September was an underwhelming month for the market as the S&P 500 showed a 5.25% decline during the month. On September 27, the US 10-year Treasury note reached its highest level since 2007 while the S&P 500 Utilities Index hit its lowest intraday since March 2021. Similarly, it was a bad month for the renewable energy sector as a whole too. The Invesco Global Clean Energy UCITS ETF Acc registered an approximately 11.5% decline and Fidelity Clean Energy ETF was down by around 10.75% between September 1 and September 29.
Nevertheless, renewable energy is a growing trend in the global market. According to Grand View Research, the sector is expected to grow at a compound annual growth rate of 16.9% between 2023 and 2030. The clean energy sector picked up its pace after the fossil fuel price boom due to the Russia-Ukraine war. Moreover, the sector could see another surge as per barrel oil prices increased again which could create a decline in demand for fossil fuels. The front-month WTI crude oil and front-month Brent crude closed the third quarter at $90.79 per barrel and $95.31 per barrel, respectively.
In 2023, there have been several growth catalysts for the clean energy market as the European Union (EU) reached a provisional deal to increase the percentage of renewable energy in its total energy mix from its current target of 32% to 42.5% by 2030. The EU is already looking to add up to 68 gigawatts (GW) of wind and solar capacity in 2023, up 17% YoY. Earlier in September, the G20 countries agreed to triple the renewable energy capacity by 2030.
According to Deloitte, renewable energy growth slowed down in the US in 2022. Nonetheless, if we look at the numbers, the growth has still been quite significant. The clean energy investments in the United States increased to $141 billion in 2022, and the sector accounted for 41% of the total energy mix. The US has been focusing on increasing its renewable capacity for a very long time. According to Section 203 of the Energy Policy Act of 2005, at least 7.5% of the total energy used annually by the Federal Government should be accounted for by renewable energy. On top of that, the Inflation Reduction Act of 2022 has also become an extra incentive for energy companies to add more renewable energy to their mix.
Energy companies all around the world are focusing on increasing their clean energy capacity. The American utility company, NextEra Energy, Inc. (NYSE:NEE), is planning to reach “Real Zero” by 2045, which means that it plans to completely eliminate carbon emissions from its operations by that time. On the other hand, the oil and gas company, BP p.l.c. (NYSE:BP), is planning to develop nearly 50 GW of net renewable generating capacity globally by 2030.
Similar to this list of clean energy stocks that Wall Street analysts find undervalued, you can also check out the list of undervalued renewable energy stocks according to hedge funds. Wall Street analysts believe that some of the best clean energy stocks include Sunrun Inc. (NASDAQ:RUN), Plug Power Inc. (NASDAQ:PLUG), and SolarEdge Technologies, Inc. (NASDAQ:SEDG).
12 Best Clean Energy Stocks To Buy According to Wall Street Analysts
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Our Methodology
For this article, we collected a list of all the clean energy stocks that have a market capitalization of more than $2 billion. Among those stocks, we chose the ones with the highest expected upside to their price according to Wall Street analysts. The analyst forecast data for this article has been taken from Tip Ranks.
12 Best Clean Energy Stocks To Buy According to Wall Street Analysts
12. American Electric Power Company, Inc. (NASDAQ:AEP)
Average Analyst Price Target Upside: 24.14%
American Electric Power Company, Inc. (NASDAQ:AEP) is an American utility company serving over 5.6 million customers. The company owns or operates around 25,000 megawatts of generating capacity, including renewable sources like wind, solar, and hydro.
American Electric Power Company, Inc. (NASDAQ:AEP)’s stock was owned by 33 hedge funds in the second quarter of 2023, with a combined stake value of over $674 million. In Q2, Israel Englander’s Millennium Management upped its stake in American Electric Power Company, Inc. (NASDAQ:AEP) by 619% to 2.046 million shares worth nearly $172.306 million and was the company’s largest stakeholder for the quarter.
American Electric Power Company, Inc. (NASDAQ:AEP) ranks 12th on our list of best clean energy stocks according to Wall Street analysts. Out of 12 analysts, 9 maintained a Buy rating on the company stock and its average price target of $93.38 represents a 24.14% to American Electric Power Company, Inc. (NASDAQ:AEP)’s stock price of $75.22 as of September 29 market close.
American Electric Power Company, Inc. (NASDAQ:AEP) is one of the best clean energy stocks recommended by the Wall Street analysts in addition to Sunrun Inc. (NASDAQ:RUN), Plug Power Inc. (NASDAQ:PLUG), and SolarEdge Technologies, Inc. (NASDAQ:SEDG)
Array Technologies, Inc. (NASDAQ:ARRY) is a New Mexico-based solar technology company that manufactures and sells ground-mounting tracking systems for solar energy technology. On September 28, Barclays analyst Christine Cho maintained an Overweight rating on Array Technologies, Inc. (NASDAQ:ARRY)’s stock and raised its price target to $30 from $28. The analyst added in her research note that the company is well-positioned to experience a gross-margin expansion from the Inflation Reduction Act. Christine Cho believes that the gross-margin expansion expectation is due to Array Technologies, Inc. (NASDAQ:ARRY)’s "advantaged positioning with regard to domestic content."
Bank of America is also highly bullish on Array Technologies, Inc. (NASDAQ:ARRY) and added it to its US 1 List on September 19. The firm reaffirmed a Buy rating on the company stock with a $30 price target.
