We recently compiled a list of the 10 Best Clean Energy Stocks According to Reddit. In this article, we are going to take a look at where GE Vernova (NYSE:GEV) stands against the other clean energy stocks.
The clean energy or the renewable energy market is one of the most largest growing sector globally. Clean energy sources, such as wind, hydropower, biofuel, and solar energy, are gaining momentum due to environmental concerns and government regulations in countries around the world. These factors have significantly boosted the sector, leading to a rise in installed capacity for clean energy sources. Additionally, the growing demand for power and rising energy consumption are driving the expansion of the clean energy market.
The U.S. Energy Information Administration (EIA) forecasts a 17% increase in clean energy deployment in 2024, potentially reaching 42 GW and accounting for nearly a quarter of the nation’s electricity generation. This growth could lead to a temporary rise in clean energy costs due to higher expenses for financing, labor, and land. Despite these challenges, tax credits from the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA) are expected to help maintain the competitiveness of solar and wind energy. The solar and energy storage markets are poised for further growth, supported by tax incentives and government programs such as the DOE’s Loans Program. Conversely, the wind and hydrogen energy sectors face obstacles, with wind energy experiencing higher costs and approval delays, and hydrogen development slowed by a lack of government incentives.
In a recent interview, Bruce Flatt, CEO of Brookfield Asset Management, discussed the transformative impact of decarbonization on industries and investments, describing it as a major trend reshaping the market. The company has launched a renewable energy fund and raised $15 billion, with plans for a second fund to help companies reduce carbon emissions, with solar and wind projects in 15 countries. Brookfield’s strategy includes building renewable infrastructure and directly supplying power to corporate clients to help them meet net-zero goals. Flatt highlighted that the U.S. Inflation Reduction Act (IRA) has provided incentives that accelerate clean energy projects, which will lead to improved completion rates and benefit the sector. Brookfield targets returns of 9-10% for debt products and around 20% for equity investments in the clean energy sector, with optimism for future growth and returns as more capital flows into the market.
As the world shifts towards more sustainable energy solutions, the demand for clean energy is expected to increase significantly, driven by rising environmental concerns and government incentives. Some of the largest players in the energy market are transitioning towards clean energy and are well-positioned to benefit from the ongoing push towards a more sustainable future.
Our Methodology
For this article, we sifted through several active subreddits to compile an initial list of 30 clean energy stocks that retail investors were bullish on. From that list, we narrowed our choices to 10 stocks according to their hedge fund sentiment, which was taken from our database of 912 elite hedge funds as of Q2 of 2024. We also included the market cap of these companies as of September 4. The list is sorted in ascending order of their hedge fund sentiment, as of the second quarter.
Why do we care about what hedge funds do? 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).
A close-up of an electrical power line with a bright blue sky in the background, highlighting the company’s selection of electricity and natural gas services.
GE Vernova (NYSE:GEV)
Number of Hedge Fund Holders: 92
Market Capitalization as of September 4: $54.81 Billion
GE Vernova (NYSE:GEV) has over 130 years of experience in the production of electrical equipment, natural gas turbines, wind turbines, hydropower turbines, and high-voltage electrical transmission products. The company plays a a crucial role in clean energy and its technology is used in around 55,000 wind turbines and 7,000 gas turbines across more than 100 countries which generate approximately 25% of the world’s electricity.
GE Vernova (NYSE:GEV) is uniquely positioned to benefit from several global megatrends, including the increasing demand for electricity, natural gas, and clean energy solutions. According to the International Energy Agency (IEA), global electricity demand is expected to grow by 4% in 2024 and 2025, up from 2.5% in 2023. This growth is largely driven by the electrification of transportation, including the adoption of EVs, and the rising need for power-intensive technologies such as AI systems. In their Q2 2024 investor letter, Carillon Tower Advisers stated the following regarding GE Vernova Inc.
“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.”
In Q2, GE Vernova (NYSE:GEV) reported a net income of $1.3 billion, a remarkable turnaround from a loss of $100 million in the same period the previous year. This represents a year-over-year increase of $1.4 billion, highlighting the company’s growing profitability. Additionally, GE Vernova’s (NYSE:GEV) net income margin increased by 17.4% year-over-year, due to improved operational efficiency. The company’s Power unit, which includes its gas and steam turbines, experienced a 30% growth in orders compared to Q2 2023. The backlog for GE Vernova’s (NYSE:GEV) electrification business grew by 35% year-over-year.
The global energy sector is expected to experience robust growth over the next several years. According to a report by Business Research Company, the market for electrical equipment is projected to grow at a CAGR of 6.1% from 2024 to 2028. Additionally, the International Energy Agency (IEA) forecasts that the installed capacity of wind power is anticipated to double between 2023 and 2029 which will further drive the demand for GE Vernova’s (NYSE:GEV) wind turbines and related products. As of the second quarter, GE Vernova’s (NYSE:GEV) stock is held by 92 hedge funds and the stakes amount to $5.70 billion.
Overall GEV ranks 1st on our list of the best clean energy stocks to buy. While we acknowledge the potential of GEV as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GEV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
