. (NYSE:NEE) is one of the best wind power and solar stocks to buy for exposure to generating, transmitting, and distributing electric power to retail and wholesale customers. The company generates power through wind, solar, and nuclear, among other clean energy options.
NextEra Energy Inc. (NYSE:NEE) is one of the largest wind power producers in the world, with 21 gigawatts of operating wind generation capacity. It has also announced plans to build as much as 11.5GW of new wind energy capacity by 2027, seeking to take advantage of the strong demand for clean energy for powering households and data centers amid the artificial intelligence revolution.
NextEra Energy Inc. (NYSE:NEE) is already moving quickly to address the expected 38% rise in power demand in the US. With the expected demand increment to be met through renewable energy and battery storage, the company is investing in the future. Consequently, it plans to sell $2 billion of equity units as it looks to raise much-needed capital to fund investments in energy and power projects.
In addition to a robust expansion plan, NextEra Energy Inc. (NYSE:NEE) has proven to be a key value generator, increasing its dividend payout by over 11% over the past five years. The company currently has a solid 2.61% dividend yield.
Analysts on Wall Street are bullish about NextEra Energy Inc. (NYSE:NEE), with an average price target of $79.88, implying 1.02% upside potential from current levels. On the other hand, 73 hedge funds out of 912 tracked by Insider Monkey held stakes in the company as of the second quarter. Rajiv Jain’s GQG Partners is the largest shareholder of the company, holding 12.49 million shares valued at $884.56 million.
ClearBridge Investments also mentioned this in its Q2 2024 investor letter. Here is what the firm has to say about NextEra Energy, Inc. (NYSE:NEE):
“AI-related momentum was a key driver of performance in the second quarter, lifting the enablers in technology as well as holdings like renewable power producer NextEra Energy, Inc. (NYSE:NEE) that supplies the increasing energy needs of data centers. Parts of the market lacking an AI connection, like our medical device holdings, underperformed despite no change to fundamentals. We have managed through several similar momentum periods over our tenure and have delivered long-term results for shareholders by staying true to an approach that emphasizes diversification across three buckets of growth companies (select, stable and cyclical) and seeks to take advantage of attractive entry points into quality growth businesses.”
1. GE Vernova Inc. (NYSE:GEV)
Number of Hedge Fund Investors: 92
Stock Upside Potential: 8.84%
GE Vernova Inc. (NYSE:GEV) is one of the best wind power and solar stocks to buy, thanks to its diversified portfolio of products and services for generating, transferring, and storing renewable energy. The company’s wind segment uses wind-generation technologies, including onshore and offshore wind turbines and blades.
GE Vernova Inc. (NYSE:GEV)’s competitive edge stems from the fact that it is one of the leaders in the manufacturing, storage, and servicing of wind turbines. The company has installed more than 55,000 units worldwide, affirming the strength of its recurring servicing revenue.
Moreover, GE Vernova possesses a significant and expanding portfolio of wind projects, both onshore and offshore, which is expected to lead to consistent expansion in the near future. While it’s not exclusively focused on wind energy, GE Vernova Inc. (NYSE:GEV) offers investors a chance to be part of the industry and the broader movement towards lower carbon energy.
Amid the growing demand for clean energy to power data centers for the artificial intelligence revolution, GE Vernova is one of the companies well-positioned to benefit. The company has already started leveraging artificial intelligence to manage power more efficiently, having also released an AI-powered autonomous inspection software designed to transform energy asset inspections.
In its first quarter since being spun off by General Electric, GE Vernova Inc. (NYSE:GEV) posted a quarterly loss of $106 million, an improvement from the net loss of $346 million delivered a year ago. Nevertheless, revenues were up 6% to $7.26 billion.
Analysts on Wall Street remain upbeat about the company’s long-term prospects, with an average price target of $200.55, implying 8.84% upside potential. Likewise, 92 hedge funds out of 912 tracked by Insider Monkey held stakes in GE Vernova Inc. (NYSE:GEV) as of the end of the second quarter.
Here is what Carillon Eagle Mid Cap Growth Fund said about GE Vernova Inc. (NYSE:GEV) in its Q2 2024 investor letter:
“GE Vernova Inc. (NYSE:GEV) is a global electric power company that was recently spun out of a much larger industrial conglomerate. The company’s shares performed well in their first quarter as a standalone company, primarily as a result of the increasing outlook for power demand growth, both domestically and abroad. We believe GE Vernova is well positioned to capitalize on this growing trend across its various products and services, but most notably within its large-scale gas turbine equipment and related services, as well as in its high-voltage electrical transmission products.”
The best wind power and solar stocks to buy offer some of the best opportunities amid the clean energy push fuelled by the electric vehicle revolution and bid to combat climate change. However, given that the artificial intelligence arms race is just but starting, there are under-the-radar AI stocks trading at highly discounted valuations that hold greater promise for anyone looking to diversify their portfolio. If you are looking for an AI stock that is more promising than NVDA, check out our report about the cheapest AI stock.
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