The concept of renewable energy stocks to buy essentially offers a two-fer: obviously, you support go-green initiatives and second, you can potentially profit from your altruism. According to Allied Market Research, the global renewable energy market reached a valuation of $881.7 billion in 2020. Experts there project that the segment can expand at a compound annual growth rate of 8.4% from 2021 to 2030.
By the culmination of the forecasted period, the sector might hit a valuation of $1.98 trillion. Like any other market, investors can choose to tack on more risk in exchange for the possibility of greater rewards. Each of the ideas below for renewable energy stocks to buy should be considered extremely speculative. However, if the stars align just right, you could be seeing double your money.
|DQ||Daqo New Energy||$44.47|
NextEra Energy (NEE)
One of the biggest names among renewable energy stocks to buy, NextEra Energy (NYSE:NEE) is the largest electric utility holding company by market capitalization, per its public profile. However, it’s been rough going for the go-green ecosystem. Since the Jan. opener, NEE slipped nearly 6%. In the past 365 days, shares gave up more than 9% of equity value.
Financially, NextEra’s biggest strengths centers on its bottom line. Notably, its gross margin pings at an impressive 48.38%. And its net margin comes in at 19.79%, outpacing 84.8% of its peers. Also, the company’s return on equity is 11.07%, above 65.31% of companies listed in the utilities industry.
Per TipRanks, Wall Street analysts peg NEE as a unanimous strong buy. On average, their price target stands at $93.92, implying 19% upside potential. Okay, so it’s not exactly 100%. However, the most optimistic target is $100, implying upside of nearly 27%. Given enough time (say, five years instead of 12 months), NEE could double in value.
Enlight Renewable Energy (ENLT)
An intriguing name among renewable energy stocks to buy, Israel-based Enlight Renewable Energy (NASDAQ:ENLT) builds and operates solar and wind power facilities. Geopolitically, Enlight’s home nation sits in a geopolitically sensitive area. Therefore, the enterprise could help build energy resilience for Israel, which may have profound implications. However, since the Jan. opener, ENLT slipped almost 18%.
Financially, Gurufocus warns that Enlight might be a possible value trap. Objectively, the company enjoys decent stability in the balance sheet. For instance, its equity-to-asset ratio is 0.62 times, ranked better than 77.11% of the competition. Operationally, Enlight’s three-year revenue growth rate pings at 31.9%, outpacing 82.27% of its peers. Also, its book growth rate during the same period is an impressive 34%.
Lastly, covering analysts peg ENLT as a unanimous strong buy. On average, their price target stands at $21.50, implying nearly 32% upside potential. The highest target is $22, implying 35% growth. However, over time, ENLT could easily double in value.
SolarEdge Technologies (SEDG)
Another Israeli enterprise, SolarEdge Technologies (NASDAQ:SEDG) develops and sells solar inverters for photovoltaic arrays, energy generation monitoring software, battery energy storage products, as well as other related products and services to residential, commercial and industrial customers. Since the start of the year, SEDG slipped about 2%. In the trailing year, it’s down 11%.
To be sure, Gurufocus warns its readers that SolarEdge may be a value trap. However, it could also be one of the more enticing renewable energy stocks to buy for speculators. First, the company features an Altman Z-Score of 6.21, indicating very low bankruptcy risk in the next two years.
Operationally, SolarEdge posts a three-year revenue growth rate of 23.5%, above 77.05% of the industry. Also, its book growth rate pings (during the same period) an impressive 32.7%.
In closing, analysts peg SEDG as a consensus moderate buy. On average, their price target stands at $369.57, implying nearly 32% upside potential. However, the most optimistic target is $452, which implies over 61% growth.
Enphase Energy (ENPH)
An American energy tech firm, Enphase Energy (NASDAQ:ENPH) develops and manufactures solar micro-inverters, battery energy storage and electric-vehicle charging stations primarily for residential customers. Thanks to its underlying relevancies, Enphase ranks among the most popular renewable energy stocks to buy. However, it’s been a rough outing in 2023, with shares down almost 25%.
Still, circumstances could get interesting for ENPH. For starters, it enjoys decent stability in the balance sheet, as evidenced by its Altman Z-Score of 8.91. Operationally, Enphase’s three-year revenue growth rate comes in at 50.4%, above 94.5% of companies in the semiconductors industry. Also, its EBITDA growth rate during the same period is 60.9%, an impressive figure.
Turning to Wall Street, covering analysts peg ENPH as a consensus strong buy. On average, their price target stands at $293.35, implying almost 54% upside potential. Further, the most optimistic analyst believes shares will hit $365. If so, this would imply a return of slightly over 91%.
On paper, Enviva (NYSE:EVA) is the world’s largest producer of wood pellets, a renewable alternative to coal. At the same time, Enviva suffers from controversies related to its negative environment impact to achieve its goals. Since the Jan. opener, EVA fell more than 48%. In the trailing one-year period, it gave up more than 69% of equity value. Not surprisingly, it’s one of the riskiest renewable energy stocks to buy.
Circumstances don’t exactly improve when shifting attention to the financials. For example, Enviva features poor stability metrics in its balance sheet. One danger area to point out is its Altman Z-Score of 0.67, which reflects a deeply distressed enterprise. Also, its three-year revenue growth rate sits at 27.2% below breakeven. So much then for growth.
Combined with negative margins, Enviva appears unnecessarily risky. So, why mention it among renewable energy stocks to buy? Simply, analysts like it, pegging EVA as a consensus moderate buy. On average, their price target stands at $39.50, implying nearly 58% upside potential. Plus, the most optimistic price target is $55, implying growth of nearly 120%.
Plug Power (PLUG)
Simultaneously one of the most popular and riskiest renewable energy stocks to buy, Plug Power (NASDAQ:PLUG) isn’t for everyone. I know that because since the Jan. opener, PLUG fell nearly 24%. In the past one-year period, it gave up 66% of equity value. Still, retail investors continue to bid it up due to its development of hydrogen fuel-cell systems.
To be fair, the company does feature some attractive financial metrics. For instance, its cash-to-debt ratio pings at 2.4 times, ranking above nearly 62% of its peers. Also, its three-year revenue growth rate is 7.6%, outpacing 60.35% of the competition.
As a bonus, PLUG trades at 1.35-times book value. In contrast, the sector median value comes in at 1.94 times. Therefore, you could say that Plug Power is undervalued. Although suffering from credibility challenges, analysts love PLUG, pegging it a consensus strong buy. Moreover, their average price target stands at $25.75, implying nearly 178% upside potential.
Daqo New Energy (DQ)
Based in China, Daqo New Energy (NYSE:DQ) engages in the manufacture of monocrystalline silicon and polysilicon, primarily for use in solar photovoltaic systems. While seemingly compelling, Daqo also suffers from controversies, particularly a Bloomberg report centering on allegations of forced labor. So, while renewable energy stocks to buy may represent feel-good stories, Daqo presents some questions.
That said, the company features some awfully enticing financial metrics. For example, Daqo has zero debt on its books, affording it incredible flexibility during this ambiguous time. Operationally, the company features a three-year revenue growth rate of 128.5%, though this will surely come down over time. As well, its book growth rate during the same period comes in at an astounding 97.4%.
Plus, the market prices DQ at a forward multiple of only 2.3, which is wildly undervalued. You should be aware that Gurufocus believes that it’s too good to be true. Within the past three months, no one covers DQ stock. However, in the trailing year, Jefferies’ Johnson Wan forecasted DQ hitting $134.80. If so, that would imply upside of slightly over 203%.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.