We recently published a list of 11 Best Alternative Energy Stocks to Buy Now. In this article, we are going to take a look at where Talen Energy Corporation (NASDAQ:TLN) stands against other best alternative energy stocks to buy now.
The global energy market is going through a massive change as alternative energy sources are becoming increasingly popular and the world transitions away from fossil fuels. Governments, corporations, and investors are now prioritizing renewable energy sources. This is powered by favorable policies, technological advancements, and the rising demand for energy due to emerging industries like AI-driven data centers. Thus, energy stocks are becoming an attractive investment opportunity as the world moves toward sustainable energy alternatives.
Accordingly, global clean energy deployment hit a new record in 2023, driven by a growth of 85% in solar PV and 60% in wind capacity, as per the International Energy Agency (IEA). Investment in solar exceeded all other energy sources, breaching the $500 billion mark, as per the World Economic Forum. On the other hand, investments in battery storage surpassed $50 billion, adding to the strength of the energy storage solutions. Thus, these investments point toward the increasing demand for renewables in the global energy mix.
The acceleration of this transition has been majorly supported by federal policies. Initiatives worldwide, like the Inflation Reduction Act (IRA) in the U.S., have fostered the expansion of clean energy by presenting tax credits and incentives for renewable energy projects. Utility-scale solar and wind additions made up 90% of the total new capacity additions, up from 57% in 2023, according to a report by Deloitte.
The demand for electricity is also increasing as the expansion of AI, data centers, and cleantech manufacturing flourishes. According to Deloitte’s 2025 Energy Outlook, data centers could drive 44 GW of additional demand by 2030, adding to renewable energy solutions’ needs. Consequently, investments in solar, wind, and battery storage are expected to grow at an increasing rate.
On the other hand, nuclear energy is facing renewed interest. Although additions to nuclear capacity faced a decline in 2023, now the number of reactors globally under construction is at 58, emanating a total capacity of over 60 GW. Investments in the nuclear sector are doubled by countries like the U.S. and France, recognizing it as a potential reliable emissions-free energy solution.
Furthermore, the clean energy sector is propelled forward by increasing technological advancements and cost-cutting. The price of lithium-ion batteries has reduced by over 90% in the past decade, with a 40% decrease in 2024 alone, as reported by the World Economic Forum. AI also plays an important role in the optimization of energy storage, enhancing grid efficiency, and furthering renewable deployment.
Green hydrogen has emerged as a promising long-term solution. The capacity for hydrogen electrolyzers grew by 360% in 2023, largely due to China and the U.S. Such growth and advancements in hydrogen storage and distribution could potentially make hydrogen a viable alternative for industries requiring high-energy-density fuels.
Therefore, alternative energy stocks seem to be an attractive investment in light of strong policies, technological advancements, and increasing demand for clean energy. The Inflation Reduction Act in the U.S., as well as policies in Europe and Asia, have introduced incentives to encourage companies to expand their renewable energy initiatives.
Thus, the sector is positioned to be attractive for investors in terms of long-term growth due to its swift expansion, decreasing costs, and increasing adoption by the corporate sector.
Methodology
To come up with our list of the 11 Best Alternative Energy Stocks to Buy Now, we first picked companies operating in the alternative energy sector with market capitalization surpassing the $5 billion mark. We then further shortlisted these stocks on the basis of hedge fund backing, as stocks with strong hedge fund interest often prove to be financially strong, with robust growth potential.
The shortlisted stocks were then ranked using Insider Monkey’s Hedge Fund Database as of Q4 2024, as per the number of hedge funds invested in them. The companies with the highest hedge fund interest were ranked in ascending order.
Why are we interested in 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Talen Energy Corporation (NASDAQ:TLN)
Number of Hedge Funds Holders: 77
Talen Energy Corporation (NASDAQ:TLN), a stand-alone power producer and infrastructure company, sells and generates electricity across the United States. Talen Energy has a broad portfolio consisting of solar, fossil, nuclear, and coal power plants and is expanding its battery storage initiatives to solidify its clean energy transition
Talen Energy Corporation (NASDAQ:TLN) reported $770 million in adjusted EBITDA and $283 million in adjusted free cash flow, demonstrating strong operational performance for the fiscal year ended December 31, 2024. The Susquehanna nuclear facility accounted for half of the total 36 terawatt hours of power generated. The company took advantage of rising dispatch opportunities for its gas-fired fleet during increasing energy demand in the Pennsylvania-New Jersey-Maryland Interconnection (PJM) market.
Moreover, Talen Energy Corporation (NASDAQ:TLN) is vigorously collaborating with AWS to power a 960 MW data center campus at its Susquehanna nuclear plant. Of the total capacity, 300 MW is being developed under a Power Purchase Agreement (PPA) and the company is working through regulatory processes to further scale the project. The operations of its Brandywine and Wagner plants are extended till 2029, generating $145 million annually starting June 2025, as Talen acquired a Reliability Must Run (RMR) agreement in Maryland.
Furthermore, by repurchasing 13 million shares in 2024 (approximately 22% of its outstanding stock) and returning $2 billion in capital, the company remains dedicated to shareholder returns. Talen Energy Corporation (NASDAQ:TLN) ensures balance sheet flexibility and has $1.2 billion in liquidity to facilitate future growth, with a net leverage ratio of 2.4x.
Thus, Talen Energy Corporation (NASDAQ:TLN) maintains its position as one of the best clean energy stocks and remains a prominent player in the evolving energy landscape with reaffirmed 2025 EBITDA guidance of up to $1.175 billion.
Overall, TLN ranks 4th on our list of best alternative energy stocks to buy now. While we acknowledge the potential of TLN, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TLN 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.
