The 6 Best Renewable Energy Stocks for 2022
The path toward a renewable future starts with investments in renewable energy. As investors begin to look for their next long-term position, many are identifying renewables as a market that’s rife with opportunities. From solar panel manufacturers to wind farm leasing corporations and companies across the spectrum, there’s no shortage of options. The question is: what are the best renewable energy stocks for 2022?
Here’s a look at six companies that have distinguished themselves in the renewables sector. Whether through burgeoning growth, proven margins, market share acquisition or some other fundamental metric, these stocks are worth investigating further if your portfolio lacks a green energy investment.
1. NextEra Energy (NYSE: NEE)
NextEra Energy is far and away the most established renewable energy provider. The company is something of a power broker. In fact, it’s generating wind and solar energy and selling it to other utilities via Power Purchase Agreements (PPA).
Not only does NextEra Energy have a proven track record of profitability and strong operating margins of 20%, it also pays a 1.84% dividend. With a market cap of around $170 billion and strong EPS over the past five years, this company is among the most stable and predictable organizations in the emerging renewables market.
2. SolarEdge Technologies (NASDAQ: SEDG)
SolarEdge Technologies has been on a tear. Over the past five years, the company has amassed an EPS of 39.5%. And it has a strong runway ahead of it over the next five, with projected EPS of 32.56%. At a market cap of $17.5 billion, it’s showing strong performance as it positions itself to continue growing.
In its last filing, the company reported $1.96 billion in sales, with revenues of just over $169 million, signaling good profitability for a solar inverter manufacturer. As demand for solar accelerates in the United States (and worldwide), SolarEdge Technologies is emerging as a de-facto producer of critical components.
3. Brookfield Renewable Corporation (NYSE: BEPC)
For those looking beyond solar or even wind power investments, hydroelectric opportunities start with Brookfield Renewable Corporation. This company is the global leader in hydroelectric power generation. Moreover, it makes its money through PPAs: $3.37 billion annually, according to the company’s last filing. That figure is set to grow as the company diversifies into solar and wind.
While Brookfield Renewable has a sizeable debt load, the company is in fantastic financial shape. In fact, it pays a 3.06% dividend and has its eyes set on a dividend hike in the near future, according to management. With a gross operating margin of 57.70%, dividend growth and continued balance sheet stability shouldn’t be a problem for this company.
4. First Solar (NASDAQ: FSLR)
Solar panel technology is constantly evolving. As a result, the company that unlocks the next iteration of efficiency will find itself as an industry frontrunner. It’s why First Solar invests heavily in solar panel development, specifically for industrial use. Its thin-film panels are large, efficient and reliable and therefore, heavily in-demand.
While its market cap is only $8.5 billion, the company has more than impressive financials to make it one of the best renewable energy stocks in 2022. Strong five-year EPS (25%), healthy cash flows (20% operating margin), low debt load (0.04 D/E) and fair valuation (1.4 P/B) all play in favor of First Solar. Those leaning into solar as a critical component of our industrial future will jump at the chance to add First Solar to their portfolio.
5. Clearway Energy (NYSE: CWEN-A)
Another energy cultivator that harvests and sells green energy via PPAs, Clearway Energy is quickly becoming a force within the renewables sector. The company has an annualized growth rate of 10% since it went public in 2013. And today, its market cap hovers around $7.0 billion overall.
Those investigating the best renewable energy growth stocks will find Clearway Energy more than appealing. Not only is it primed for 36.70% EPS growth over the next five years, its quarterly earnings have increased at a rate of 68.50%. The company has a tremendous gross margin of 64.90%, which is great news for income investors eagerly watching the company’s growing 4.32% dividend.
6. Vistra Corp. (NYSE: VST)
Investors willing to take on a little risk in an emerging sector will welcome the potential of Vistra Corp. The company has a market cap of $10.44 billion and is growing at a rapid pace; yet, it’s this profound growth that could pose a problem. Though a well-established clean energy power provider with $12.08 billion in sales, the company is struggling to maintain its balance sheet and maintain consistent profitability.
There’s good news on the horizon, however. By several core valuation metrics, the company might actually be undervalued. It has a P/S of 0.86 and a forward P/E of 11.7. Investors willing to buy and hold through some short-term turbulence could find themselves with one of the best renewable energy stocks over the next decade.
The Best Renewable Energy Stocks Present Opportunities
The six companies outlined above are just a fraction of the numerous players in the growing renewables market. They represent some of the most proven and promising purveyors of clean energy and the equipment used to generate it.
Investors searching out the best renewable energy stocks of 2022 should also get familiar with the sector as a whole. Energy stocks conform to their own behaviors. Therefore, it’s worth understanding the nature of this industry as you investigate up-and-coming renewable energy providers within it.