Renewable sources accounted for more than half of new electricity generation infrastructure added in the first four months of 2020. More than 5 gigawatts (GW) of the 9.1 GW added through April were the result of new solar, wind, hydropower or biomass.
An alternative energy company may be involved with solar or wind generation, fuel cells, hydrogen power, geothermal or another non-fossil fuel energy product. One thing they all have in common is that they emit no carbon pollutants.
Before getting to a list of the companies that stand to benefit most from the continued development of renewable sources, here’s a brief rundown of the state of U.S. renewable energy today.
Solar energy accounts for 3.79% of all installed U.S. generation capacity, compared to 9.08% for wind power. Among nonrenewable sources, natural gas has increased its share from 42.23% of total U.S. capacity to 44.64%, coal-fired generation has dropped from 27.50% to 20.32%, and oil-fired generation has decreased from 3.92% to 3.29%. The Federal Energy Regulatory Commission (FERC) reported the data in June.
FERC does not report new solar capacity additions of less than 1 megawatt, thus excluding virtually all residential rooftop solar installations. The U.S. Energy Information Administration (EIA) estimates that adding rooftop installations would push the solar total up by as much as 50%. Using that as a metric, total U.S. solar capacity could be generating as much as 5.6% of all the nation’s electricity.
The primary focus of the companies we’ve looked at is solar energy. Five of these seven renewable energy companies are all directly involved in solar energy products: one makes solar modules and panels, one is an installer, and three are yieldcos (publicly listed companies that own operating renewable energy assets).
The other two renewables firms are involved in alt energy fuel cell manufacturing.
Plug Power Inc. (NASDAQ: PLUG) offers hydrogen fuel cell solutions for electric vehicles and electricity markets in North America and Europe. The company announced two acquisitions shortly after the initial public offering from electric-hydrogen semi truck maker Nikola Corp. (NASDAQ: NKLA) and the stock price shot up 20% following the announcement. The company had revenue of $230.5 million in 2019 but posted an operating loss of $50.0 million and a net loss of $85.5 million.
Shares closed at $9.50 on Wednesday, in a 52-week range of $1.88 to $10.49. The consensus price target is $9.34 and the high target is $14.00 from H.C. Wainwright. At the high target price, the stock has an implied upside of 71.2%.
Bloom Energy Corp. (NYSE: BE) designs, manufactures and sells solid-oxide fuel cells for on-site power generation. The company posted $785.2 million in revenue last year, with an operating loss of $232.8 million and a net loss of $306.9 million. Revenue was more than double the 2017 total.
The stock closed at $12.53 on Wednesday, in a 52-week range of $2.44 to $14.51, and the consensus price target is $11.00. At the high price target of $21.00, the implied upside on the stock is 67.6%.
First Solar Inc. (NYSE: FSLR) posted 2019 revenues of $3.06 billion, a year-over-year jump of more than 36%. The leap in operating income was even higher, nearly 600% to $279.5 million last year. Net income, however, plunged from $144.3 million to a net loss of $114.9 million. First Solar designs and manufactures its own modules, and the company’s systems segment designs and builds solar energy systems.
With a market cap at $5.63 billion, First Solar’s stock closed at $58.06 on Wednesday, in a 52-week range of $28.47 to $69.24. The consensus 12-month price target on the stock is $53.57, with the high target set at $75.00 per share. At that price, the implied upside to Wednesday’s closing price is 29.2%.
Brookfield Renewable Partners L.P. (NYSE: BEP) is a Bermuda-based yieldco that owns and operates some 19 GW of renewable generating in all parts of the world. Last year the company posted revenue of $3.0 billion, operating income of $1.1 billion and net income $10 million. The company’s market cap is $8.92 billion.
Shares closed Wednesday at $49.62, in a 52-week range of $30.09 to $57.59, and the consensus price target is $35.63. The high target is $63.69, from Industrial Alliance Securities. At the current share price, Brookfield is significantly overvalued, but the firm’s dividend yield is 4.4% and the implied upside to the high target is 28.3%.
NextEra Energy Partners L.P. (NYSE: NEP) is a yieldco that buys, owns and manages contracted clean energy projects and natural gas pipelines in the United States. The company’s 2019 revenue totaled $855.0 million, and operating income totaled $233 million. NextEra, however, posted a net loss for the year of $71 million. The company is a subsidiary of NextEra Energy Inc. (NYSE: NEE).
Shares closed at $54.94 on Wednesday, in a 52-week range of $29.01 to $61.87, with a consensus price target of $56.87. At the high price target of $65.00, the implied upside on the stock is 18.3%. NextEra Energy Partners pays a dividend yield of 4.17%.
Atlantica Sustainable Infrastructure PLC (NASDAQ: AY) is a U.K.-based yieldco that owns and manages renewable energy and other assets (including natural gas) in several countries in the Western Hemisphere and in Spain, Algeria and South Africa. Last year the company posted $1.0 billion in revenue, operating income of $500.5 million and net income of $62.1 million.
Atlantica shares closed Wednesday at $29.84, in a 52-week range of $17.74 to $32.50. The high price target of $34.00 implies an upside of 13.9%. The company also pays a dividend yield of 5.57%.
Sunrun Inc. (NASDAQ: RUN) designs, develops, installs, owns and maintains residential solar energy systems in the United States. The company recently acquired rival Vivint Solar Inc. (NYSE: VSLR) for $3.2 billion in stock, including debt. 2019 revenue totaled $858.6 million, but the firm also posted an operating loss of $215.7 million. Net income for the year totaled $26.3 million.
The momentum behind the stock since its acquisition has added nearly $7.00 to the share price, which closed at $28.27 on Wednesday. The stock’s 52-week range is $7.84 to $28.40, and the high was posted Wednesday. The consensus price target is $24.43, and the high target was set Monday at $31.00. At that high target price, the implied upside is 9.7%.