Renewable energy stocks could come back into vogue this year. Many countries around the world are far behind their carbon emissions targets, and the urgency to address the climate crisis may energize investment in these companies.
Also, government incentives and policies favor renewable energy. This regulatory support can boost the profitability of renewable energy companies. Solar, wind and hydroelectric power are popular choices to achieve the carbon-neutral goals of many countries.
The benefit of this renewed focus is that there are a handful of renewable energy stocks that could see a surge in share prices this year. Here are some of the best companies to consider.
Enphase Energy (ENPH)
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Enphase Energy (NASDAQ:ENPH), headquartered in California, is known for its energy management technology, particularly in solar energy. This company specializes in microinverters for solar panel systems and is branching out into other types of operating segments as well like batteries and electric vehicle (EV) charging stations. Another core driver of growth for ENPH stock is its collaboration with solar panel manufacturers to produce AC modules, which integrate its microinverter technology directly into the solar panel.
Analysts expect ENPH to surge this year. The consensus upside for its stock price is 53.08% and this comes with a “Buy” rating. This strong share price growth is attributed at least partially to a recovery in its valuation. There are corporate restructuring plans in motion for ENPH as it seeks to create a more efficient business model, and there could also be tax breaks on the horizon that could further its margins and profitability.
Currently trading at $109.67, ENPH could be an attractive pick for investors who are interested in picking up some undervalued shares in renewable energy stocks.
Brookfield Renewable Partners (BEP)
Brookfield Renewable Partners (NYSE:BEP) operates one of the world’s largest publicly traded, pure-play renewable power platforms. All of the most well-known renewable energy sources are included in BEP’s portfolio, including hydroelectric, wind, solar and storage facilities. Hydroelectric power is BEP’s main operating segment, and the company is also geographically diverse, with operations in North America, South America, Europe, Asia and Australia.
BEP has been struggling with negative profitability metrics and analysts expect it to post an earnings-per-share (EPS) loss of two cents per share in its upcoming report. While that initially sounds negative, it is actually a significant improvement of 87.5% compared to the same period the previous year.
On top of an improving EPS, analysts predict that BEP’s top line will also strengthen. Revenue is anticipated to grow 15.2% year-over-year (YOY), which will signal an important turning point for the company as it gets its deliveries back on track.
The picture for the full fiscal year 2024 is even more promising, as Wall Street rates it as a “Buy” and predicts that its EPS will be positive at eight cents. This improvement also comes with a 27.74% predicted upside for its stock price.
Array Technologies (ARRY)
Array Technologies (NASDAQ:ARRY) specializes in solar tracking technology. Its trackers significantly increase the potential energy generation, efficiency and usefulness of solar panels by allowing them to follow the sun’s path.
A potential plus side to ARRY stock is that it is not as well-known or capitalized as many of the renewable energy stocks on the market, with a market capitalization of $2.09 billion at the time of writing. This could mean that there’s more upside potential in store for investors.
It should also be noted that ARRY is a contrarian pick for investors who are willing to make a bit of a speculative gamble. That’s based on the fact that it reported earnings of 21 cents per share on sales of $350 million, which missed analyst expectations of 14 cents per share on sales of $375 million. The earnings miss also put a large dent in its stock price, tumbling 27.96% since its high in December of last year.
Looking at the positives, ARRY has 18 buy ratings from analysts. It also has a backlog of approximately 100 projects, and most of them are on schedule. This backlog is the main reason to be bullish on ARRY, as it may make a recovery this year. Overall, analysts expect ARRY stock to surge 72.6% in the next 12 months, which makes it one of the renewable energy stocks to consider for strong and speculative gains.
On the date of publication, Matthew Farley did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.
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