Best Stocks for Investing in Energy Companies
Along with the EV space, the renewable energy sector has received quite a bit of attention in recent months. Especially with gas prices continuing to fluctuate, near extreme highs, people are paying even closer attention. For those interested in investing in energy companies, today we’ll look at four renewable energy plays.
Top Stocks for Investing in Energy Companies
No. 4 Enphase Energy Inc (Nasdaq: ENPH)
Starting off our list is Enphase Energy. Enphase is a company which does just about everything pertaining to solar home energy solutions. This includes solar generation, energy storage and monitoring and control systems. Its financial condition is solid. Enphase has reported a beat on each of the last four earnings reports. However, the next earnings report is four days from now. So things may quickly change.
The price of ENPH stock has decline drastically in the past two trading days, falling from $197 to $156. Why the stock saw such a drastic selloff on April 20 and 21 is unclear. There was no news about the company whatsoever. In addition, price targets set just this month are quite positive. Three financial institutions released updated price targets in April, ranging from $220 to $280. That represents a potential upside between 41 and 79.5%.
Keep reading to learn more about investing in energy companies.
No. 3 SolarEdge Technologies (Nasdaq: SEDG)
SolarEdge Technologies is an Iraeli company. It’s known principally for its production of solar inverters and power optimizers. On an earnings basis, SolarEdge is the inverse of Enphase Energy. Whereas Enphase has beat on earnings expectations, SolarEdge has reported a miss on each of the last four earnings reports. That is not to say that the company is not profitable. Revenues and net income continue to grow.
Like Enphase, SolarEdge reports earnings soon, with their report scheduled for Monday, May 2. In addition, their stock has also sold off in the past two days, dropping from $310 to $254. Since March 30, eight different financial institutions have released updated price targets for SEDG. The price targets range from $359 to $490, a potential upside between 41.3 and 92.9%.
No. 2 Sunrun Inc (Nasdaq: RUN)
Sunrun is an American solar energy company which builds solar panels and home batteries. It is the smallest company of the four stocks on this list regarding investing in energy companies by market cap. And is also the clearest growth company. Yes, noticing a trend, Sunrun has also fallen drastically in the last two trading days. The price of RUN shares fell from $25 to $21. It has also missed on earnings expectations in three of the last four earnings reports. However, financial institutions have the widest, and by upside highest, price targets for Sunrun compared to the other three companies.
Since the beginning of the year, ten financial institutions have released updated price targets for Sunrun. The price targets range between $39 and $89, itself an astounding range. That range represents a potential upside of between 85.7 and 323.8%. If investing in energy companies, Sunrun represents the greatest risk-reward tradeoff.
No. 1 NextEra Energy (NYSE: NEE)
The largest renewable energy company by market cap, NextEra Energy, is valued at over $150 billion. The largest producer of solar and wind energy, NextEra is the renewable energy sector’s blue chip stock. However, it fell from $83 to $76 over the past two trading sessions. Unlike the previous entries, there was actually some news that broke during that fall.
Yesterday NextEra announced their quarterly financial results. It beat on earnings expectations, but missed on revenue expectations. The earnings beat represented the fourth consecutive quarter with a positive surprise for the company. There have been three updated price targets released this month, though more will no doubt follow following their earnings report. The price targets range from $88 to $107, a potential upside of between 15.8 and 40.8%.
Conclusions on Investing in Energy Companies
When investing in energy companies, a level of prudence and caution is warranted. Given the recent sociopolitical trend towards, it is still a growing sector. There have also been recent selloffs in the sector, largely unrelated to any direct news. Whether you interpret that as a sign of volatility, or an improved buying opportunity, is up to you. What is clear is that, like the EV space, financial analysts are very optimistic of growth opportunities within the sector.
About Gabriel Shabat
Gabriel Shabat is a writer who focuses on financial literacy and investing topics. He has been studying and talking about the markets for over seven years. Last year he became a part of the instructional staff at Boston University, teaching graduate finance courses as part of their Masters degree programs. When he isn’t working, he enjoys playing the guitar, working out and spending time with his loved ones.