Company / Analytics

Analytics, 20 August 2022

Clean energy stocks you should consider

Renewable energy stocks have soared in recent days following the passing of a historic climate and energy bill in the US that experts have hailed as the largest investment in fighting climate change ever made by the country. The Inflation Reduction Act, passed by the Senate, allocates $369 billion to renewable energy.

An analytical report by the American Clean Power Association indicated that the move could triple the production of clean energy while cutting emissions by 40% by 2030. The move is also predicted to create 550,000 clean energy jobs in the period.

Companies dealing with Residential solar and lithium products in the clean energy space are likely to benefit from the bill. The bill’s key features include a 10-year extension of solar and wind tax credits and incentives to support new technology. Energy and Hydrogen storage technologies are also expected to benefit from the bill.

Governments and global institutions are continuously persistent with the push for the adoption f clean energy, and this sets a precedence for equities in the sector to perform well in the long term.

Here are some clean energy stocks you should consider for your portfolio.

First Solar Inc.

First Solar, traded as NASDAQ: SEDG, Is a United States-based company that deals with the provision of photovoltaic (PV) solar energy solutions. Countries in which the company has a base include Japan, France, Canada, India, and Australia. The company also ships internationally. The company designs, manufactures, and sells cadmium telluride solar modules that convert sunlight into electricity.

A few factors edge First Solar from its competition. This includes their thin-film solar panels First Solar makes work better in extreme conditions, like in deserts or near coastlines, and that’s allowed the company to charge a premium versus commodity crystalline silicon solar panels.This has evidently put the company’s margins in a better position compared to their competition.

After announcing strong earnings late last month and on the back of the passage of the Inflation Reduction Act, The company’s shares have soared by nearly doubled in a month. Financial analysts at Guggenheim raised the stock to Buy from Neutral with a $135 price target while J.P. Morgan has upgraded it to Overweight from Neutral with a $126 price target, up from $83. The analysts believe First Solar is positioned to benefit the most from the provisions of the Inflation Reduction Act that was passed by the Senate.

The company’s stock currently trades at $115, which is approximately 30% up year-to-date. The stock is expected to keep rising, both in the short term and long term.

TPI Composites Inc.

TPI Composites is a composite wind blade manufacturer based in the US that deals with wind turbine blades and related precision molding and assembly systems to original equipment manufacturers (OEMs). The company also provides composite solutions for the transportation industry; and field service inspection and repair services to OEM customers and wind farm owners and operators.

TPI composites shares soared s much as 38% on the announcement of the Inflation Reduction Act, its biggest gain ever. This prompted analysts across wall street to review their price targets on the equity, with Morgan Stanley recently raising their price target on the stock from $21.00 to $24.00. JPMorgan Chase & Co. raised TPI Composites from a “neutral” rating to an “overweight” rating and set a $27.00 price. The stock, as of the writing of this article, was priced at $18 per share. Other analysts reaffirmed a more bearish stand in the short term with the UBS group maintaining the rating and setting a $16.00 price objective (up previously from $14.00) on shares of TPI Composites.

Based on data from MarketBeat, the company currently has a consensus rating of “Hold” and a consensus price target of $20.75. The stock is up 20% year-to-date at $18.03 per share, but over 50% down year-over-year, which sparingly points towards an upside in the long term.

Sunrun Inc

Sunrun Inc, the largest US-based residential-solar installer, deals in the design, development, installation, sale, ownership, and maintenance of residential solar energy systems. The company also sells solar energy systems and products, such as panels and racking; and solar leads generated to customers.

Sunrun Inc jumped as much as 34% on the announcement of the Inflation Reduction Act, as the company is set to benefit massively over the next ten years from the bill. Recent market movements by the equity indicate a short-term technical score of 70 indicates that the stock has traded more bullishly over the last few weeks, beating most stocks on the market. The equity has a Long-Term Technical rank of 89. This means that trading over the last 200 trading days has placed the company in the upper half of stocks with 11% of the market scoring higher. In the Solar industry which is number 8 by this metric, RUN ranks better than 8% of stocks.

The upside potential of the RUN stock is further cemented by Wall Street hedge funds adjusting their positions on the stock towards the upside. CWM LLC lifted its holdings in Sunrun by 512.3% in the first quarter. CWM LLC now owns 845 shares of the energy company’s stock valued at $26,000 after acquiring an additional 707 shares during the period.

The stock is down 7.6% year to date, 22% down in the last twelve months, but has seen bullish trends in the last few weeks, with the stock up 33% in the last month.

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