With the green energy industry continually expanding, Maxim Manturov, Head of Investment Advice at Freedom Finance Europe, explores which companies are promising investment choices within the sector.
The time of green energy being a novel concept held up by emerging technologies is ending; electric vehicles, solar panels, and hydrogen fuel cells have all developed into more affordable and essential technologies, the future of which could be greatly profitable for those who choose to invest in them as governments are looking for solutions to an energy crisis and fears over a climate emergency escalate.
Additionally, with the looming threat of a global energy crisis, many countries want to free themselves from dependance on Russia for oil and gas resources, resulting in a greater focus on renewable energy sources in the coming years. Furthermore, the adoption of clean solar power generation could accelerate due to the US placing sanctions on Russian exports causing a surge in oil and gas prices. This in turn will have a positive outcome for those investing in solar energy stocks.
With this in mind, what are the top green energy stocks investors should keep an eye on?
Top 5 green energy stock picks
Tesla (TSLA) is the leader in the electric car race with a growing presence in solar energy technology. Tesla has changed transportation – electric cars have become mainstream. Elon Musk recently hinted that Tesla may be about to increase the availability of its home battery Powerwal. This would be another important step forward for renewable energy.
The company successfully completed a stock split in August 2022, making it more accessible to retail investors. Regardless of what happens in other sectors, Tesla will remain at the forefront of the green revolution. The average target price is at $380 (£336) with an upside growth potential of around 77%.
Plug Power (PLUG) is a well-known player in the field of hydrogen fuel cells and has shown a consistently high growth rate. The company has signed an agreement with Amazon to supply liquid green hydrogen, making it realistic to achieve a revenue of $3 billion (£2.63 billion) by 2025. The company will supply 10,950 tonnes of liquid green hydrogen per year to feed Amazon’s operations.
PLUG is well positioned to benefit from many governments’ support for green hydrogen and the hydrogen tax rebate as part of the Energy and Health Bill. The average target price for this stock is $38 (£33) with an upside growth potential of around 130%.
Enphase Energy (ENPH) is known for its solutions to one of the biggest problems of green energy – variability through periods of downtime. First and foremost is its battery storage system, which increases resilience during power outages (e.g., at night when there is no sun).
Enphase has also installed more than 45 million microinverters (systems that convert DC to AC) in more than 2 million homes and businesses. The company’s sales for Q2 2022 were $530 million (£464 million,) an increase of 67% compared to the same period last year. The average target price sits at $366 (£323) with an upside growth potential of around 45%.
Sunrun (RUN) is one of the leading solar manufacturers in the US with annual sales of $1.61 billion (£1.41 billion). The company has partnerships with several leading retailers, including Costco and Home Depot, enabling it to sell its services in retail shops nationwide.
RUN stock has risen 60% over the past six months, with Q2 revenue of $584.6 million (£512 million), exceeding analysts’ average estimate of $485 million (£425 million). Perhaps most impressively, Sunrun added 34,403 new customers in Q2, bringing its total number of customers to 724,177, up 21% from the same period a year earlier. The average target price is $48 (£42) with an upside growth potential of about 140%.
First Solar (FSLR) manufactures and sells solar modules used in large-scale solar power projects. From a fundamental analysis point of view, the company is exceptionally well placed to benefit from the strong incentives for domestic solar panel production in the Energy Act.
First Solar is the world’s second-largest producer of solar panels and has been publicly traded since 2006. The average target price is at $160 (£141) with an upside growth potential of about 32%.