In this article, we shall discuss the 13 best alternative energy stocks to buy now. To skip our detailed analysis of the alternative energy sector in 2023, go directly and see 5 Best Alternative Energy Stocks To Buy Now.
Amid a disrupted market landscape and lower carbon expectations, the global energy sector is hurrying to adapt to the evolving market conditions. Some of the best alternative energy stocks to buy in the oil and gas sector have been ramping up investments in the renewable energy business, clean energy players are expanding operational capabilities, and a greater number of sustainability-focused entrepreneurial ventures are springing up to capitalize upon the fast transition to renewable energy and to deliver innovative solutions to the transforming market. According to McKinsey's Global Energy Perspective 2022, despite being significantly well-positioned to cash in on the energy transition, oil and gas companies are expected to continue their reliance on fossil fuels as a substantial part of the global energy mix, at least till 2050. Some of the reasons for this is the increased affordability and security of supply which is indicative of fossil fuels in the 21st century. However, the report postulates that these companies are also likely to continue investments in clean energy due to their sheer global scale, the magnanimous capacity for risk of their investors, their substantial income statements and balance sheets, and their favorable equations with energy consumers and shareholders. Some of the most prominent players leading the clean energy transition are NextEra Energy Inc. (NYSE:NEE), General Electric Co. (NYSE:GE), and Tesla Inc. (NASDAQ:TSLA).
However, according to Bloomberg, the power sector, which includes some of best alternative energy stocks to buy, needs to make a more concerted effort in its transition towards alternative energy models by 2050. The International Energy Agency updated that the energy sector is still the world's largest emitter of atmospheric carbon. And although solar power and EV sales have boomed since the IEA's 2021 update, the current projected limit to global warming of 2.4C is still too much. This is coupled with the fact that carbon emissions by the energy sector set a new total high of more than 40 billion tons in 2022 owing to the post-COVID economic rebound and the global energy crisis which was exacerbated by Russia's 2022 invasion of Ukraine. This led to a widescale competition to produce and burn a greater number of fossil fuels, especially in China, India and other developing countries around the world. Wind power is also struggling due to skyrocketing inflation rates and political pushbacks, the latter causing numerous large-scale wind projects to be stalled indefinitely. To read more on some of the challenges and upside potential facing the alternative energy industry in 2023, check out our article on 30 Countries With the Cleanest Air in the World.
In a 2023 report, McKinsey and Company outlined certain key areas which can generate substantial value for energy companies amid the energy transition, one of them being offshore project development. Oil and gas companies can invest in integrated projects, including clean energy generation and hydrogen and heat production. Furthermore, players like NextEra Energy Inc. (NYSE:NEE), General Electric Co. (NYSE:GE), and Tesla Inc. (NASDAQ:TSLA) have histories with hydrogen production in their refining and chemical processes. Since existing capacities are integral for clean hydrogen production and transportation, the best alternative energy stocks can build on their capabilities to increase clean energy generation. Thirdly, clean energy companies may also leverage their brands, consumer relations, real estate, and fuel stations near freeways to deliver fast-charging EV solutions to customers. Lastly, increasing public scrutiny has pressured oil and gas players to decarbonize through increased investments in technical solutions and expertise. These added capabilities can be used to improve upon decarbonization services like clean energy generation, renewables retail, batteries and CCUS (carbon capture, utilization, and storage). Since the industry is still heavily reliant on fossil fuels and fosters favorable relationships with suppliers, its representatives deserve a seat at the table when developing the transition strategy. To read more on countries which have incentivized these steps, check out our article on the 12 Most Advanced Countries in Renewable Energy.
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Our Methodology
To compile our list of the 13 best alternative energy stocks to buy now, we first made a list of the 30 largest alternative energy companies in the world in terms of their market capitalization. Some companies are pure-play alternative energy companies while others generate a significant portion of their annual revenue through alternative energy sources and are moving towards a 100% clean energy model. Then, we picked 11 stocks with strong fundamentals, positive analyst ratings, or a favorable hedge fund sentiment. The stocks have been ranked based on the number of hedge funds which hold stakes in them, from lowest to highest.
Based in Toronto, Ontario, Brookfield Renewable Partners L.P. (NYSE:BEP) is a publicly traded limited partnership which focuses on the operation of renewable power assets. More than 60% of the company is owned by Brookfield Asset Management. As of 2022, Brookfield Renewable Partners L.P. (NYSE:BEP) owns more than 200 hydroelectric plants, 150 wind farms, more than 600 solar facilities, and four storage facilities across the world. In Q2 2023, the company generated a revenue of more than $1.2 billion.
