Alternative Energy Stocks Poised to Surge in 2019

Alternative Energy Stocks 


Alternative energy is any energy source that is an alternative to fossil fuel.  Ideally, these energy sources should be renewable and have no undesired consequences.  They should not damage the environment or contribute to global warming. These include Biomass Energy, Wind Energy, Solar Energy, Geothermal Energy, and Hydroelectric Energy sources.  Alternative Energy Stocks can be a great way to help the environment while helping the earnings in your investment portfolio.

The nature of what constitutes an alternative energy source has changed considerably over time. Because of the variety of energy choices and differing goals, defining energy types as “alternative” is becoming more complicated.

By 2050, one-third of the world’s energy will need to come from solar, wind, and other renewable resources. Who says? British Petroleum and Royal Dutch Shell, two of the world’s largest oil companies. Climate change, population growth, and fossil fuel depletion mean that renewable energy will need to play a bigger role in the future than they do today.

Best Energy Stocks 

Renewable Energy Stocks – NextEra Energy (NYSE:NEE)

NextEra Energy is the largest producer of wind and solar energy anywhere on the planet.  It is also the world’s largest utility.   This puts NextEra Energy at the top of our list and one of the Top Alternative Energy Stocks to buy for the long haul. NextEra is widely known because of its Florida Power and Light subsidiary that serves more than 5 million Floridians. It is one of the largest rate-regulated electric utilities in the U.S.  Its subsidiary, NextEra Energy Resources – owns 120 wind facilities in North America that generate 13,000 megawatts of energy annually. It also generates more than 2,000 megawatts of solar power from facilities in seven states and Canada along with natural gas-fired and nuclear power plants that deliver additional power generation.  The company’s views on diversity that makes it an excellent long-term investment.

Clean Energy Stocks – Brookfield Renewable Partners (BEP)

Brookfield Renewable Partners announced that it had increased its ownership of TerraForm Power (NASDAQ:TERP) from 51% to 65% by purchasing an additional 61 million shares in a private placement. The investment will add $80 million annually to Brookfield Renewable’s funds from operations. TerraForm Power generates 3,634 megawatts of solar and wind power around the globe with 65% in the U.S., another 26% in Europe, and the remainder from facilities in Canada, Chile and Uruguay. Brookfield Renewable worldwide has 843 renewable power facilities in North America, Latin America and Europe capable of producing 16,300 megawatts of power annually.  In North America alone its renewable energy facilities generate enough electricity to power 2 million homes.

Solar Energy Stocks 

Top Solar Energy Stocks – SunPower (NASDAQ:SPWR)

SunPower is a leader in distributed generation (DG) solar.  DG refers to solar panels that are installed on the rooftops of homes and commercial buildings. The company recently decided to focus on DG. SPWR believes that its more efficient, more expensive solar modules add more value to DG projects than utility-scale projects. The company has also noted that DG products have been growing much more quickly than utility-scale projects globally.

In the U.S. in general and California in particular, SPWR says that it’s the market-share leader in DG. In 2019, SunPower expects its U.S. DG business to increase more than 20%. In California, SunPower’s solar installations jumped 40% in terms of megawatts. Additionally, California-based solar installation company Solaron says that SunPower has the most efficient solar panels. SPWR stock should benefit from the California solar mandate for homebuilders in 2019 and in 2020.

In 2019, SunPower stock should also get a tremendous lift from the company’s newly won exemption from U.S. solar tariffs. SPWR’s margins should also increase because it will be able to charge relatively high prices for its panels in the U.S. but will not have to pay tariffs.  Furthermore, SunPower and SPWR stock will benefit from the fact that the company often provides battery storage systems along with its solar panels. As the cost of batteries drops quickly, demand for them is rising rapidly. According to research firm Wood McKenzie, demand for residential energy storage in the U.S. jumped 60% in the second quarter and is expected to surge nearly 1000% between 2017 and 2023.

Top Solar Energy Stocks – First Solar, Inc. (FSLR)

First Solar had a somewhat disappointing 2016, when revenue was down nearly 20% from 2015.  However, 2017 turned out to be an impressive year. After the company beat consensus estimates in the first two quarters of 2017, the results for the third quarter were even more impressive.  First Solar reported third quarter revenue of $1.09 billion, representing year-over-year growth of 60% and crushing the consensus estimate of $824.2 million. While the company missed revenue estimates in the fourth quarter, the adjusted loss of 25 cents per share came in better than expectations of a 33-cent loss.

First Solar could actually benefit from Trump’s tariff decision because it uses thin-film solar panels.  this is a different technology than what is employed by the Chinese companies that the tariff is designed to protect against. Thus, although First Solar has manufacturing facilities overseas, its panels are exempt from the tariff. However, the stock’s response to the tariff decision was rather muted, indicating that the advantages to First Solar may have been priced into the shares prior to the formal announcement of the policy.

Following a sizzling performance in 2017 in which First Solar shares more than doubled in price, 2018 has been quite a different story, with the stock down nearly 28% year to date. A number of factors could be behind First Solar’s recent declines, including concerns about the escalating trade conflict between the U.S. and China as well as U.S. production increases by other companies trying to take a piece of First Solar’s tariff-exempt market share. Despite the recent downturn, First Solar remains a major player that is poised to profit from the growth of the industry, and the recent pullback in the shares could represent a buying opportunity for solar bulls.

