While the critical resource sector has long been vital to economic growth, both sustainability concerns and geopolitics have shined a bright light on so-called green energy stocks. In this article, we’ll explore three compelling tickers – NEE, ENPH, and SMR – which each offer a distinct take on power delivery in the 21st century.
Over the last several years, the rise of connectivity-based technologies facilitated incredible advances in economic productivity and social functionality. However, no matter how advanced human civilizations become, the digital revolution requires power – an increasing amount of it. At the same time, rising fears of the devastating effects of climate change combined with paradigm-altering geopolitical flashpoints infused green energy stocks with unparalleled relevance.
At first glance, the rise in hydrocarbon-based fuels provided an opportunity for cynically minded investors. As TipRanks reporter Sweta Jaiswal mentioned, the silver lining in severe pain at the pump was that it opened doors for acquiring shares of big oil giants.
Unfortunately, pure reliance on hydrocarbons likely will not be the answer, moving forward. Both socially and politically, efforts to address the steep concerns regarding climate change gained considerable momentum. As new data pours in – most recently stemming from global heat waves – it has become untenable for politicians and social influencers to ignore the issue.
As well, Russia’s invasion of Ukraine knocked the longstanding energy paradigm out of balance. Prior to the war, western Europe became increasingly dependent on Russian hydrocarbons. Now, because of the west’s support for Ukraine, Moscow effectively cut natural gas supplies to Europe, potentially sparking a future energy crisis.
These and other factors strongly imply that green energy stocks represent the future. Below are three compelling examples to consider.
Billed as one of Americas largest capital investors in infrastructure, NextEra Energy is a powerhouse among green energy stocks. Featuring up to $55 billion in planned wind and solar infrastructural investments and generating 45,500 megawatts (MW) of net generating capacity, NextEra operates true to its brand name.
Another factor that makes NEE a compelling idea among green energy stocks is that the underlying firm delivers the goods financially. In the second quarter of 2022, NextEra posted revenue of $5.18 billion, up 32% from the year-ago period. Also, it delivered net income of $1.38 billion in Q2 2022, up more than five-fold on a year-over-year basis.
However, the market appears to be discounting the relevance of NEE stock. Shares are down 11.6% on a year-to-date basis, making them a potentially interesting pick-up for contrarian investors.
Is NEE Stock a Buy or Sell?
Turning to Wall Street, NEE stock has a Strong Buy consensus rating based on 10 Buys, two Holds, and zero Sell ratings. The average NEE price target is $98.90, implying 19.85% upside potential.
One of the most powerful green energy stocks this year, Enphase Energy is a global energy management technology company that provides residential and commercial solar plus storage solutions, per its website. While Enphase features several positive implications, it’s particularly intriguing for its energy storage system.
As TipRanks reporter Amit Singh pointed out, amid extreme heat waves, “California’s power blackouts are a growing reality. Given the surge in power usage and energy shortages, the demand for natural gas and solar energy is expected to remain high.” However, astute residential owners can mitigate this impact through energy storage solutions that can power homes through blackouts.
Like NextEra, Enphase also brings home the goods financially. In Q2 2022, it posted revenue of $530 million and net income of $77 million. Both figures easily represented double-digit gains on a year-over-year basis. Because of its strong performance and relevancies, however, ENPH is not a discounted opportunity, with shares up over 53% year-to-date.
Still, ENPH may be a case of strength begetting even more strength.
Is ENPH a Good Stock to Buy?
Turning to Wall Street, ENPH stock has a Strong Buy consensus rating based on 12 Buys, four Holds, and zero Sell ratings. The average ENPH price target is $284.21, implying 1.7% upside potential.
NuScale Power (NYSE:SMR)
At first glance, NuScale Power doesn’t immediately register as a green energy stock. After all, the company specializes in nuclear energy, a controversial power source in the best of times. True, NuScale brings to the table small modular reactors (SMRs) or nuclear facilities that feature a smaller footprint and effectively allow a much wider distribution of electricity. Still, nuclear power always commands risks (as do other energy sources).
To be clear, though, the Office of Nuclear Energy states that nuclear power plants represent “the second largest source of low-carbon electricity in the world behind hydropower.” Also, the federal agency argues that the underlying power source protects air quality and generates minimal waste.
SMRs bring all the advantages of nuclear power – such as unparalleled energy density – in a more convenient and safer package. The market finally sees the opportunity in SMR stock, with the security gaining 25% year-to-date.
However, the drawback to the opportunity is the current lack of financial rigor. In Q2 2022, NuScale only posted revenue of $2.75 million.
Is NuScale Power Stock a Buy?
Turning to Wall Street, SMR stock has a Moderate Buy consensus rating based on one Buy, one Hold, and zero Sell ratings. The average SMR price target is $17.50, implying 39.2% upside potential.
Conclusion: Diverse Options Among Green Energy Stocks
Though the concept of green energy stocks initially appears narrowly defined, investors enjoy several opportunities in the space. For those seeking the overall stability of infrastructural plays, NEE represents a solid bet. Growth-focused investors may want to opt for ENPH, which has been on fire this year. However, the most exciting high-risk, high-reward wager goes to SMR, which can deliver potentially powerful gains.