On October 13, the National Bank revised Q3 2023 estimates for Brookfield Renewable Partners L.P. (NYSE:BEP), saying they are projecting proportionate generation at 7564 Gigawatt hours, up from the previously expected 7328 GWh. This is driven by exceptionally strong results for the company in US hydropower, partially offset by weaker wind. The National Bank is now postulating an adjusted EBITDA of $527 million, up from the previous estimate of $511 million. With share prices down and dividend yields increased to over 6%, the company is focusing on the diversification of its investments globally, with an increased focus on North America for added stability.
Based in Houston, Texas, Sunnova Energy International Inc. (NYSE:NOVA) is an American solar energy company which was founded in 2012. On October 17, Citi analysts upgraded Sunnova Energy (NYSE:NOVA) to Buy from Neutral, and lowered the price target to $14 from $22. According to the analysts, the upgrade is predicated almost entirely on valuation. They have pointed out that the stock is down 55% since July 19, and now reflects net customer value discounted at 12% without any credit for the development company, which appears to be a valuation floor especially as rates stabilize. Citi believes that although Sunnova's (NYSE:NOVA) Q3 estimates have substantial downside, the stock's valuation is too compelling to ignore. Like NextEra Energy Inc. (NYSE:NEE), General Electric Co. (NYSE:GE), and Tesla Inc. (NASDAQ:TSLA), Sunnova Energy International Inc. (NYSE:NOVA) is one of the best alternative energy stocks to buy now.
Furthermore, even though the company is expected to deliver Q3 earnings amidst declining expectations, overall revenue growth stands at an impressive 40% year-on-year. Furthermore, the current operating environment within the company contains multiple catalysts which have the potential to deliver a massive turnaround. The following is an excerpt from Sunnova's (NYSE:NOVA) Q2 2023 earnings call transcript.
"This outstanding performance can be attributed to the strong demand for our comprehensive suite of services, the continued growth of our dealer base and the expansion of our addressable market and market share. What sets Sunnova apart and fuels our growth is our unique business model, exemplified by an unwavering commitment to delivering responsive and reliable service. While solar forms the foundation of our existing customer base, we have observed a growing trend among newer consumers."
Headquartered in Latham, New York, Plug Power Inc. (NASDAQ:PLUG) is an American company which focuses on the production of hydrogen fuel cell systems which are geared to replace conventional batteries in electrical equipment and vehicles. In Q2 2023, the company generated a total revenue of $260 million, up from $210 million in the preceding quarter. As of the end of Q2 2023, 20 hedge funds hold significant shares in Plug Power Inc. (NASDAQ:PLUG).
On October 16, H.C. Wainwright lowered the price target on Plug Power Inc. (NASDAQ:PLUG) to $27 from 28, but maintained the Buy rating on the shares. According to the analysts, updates provided during the company's symposium and significant changes to the company's underlying assumptions with respect to the current economic climate make the Plug Power Inc. (NASDAQ:PLUG) shares a valuable prospect. Furthermore, Plug Power Inc. (NASDAQ:PLUG) management expects margins to substantially improve in Q3 2023 as the company has cut major losses in their fuel sales business and have shifted focus shifts towards leveraging and capitalizing on the scale of the company, adding that compounding growth in 2024 and beyond is expected with 2023 being the inflection year for the company.
Based in Wanzhou, Chongqing, Daqo New Energy Corp. (NYSE:DQ) is a Chinese alternative energy company which focuses on the manufacture of monocrystalline silicon and polysilicon, which is an essential in the production of solar photovoltaic cells. Hedge fund sentiment around Daqo New Energy Corp. (NYSE:DQ) is at an all-time high in Q2 2023 with 22 hedge funds long the stock, up from 21 in Q1 2023. Like NextEra Energy Inc. (NYSE:NEE), General Electric Co. (NYSE:GE), and Tesla Inc. (NASDAQ:TSLA), Daqo New Energy Corp. (NYSE:DQ) is one of the best alternative energy stocks to buy now.