 Wind Energy Stocks 

Top Alternative Energy Stocks – Pattern Energy Group Inc. (PEGI)

This San Francisco-based company owns wind energy projects. It generates its revenue selling energy to local utility companies. Projects are in the United States, Canada and Chile. The stock price rose throughout the early part of 2017, but it began to see declines starting in September. While the shares struggled to post gains over the first half of 2018, at current levels, Pattern Energy Group offers an attractive dividend yield of 8.28%. The company has ambitious plans to boost its renewable energy assets via acquisitions, and if it meets those goals, shareholders could benefit from the resulting growth.

Alternative Energy Stocks – TransAlta Renewables (TSE:RNW)

TransAlta Renewables pays approximately CAD 150 million in dividends annually.   It is able to do this using free cash flow generated from wind-power facilities in the U.S. and Canada.   They have the capacity to produce 1,248 megawatts of wind power to generated 49% of their annual cash flow.  The company has natural gas-fired power generation that delivers 47% of its annual cash flow with hydroelectric facilities providing the rest.   The company is in the process of strengthening its balance sheet. Over the past two years, it has retired CAD$900 million of its debt. This should result in the company’s free cash flow doubling over the next three years. The company currently pays a monthly dividend of CAD$0.07833 which works out to CAD 94 cents and a yield of 8.4%.

Renewable Energy Stocks

Top Alternative Energy Stocks – Covanta Holding Corporation (CVA)

Covanta Holding provides waste services to cities in the United States and Canada. The company’s energy-from-waste plants convert roughly 20 million tons of waste per year into clean energy for more than one million homes. Covanta also recycles over 500,000 tons of metal annually that is a byproduct of the waste-conversion process. Daily volatility for this stock can be high.  This is one to buy only for those who are willing to ride out some dramatic moves in the stock price. Similar to the other stocks on this list, Covanta may be enticing to those investors seeking dividend yield.

Alternative Energy Stocks – Enviva (EVA)

This is probably the least sexy stock in the renewable energy sector, but Enviva Partners (NYSE:EVA) is a good one nonetheless.  Eviva is the world’s largest producer of wood pellets, producing over three million metric tons each year from seven plants in the Southeastern part of the U.S. The pellets themselves are sold to utilities in the U.K. and Europe that use them in place of coal to produce a cleaner electricity source.

Thanks to wood pellet businesses in the south like Enviva, greenhouse gas emissions have been reduced, forests are growing and jobs have been created, providing a trio of benefits that are hard to beat. Enviva has long-term supply contracts that provide stable cash flows. Its current contracted backlog is $6 billion with nine years left on the average supply contract.  In 2018, the company expects to generate at least $79.5 million in distributable cash flow resulting in distributions of at least $2.53 a share for an 8.8% yield. If you’re an income investor, Enviva is a very safe way to meet your annual income requirements.

Green Energy Stocks – Renewable Energy Group (REGI)

Renewable Energy Group (NASDAQ:REGI) is another simple yet attractive businesses turning vegetable oils and animal fats into diesel fuel. Whenever you see one of those trucks sucking out the grease traps at a restaurant, it’s likely going to one of Renewable Energy’s 13 biomass refineries to be turned in diesel fuel. The company has the capacity to produce 575 million gallons of diesel fuel annually, 70% of which is sold to major travel centers and fuel marketers.  The demand for biodiesel is tremendous. California, Texas, New York and seven other states demand 1.5 billion gallons in 2018 – up from 1.15 billion in 2016.

In Q3 2018, Renewable Energy sold 178.8 million gallons of biodiesel generating $597.8 million in revenue and $34.58 million in adjusted EBITDA. The company’s adjusted EBITDA in the quarter was the highest in the past five years. Add in the benefit from biomass tax credits and the quarterly adjusted EBITDA profit jumps to $60 million, which is 50% higher than in the same quarter a year ago. The stock has had a strong 2018, up 124% year-to-date.  Still, analysts believe it has room to move into the $30s per share on rising demand.

The Bottom Line

Technological advancements have brought down the cost of generating and storing electricity from alternative energy sources. The outlook for the U.S. alternative energy stocks remains favorable as utilities and corporations are increasingly shifting to renewable energy sources. Going green isn’t just a nice idea. It’s a phenomenon that is driving big investments in clean technology. Worldwide, governments have adopted renewable portfolio standards and are actively promoting clean energy development.

Alternative energy stocks are mainstream enough now that investors can find companies that are extremely viable. Nevertheless, alternative energy is a disruptive technology.  The companies involved tend to be relatively small compared with the oil and gas giants of the energy sector.  Owning alternative energy stocks means staying abreast of news in the field.  Still, renewable energy is here to stay and Alternative Energy Stocks are poised to surge in 2019.

Top Technology Stocks

Are you interested in Technology Stocks? Check out Top Tech Stocks to Watch for 2019

The technology sector features stocks related to developing and distributing technologically based goods and services. This sector contains businesses that manufacture electronics, create software, and provide computers or products and services relating to information technology.