NextEra Energy, Inc. (NYSE:NEE) is an American energy company with 67 GW of generating capacity. The company has planned around $85-$95 billion of investments in renewable infrastructure in America through 2025. NextEra Energy, Inc. (NYSE:NEE) was founded in 1984 and is headquartered in Florida.
Out of 15 Wall Street analysts, 13 have kept a Buy or Overweight rating on NextEra Energy, Inc. (NYSE:NEE)’s stock with an average price target of $81.47. The average analyst price target shows a 42.21% upside to the company’s stock price on September 29, making it the 10th best renewable energy stock according to Wall Street analysts.
NextEra Energy, Inc. (NYSE:NEE) is one of the best undervalued stocks to buy as it has a price-to-earnings ratio of 14.15 as of September 29.
Fluence Energy, Inc. (NASDAQ:FLNC) is an American renewable energy storage products and services company. The company also offers AI-enabled digital applications for renewables and storage applications. The company is headquartered in Virginia and offers its services in around 47 global markets.
Hedge funds were quite bullish on Fluence Energy, Inc. (NASDAQ:FLNC) in the second quarter of 2023. In Q2, the company’s stock was owned by 19 hedge funds with a combined stake value of $143.776 million. In the previous quarter, 13 hedge funds owned Fluence Energy, Inc. (NASDAQ:FLNC)’s stock with a combined value of $122.270 million.
On September 27, HSBC maintained a Buy rating on Fluence Energy, Inc. (NASDAQ:FLNC) and raised its price target to $32 from $31.
Brookfield Renewable Partners L.P. (NYSE:BEP) is a renewable energy company headquartered in Ontario, Canada. The company owns and operates clean energy facilities in the Americas, Europe, and Asia. A major part of the company is owned by Brookfield Corporation (NYSE:BN).
Brookfield Renewable Partners L.P. (NYSE:BEP) has been covered by 6 Wall Street analysts in the last three months with 4 Buy or Outperform ratings. The average analyst price target of $33.26 represents an approximately 53% upside to Brookfield Renewable Partners L.P. (NYSE:BEP)’s stock price of $21.74 on the September 29 market close.
In Q2, 13 hedge funds had a stake worth $108.36 million in Brookfield Renewable Partners L.P. (NYSE:BEP). Robert Joseph Caruso’s Select Equity Group was the most prominent hedge fund holder in the second quarter with over 3 million shares worth $89.789 million.
ClearBridge Investments made the following comment about Brookfield Renewable Partners L.P. (NYSE:BEP) in its Q4 2022 investor letter:
“Rising interest rates remain the key risk to renewables utility Brookfield Renewable Partners L.P. (NYSE:BEP), an underperformer in the fourth quarter, though we view Brookfield’s stable fundamentals (with >90% of contracted cash flows having an average term of 14 years), inflation protection (~70% of power purchase agreements are indexed to inflation) and long-term growth opportunities as attractive in the current environment. Brookfield’s balance sheet is also relatively well-protected against rising rates given it has 97% fixed-rate debt with an average term to maturity of 12 years.”
Enphase Energy, Inc. (NASDAQ:ENPH) is a California-based clean energy technology company. It offers solar micro-inverters, EV charging stations, and battery energy storage solutions. Enphase Energy, Inc. (NASDAQ:ENPH) offers its products in over 140 countries globally.
On September 21, Enphase Energy, Inc. (NASDAQ:ENPH) was upgraded to Buy from Neutral by Seaport Research with a $180 price target. The firm told investors that the company is set to benefit from its ongoing share repurchases and growth in the European solar market and "a clear emergent recovery in U.S. residential solar installations."
According to the Insider Monkey database, 50 hedge funds were bullish on Enphase Energy, Inc. (NASDAQ:ENPH) in the second quarter of 2023.
Here’s what Carillon Tower Advisers said about Enphase Energy, Inc. (NASDAQ:ENPH) in its second-quarter 2023 investor letter:
“Enphase Energy provides solar microinverters and energy storage solutions. The company’s shares lagged benchmark counterparts amid concerns surrounding a near-term moderation in the growth of residential solar installation in the United States. Despite this, the company possesses a market-leading position in its core microinverter product and remains wellpositioned over the long term to benefit from ongoing solar adoption trends. Additionally, Enphase is focused on growing its international presence while also unveiling new products that could provide the next tailwind to its growth story.”
First Solar, Inc. (NASDAQ:FSLR) manufactures solar panels and provides utility-scale solar parks and related services. Despite trading at an earnings multiple of 108, the company is still favored by Wall Street analysts. Out of 23 analysts that have covered First Solar, Inc. (NASDAQ:FSLR) stock in the last three months, 15 maintain a Buy rating on the company stock. The average analyst price target stands at $250.32, compared to $161.59 stock price on September 29.
On September 21, First Solar, Inc. (NASDAQ:FSLR) broke ground on its fifth fully vertically integrated manufacturing facility in the United States. The facility is being built in Louisiana with an approximately $1.1 billion investment. The facility will add 3.5 GW to First Solar, Inc. (NASDAQ:FSLR)’s global manufacturing capacity and will start commercial shipments by 2026.
In the second quarter of 2023, 51 hedge funds held a stake in First Solar, Inc. (NASDAQ:FSLR), compared to 39 in the previous quarter.
Sunrun Inc. (NASDAQ:RUN), Plug Power Inc. (NASDAQ:PLUG), SolarEdge Technologies, Inc. (NASDAQ:SEDG), and First Solar, Inc. (NASDAQ:FSLR) are some of the clean energy stocks with the highest stock price upside according to the Wall Street analysts.