On October 4, Nomura analyst Frank Fan upgraded Daqo New Energy Corp. (NYSE:DQ) to Buy from Neutral, maintaining the $45 price target. According to the analyst, the company still boasts significant advantages in cost, quality and manufacturing capabilities over its competitors in the market. China has been an incredibly dominant force in the global monocrystalline sector, owing to a variety of significant subsidies and incredibly cost-effective production capabilities from oversupply and substitute technologies. Although not much can be said at the moment for a long-term investment in Daqo New Energy Corp. (NYSE:DQ) due to the fast-paced market landscape, the company's impressive income statements and balance sheets, insider ownership, and its presence within China's clean energy stratosphere make it an instant buy.
Based in San Francisco, California, Sunrun Inc. (NASDAQ:RUN) is an American company which manufactures photovoltaic systems and battery energy storage products, specifically for residential consumers. The company has always maintained a power purchase agreement business model, where Sunrun Inc. (NASDAQ:RUN) installs a solar power system at a consumer's place of residence, and then proceeds to sell power to the consumer at an agreed-upon rate for a 20-25 year term. In Q2 2023, Sunrun Inc. (NASDAQ:RUN) beat estimates of -$0.17 by $0.42, posting an EPS of $0.25. On October 18, Citigroup analysts lowered the price target on Sunrun Inc. (NASDAQ:RUN) to $19 from $21, and maintained a Buy rating on the stock.
Based in Oakville, Ontario, Algonquin Power and Utilities Corp. (NYSE:AQN) is a Canadian clean energy and regulated utility conglomerate with multiple assets across the North American continent. The company routinely makes significant investments in hydroelectric, wind, and solar power facilities, and other utilities businesses. Although the company is currently undergoing the 40% dividend reduction, it has amped up its strategic response to the challenges and poses substantial upside for Q3 2023.
Algonquin Power and Utilities Corp. (NYSE:AQN) is currently reviewing plans to sell its renewables energy segments to boost financial flexibility. In this vein, it seems well-positioned to resist incoming regulatory changes, dilution, and influence from activist investors. Furthermore, as interest rates take a plunge, they are expected to further alleviate financial pressure, allowing Algonquin Power and Utilities Corp. (NYSE:AQN) to divert greater focus on dividends, buybacks and growth initiatives. In keeping with these projections and the low valuation, hedge funds seem to be increasingly keen on the stock. Sentiment has gone up in Q2 2023 with 29 funds long the stock, up from 27 in Q1 2023.
SolarEdge Technologies Inc. (NASDAQ:SEDG) is an Israeli company based in Herzliya. Established in 2006, the company was one of the first clean energy companies in the world to successfully commercialize power optimizers, small devices placed behind each solar panel to allow for module-level MPPT and panel-level monitoring. Hedge fund sentiment around the SolarEdge Technologies Inc. (NASDAQ:SEDG) has increased in Q2 2023, with 43 hedge funds having stakes in the company, up from 42 in the preceding quarter. Furthermore, the company delivered earnings-per-share of $2.62 in Q2 2023, beating estimates of $2.52 by $0.1.
On October 20, Citigroup analysts lowered the price target on SolarEdge Technologies Inc. (NASDAQ:SEDG) from $248 to $187, and maintained a Buy rating on the shares. According to the analysts, the company has assertively outperformed the S&P 500 over the past decade despite recent setbacks, and seems to be more than confident with respect to its pricing strategy.
Based in Baltimore, Maryland, Constellation Energy Corp. (NASDAQ:CEG) is an American energy company which focuses on the production of electric powers, natural gas, and energy management services. The company serves more than 2 million consumers across the United States. On October 12, Morgan Stanley analysts maintained an Overweight rating on Constellation Energy Corp. (NASDAQ:CEG) shares, and raised the price target to $118 from $115. According to the analyst, the company controls more than 11% of the carbon-free energy market in the US. With share prices surging by 152% since early 2022, Constellation Energy Corp. (NASDAQ:CEG) has consistently entered into strategic acquisitions and partnerships to substantiate its alternative energy sector.
Furthermore, the company boasts an impressive financial outlook for Q3 2023, generating significant adjusted EBITDA and enhancing its dividend rollout history by 100%. The company is well-positioned in the clean energy sector to resist incoming headwinds, with strong year-over-year growth. Like Like NextEra Energy Inc. (NYSE:NEE), General Electric Co. (NYSE:GE), and Tesla Inc. (NASDAQ:TSLA), Constellation Energy Corp. (NASDAQ:CEG) is one of the best alternative energy stocks to buy now.
