2 Renewable Energy Stocks to Buy in 2025 and Hold for Decades
Leo Sun, The Motley Fool
5 min read
Many renewable energy stocks were crushed over the past few years as inflation, rising interest rates, and other macro headwinds caused many government agencies and companies to curb their spending on big green energy projects. However, as the macro environment stabilizes, some of those stocks could soar higher.
From 2024 to 2030, the International Energy Agency (IEA) expects the world to add over 5,500 gigawatts of new renewable energy capacity. That would be nearly triple the capacity that was added from 2017 to 2023.
Image source: Getty Images.
Therefore, investors could profit from that expansion by investing in nuclear, wind, or solar stocks. If you're willing to ride out some near-term volatility, I think these two renewable energy stocks could be worth buying and holding for at least a few more decades: NuScale Power(NYSE: SMR) and CleanSpark(NASDAQ: CLSK).
The modular nuclear power company: NuScale Power
NuScale produces the only small modular reactors (SMRs) that have been certified with a Standard Design Approval (SDA) from the U.S. Nuclear Regulatory Commission (NRC). Its SMRs can be installed in vessels that are just 9 feet (2.7m) wide and 65 feet (20m) tall -- which makes them much easier to deploy than larger nuclear reactors.
NuScale's modular designs are prefabricated, delivered, and assembled on-site. That approach reduces the costs and construction time of a working nuclear reactor. Its current reactor clusters are certified for up to 55 megawatts of electricity.
For NuScale's SMRs to be more cost-effective than a comparable coal-fired plant, it needs its reactor clusters to generate at least 77 megawatts of electricity. It expects the NRC to certify its SDA for its first 77 megawatt reactors this year.
NuScale's stock has already surged nearly 650% over the past 12 months in anticipation of that approval, but it still trades more than 20% below its all-time high from last November. Analysts only expect its revenue to rise 4% to $24 million in 2024.
But from 2024 to 2026, it expects its revenue to grow at a CAGR of 268% to $321 million as it wins that approval and deploys more reactors. With an enterprise value of $2.1 billion, NuScale might seem richly valued at nearly 7 times its projected sales for 2026. It's also still deeply unprofitable, and its soaring costs forced it to axe a project in Idaho in 2023.
Nevertheless, the nascent SMR market could still grow rapidly over the next decade as energy demands skyrocket. Last October, the U.S. Department of Energy (DOE) earmarked up to $900 million in cost-shared funds to develop more nuclear SMRs, and Amazon said it would support its soaring energy needs with more SMRs. As a first mover in this fertile green energy market, NuScale could still have plenty of room to run.
The green Bitcoin miner: CleanSpark
CleanSpark develops modular microgrids for wind, solar, and other renewable energy sources. These microgrids can be deployed as stand-alone systems or plugged into existing energy grids, and they're used to funnel energy into storage systems, backup generators, and load management solutions.
CleanSpark initially developed these green energy systems for other companies, but it evolved into a Bitcoin miner upon acquiring ATL Data Centers in May 2021. It upgraded ATL's mining facilities with its technology to boost their efficiency and demonstrate that it was possible to mine Bitcoins with low-carbon energy. It subsequently acquired and upgraded additional mining facilities in the same way, and it now provides those services to other Bitcoin mining companies.
CleanSpark mined 7,024 Bitcoin in calendar 2024. It sold some of those holdings to raise cash, but it still ended the year with 9,952 Bitcoins (worth $947.9 million as of this writing). It expanded its fleet by 127% year over year to 201,808 miners during the calendar year, which boosted its operating hash rate (which gauges its mining efficiency) by 288% to 39.1 EH/s (exahash per second). In fiscal 2024 (which ended last September), its revenue surged 125% to $379 million as its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) grew nearly tenfold to $246 million.
That growth was driven by its rapid expansion and the soaring price of Bitcoin. From fiscal 2024 to fiscal 2027, analysts expect its revenue and adjusted EBITDA to grow at a CAGR of 36% and 22%, respectively. With an enterprise value of $3 billion, CleanSpark's stock still looks like a bargain at eight times this year's adjusted EBITDA. That makes it a great long-term play if you expect Bitcoin's price to keep climbing and the renewable energy market to keep expanding.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Leo Sun has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Bitcoin. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.
