With Elon Musk and Tesla Motors Inc (NASDAQ:TSLA) attempted takeover of SolarCity Corp (NASDAQ:SCTY) dominating energy headlines, the renewable sector is drawing a considerable amount of speculative and long term market attention. Musk already sits on the board of SolarCity, and the company has been on the cutting edge of the solar space for five years, and its $2 billion valuation attests to its competitiveness. Not everyone is happy with the Tesla-SolarCity move though and it could end up failing. Now that alternative energy is in the spotlight though, here are companies that could gain from the attention.
First Solar, Inc.(NASDAQ:FSLR) is roughly twice the size of SolarCity by market cap, and has been something of a stalwart since it went public back at the end of 2006. The stock has been on a wild ride, but still stands 86% higher than its IPO price despite that. It has two primary segments – one that manufactures and sells solar units to businesses and individuals, and another that provides turnkey solutions for solar project management that oversees construction and development.
First Solar gained strength throughout early 2007 and 2008, but took a hit when renewable energy markets unraveled towards the end of the decade. It has not fully recovered from this hit, but a push towards mass adoption, fueled by a flurry of government initiatives that should see penetration increase in the US, should drive a further recovery heading into 2020.
Green Plains Partners
Green Plains Partners LP (NASDAQ:GPP) is an unconventional renewable energy pick, but with a market capitalization just shy of half a billion dollars and a dividend yield of nearly 11%, could be a nice income or growth hold. The Nebraska based company specializes in the storage, processing and transportation of ethanol fuel. Ethanol is already a major component of current fuel options. Most retail gasoline contains some ethanol, but there is a push to increase the use of pure ethanol fuel for commercial purposes. Demand for renewable liquid fuels is expected to grow two-fold by 2030, and four fold by 2040. GPP is looking to capitalize on this push and adoption by providing the infrastructure that will underpin the industry as it expands.
The risks with Green Plains though are still high. Ethanol is only debatably renewable as the agricultural and environmental costs of growing so much corn for fuel are high. This could be one of the main reasons for its very high yield, the uncertainty surrounding the viability of ethanol as renewable fuel.
We’ll close out the list with a much larger stock, but one that often flies under the radar from a clean energy perspective – General Electric Company (NYSE: GE). GE is one of the global leaders in wind energy, producing a large portion of the global onshore and offshore wind turbines. It has a portfolio of nine different turbines, and ships around 3,000 turbines each year. The segment accounted for more than $6 billion in revenues during both 2014 and 2015, and looks set to grow across the next five years as the push towards carbon free energy benefits from government subsidy and business initiatives. This one’s a far less direct exposure to the clean energy sector than FirstSolar, Green Plains and SolarCity, but it has a much more attractive risk profile.