In this article, we will dissect whether Sunrun Inc. (NASDAQ:RUN) is a buy, sell, or hold according to analysts, and also take a look at recent developments in the market. Check our free report on the 7 Best Alternative Energy Stocks To Buy According to Analysts.
Growing Investments in the Clean Energy Transition
According to a report by the International Energy Agency, clean energy investment grew by approximately 50% from 2019 to 2023, reaching $1.8 trillion with a growth rate of 10% per year. The annual addition of solar photovoltaics and wind reached 85% and 65% respectively in 2023. However, the increase in clean energy deployment was not translated into market investments. The industry underperformed in 2023, with many investors pulling out their investments. However, On May 7, Reuters reported that clean energy generation and distribution exchange-traded funds (ETFs) are beginning to outperform oil and gas ETFs. Since 2022, the ETFs tied to renewable energy generation and distribution have declined between 20% and 70% of their value, driven by the rising interest rates and a slowdown in clean energy deployment, which led to declining stock prices and earnings of the stocks. This resulted in the increased earnings of oil and gas producers, with returns of over 50% during the same period. The declining trend of clean energy ETFs is reversing with ETFs tied to the energy transition, reporting positive returns as a leading oil and gas exploration ETF, SPDR S&P Oil & Gas Exploration & Production ETF lost nearly 5%. Major renewable energy ETF, iShares Global Clean Energy ETF has surged nearly 13% over the past month, as of May 23.
Major energy companies with prominent oil and gas business segments are transitioning to alternative energy sources, in line with their clean energy and carbon neutrality goals. For instance, on April 22, the Chief Executive Officer of a leading energy company, Equinor, Anders Opedal spoke to CNBC about its renewable investments outlook. Opedal said that the company is increasing its investments in renewables. However, the investments have to be profitable for the company. He added that the company is focused on investments in developing offshore wind and solar plants. The company has presented an income of $46 million for its renewable business, which is expected to increase while keeping it profitable. It aims to achieve a smooth and balanced energy transition with the participation of all concerned stakeholders including the government, consumers, and industries. He said:
“To be able to do the energy transition you know everyone needs to participate and really need to work. Together we need governments we need Industries. We need consumers. We have to admit that to do this will take time. We have a very efficient energy system built up over many many many years and now we are transitioning into another another energy system. This will cost and it’s important to make sure that while we are transitioning, we have enough energy in the system such that it’s affordable and that over time it can be more sustainable so we need to find that balance such that everyone can participate.”
Massive Surge in Solar as an Alternative Energy Source
Nextracker is one of the best alternative energy stocks with high upside potential. The company specializes in energy solutions providing solar trackers for utility-scale and ground-mounted distributed generation. On May 14, the company released its earnings for the first quarter of 2024. It reported earnings per share of $0.96 and surpassed estimates by $0.27. The company generated a revenue of $736.52 million for the quarter, representing a year-over-year increase of 42.08%.
On May 15, the founder and CEO of Nextracker, Dan Shugar was interviewed on CNBC regarding the company’s strong earnings report. Shugar believes that demand for solar is accelerating rapidly in the United States and internationally. This growth can also be observed in the company. performance. The solar tracking leader is serving nearly 40 countries across the world, with the United States being its strongest market. It is also experiencing strong growth in its international market including South America, Australia Africa, the Middle East, and India. This led to an increase in its backlog for 2024 reporting $4 billion, which was previously $2.6 billion in 2023. In the past two years, it has nearly doubled from its previous value. He further added that the company has experienced a compound annual growth of nearly 30% over the past six years in a row. Shugar believes there is a massive surge in solar with more than 7,000 projects with a total capacity of 1,500 GW waiting for grid connection. Battery storage is making solar one of the most attractive alternative energy options in the renewable market. The solar applications for connections are 25 times higher compared to fossil fuels, said Shugar. To address the losses related to solar energy, the company has also developed a hail technology.
Another leading name in the solar market, Sunrun is a major provider of clean energy. It is engaged in the design, manufacturing, installation, sale, and acquisition of residential solar systems. On May 8, the company announced that it has connected over 16,200 customers to California’s electrical grid during the summer, supported by its CalReady power plant. The company is proving the efficiency and reliability of its solar-plus-storage systems, by supporting the grid operations of California. In 2023, the leading residential solar company also supplied nearly 32 megawatts of power to Pacific Gas and Electric Company. The Chief Executive Officer of Sunrun, Mary Powell said that the company is leading the clean energy transition by providing its customers with reliable and efficient solutions. She said:
“We are on the forefront of a customer-led revolution to a cleaner, more affordable clean energy future. When presented with the opportunity to help, Sunrun’s customers always step up to be part of the solution. By sharing their clean solar power, they are making California’s grid more resilient for everyone. Sunrun’s CalReady is far and away the largest virtual power plant in the country and serves as a model for what the electric grid of the future should look like.”
A bird’s eye view of a sprawling solar facility in the Northeastern US, glimmering in the sun.
Methodology
To compile our list of the 7 best alternative energy stocks according to analysts, we used stock screeners from Yahoo Finance and Finviz, and shortlisted the stocks with a market valuation higher than $1 billion, as of May 21. We also reviewed multiple similar rankings by Insider Monkey and various clean energy ETFs to form a list of 30 alternative energy stocks. We picked the 7 stocks that received the most buy or buy-equivalent ratings from Wall Street analysts and also had the highest average upside potential, as of May 21. The 7 best alternative energy stocks to buy according to analysts are arranged in ascending order of their average upside potential.
We also added the hedge fund sentiment for each stock. The hedge fund data was taken from Insider Monkey’s database of over 900 elite hedge funds as of the first quarter of 2024. 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 best hedge funds. Our quarterly newsletter’s strategy picks 14 small and large-caps every quarter and it has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Sunrun Inc. (NASDAQ:RUN): Buy, Sell, or Hold?
Sunrun Inc. (NASDAQ:RUN)
Average Upside Potential as of May 21: 55.87%
Number of Hedge Fund Holders: 37
Sunrun Inc. (NASDAQ:RUN) is one of the best alternative energy stocks according to analysts. It is involved in the design, installation, and development of residential solar energy systems in the United States. On May 8, the company released its financial results for the first quarter of 2024. It reported a strong Q1 in terms of installed storage capacity. The company saw a 192% year-over-year increase in its installed capacity reaching 207 megawatt hours in the first quarter of 2024. The company has surpassed the Q1 guidance range for storage and solar installations. Its net earning assets increased to $5.2 billion in Q1.
As of May 21, Sunrun Inc. (NASDAQ:RUN) has an overweight rating, based on the consensus of 31 analysts. The stock has an average price forecast of $17.8 and a high price target of $42. It has an average upside potential of 55.87%, compared to its current price of $11.42.
According to Insider Monkey’s database, 37 hedge fund managers were long Sunrun Inc. (NASDAQ:RUN) at the end of the first quarter, with stakes exceeding $706 million. Of those, Orbis Investment Management is the top shareholder of the company, with positions worth $187.56 million.
Sunrun Inc. (NASDAQ:RUN) is ranked 3rd among the best alternative energy stocks to buy according to analysts. To find out the top picks, check out our free report on the 7 Best Alternative Energy Stocks To Buy According to Analysts.
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Disclosure. None. This article is originally published on Insider Monkey.