7 Green Stock Favorites for 'Renewable' Gains

The shift towards renewable energy is a well-established trend supported by an increased focus on climate change and green investing. The Russian invasion of Ukraine and the spike in energy prices highlights the additional tailwind of the geopolitical risks of a reliance on fossil fuels. Several contributors to MoneyShow.com highlight their favorite ways to invest in this trend, from biofuels and hydrogen fuel cells to wind and solar power, as well as renewable energy infrastructure. Brendan Coffey, Cabot SX Greentech Advisor Indianapolis-based Infrastructure & Energy Alternatives acts as a project manager, installing utility-scale solar and wind developments on behalf of project-owning customers. IEA identifies and designs sites, and constructs, installs and redevelops energy projects. For much of its history, it focused solely on wind, but added solar capability in 2019, around the same time it expanded heavily into civil engineering -- paving, rail construction, environmental remediation and industrial maintenance arms. The additions came from a series of acquisitions that diversified the business as it entered a going-public transaction with a SPAC. The company is ranked by Engineering News as the second-largest wind contractor in the U.S. and eighth in solar. Overall, the business has installed 24 GW of renewables in the U.S. (its primary market). Its specialty civil division often dovetails with the renewables operations, allowing IEA, for instance, to bid to build access roads to wind farms. The firm has also teamed with a sea cargo handler, Logistec, to offer services to the offshore wind industry, with the expectation of handling some of the multiple east coast wind projects being developed. The company signed $2 billion in renewable project deals in 2021, but revenue from them will vary -- the company doesn't start to buy materials or receive any payments until clients give the order to proceed, which can have substantial delays. Total backlog is $2.9 billion entering this year. For this year, IEA tells analysts to expect sales of $2.1 billion to $2.2 billion with adjusted EBITDA of $150 million and its first net income, at 86 cents per share. IEA pushed over its 50- and 200-day moving averages for the first time in 14 months on its earnings and outlook. I rate the stock a buy. Kirk Spano, Fundamental Trends Aemetis is the leader in biofuels and carbon capture in California, a state that has a bigger economy than all but 14 countries on the planet. The company also signed long-term jet fuel contract and I think they are going to more than double their revenue estimates through 2026-27. In addition, India just required biofuels and Aemetis owns a large biofuels plant there. There's a lot of money to be made in India as they continue to get more aggressive on cleaner energy. My experience tells me that traditional oil stock investments are not the place to be anymore. Instead, companies that are already situated for cleaner energy and carbon capture are where the easier and safer to make money will come from. It's also where the tax credits are headed. In 2026 the EPA requirements on fuels and mileage get very tough, and I expect that tougher regulations are coming. Even at the low-end of biofuel and carbon capture tax subsidies, Aemetis is in great shape, as that is where they base their projections. Chevron is a natural to take out the company and I think a deal is not unlikely as Chevron continues to build out its biofuels and carbon capture footprints. Meanwhile, the stock is getting big accumulation by institutions who are seeing what I am seeing. Blackrock owns nearly 9% of the company now. State Street, AllianceBernstein and Vanguard own around 5%. And, very interestingly, GMO and Renaissance Technologies have added big slugs at 3.5% and 1.5%. Energy is volatile, so don't get shaken out; the upside here is to a market cap of $3 billion to potentially being an S&P 500 stock. That means I expect 8x or higher over the next 5+ years. I don't pound the table often, but in this case, I am making Aemetis the rare full position stock at 3-4% of my portfolios. In my growth accounts I am buying stock in the $10-12 range. Adam Johnson, Bullseye Brief The world is pivoting to increasingly clean sources of energy, and highly visible companies like Amazon and FedEx are increasingly turning to hydrogen fuel cells. These portable, battery-like power plants use hydrogen and oxygen to create electricity, producing only water and heat in the process. Hydrogen fuel cells have twice the range of lithium-ion batteries, they recharge 15 times faster and weigh one-tenth as much. Plug Power Inc. , the leading hydrogen fuel cell company, is down significantly and I'm a buyer. The firm aspires to lead the conversion of industrial/construction vehicles from diesel to hydrogen over the next decade. The company produces more liquified hydrogen fuel than all competitors combined and has articulated a 10-year plan to add capacity backed by long-term supply agreements with major fleet operators. FCEL deployment is already well underway. Fully capable fuel cell passenger vehicles are currently for sale from Honda, Hyundai and Toyota, while experimental FCEL models are in development at Audi, BMW and VW. Management also targets several end-user markets for its fuel cells; the first and most easily serviced is the forklift market, where Plug has 9% market share of the 4 million vehicles at use in the US and Europe. The company has also sold over 50,000 fuel cells which are powering buses, delivery vans and long-haul trucks. I like owning PLUG under $25. The stock has traded to $19 and bounced on three occasions over the past 12 months. So, I think buying a one-third position initially at $25, and saving ammo to scale down, makes sense. Todd Shaver, Bull Market Report Stem is a smart energy storage solutions company; it offers proprietary AI-enabled software that it sells bundled with third-party hardware to provide what amounts to battery as a service to renewable power generation projects and other industrial customers. The software is the key to efficiency, effectively creating a smarter internal grid that supports increasingly crucial applications like electric vehicle fleet charging and managing solar-powered big box stores. The company recently released its fourth quarter earnings, reporting $53 million in revenues, up 185% year-over-year. The company posted a loss of $34 million, or $0.23 per share, compared to a loss of $100 million during the year-ago period. The company fell short on both revenue and earnings estimates. While disappointing, the results still represented a 250% year-over-year increase for the year, compared to $36 million during the same period last year. Stem blames the cost increases and supply chain issues pertaining to its hardware for taking the sheen out of its latest quarter. The company expects these issues to subside over the next few months, resulting in better margins and more robust demand. For 2022, the company expects full-year revenues between $350 million and $425 million, again more than triple, driven by bookings in excess of $1 billion expected over the next 18 months The company completed the acquisition of AlsoEnergy early last month, a deal that brings significant new capabilities on the AI driven energy storage and optimization front, along with numerous marquee customers. Two leading players coming together in the renewables segment stands to add plenty of value to shareholders and the broader market. We believe this company offers great value at this level. They are in a great business; they are growing at a tremendous rate; they have $920 million in cash, $420 million in debt, and remain on the cusp of profitability. Roger Conrad, Conrad's Utility Investor Fallout from the Russian invasion is likely to benefit offshore wind generation power, which both reduces dependence on Russian fossil fuels and cuts greenhouse gas emissions. Offshore wind player Avangrid Inc. is the U.S. operating arm of Spain's Iberdrola SA (IBDRY), which owns 81.65 percent of its shares. Neither company has material exposure to Russia. But Avangrid has suffered several recent setbacks causing some to question whether it will achieve guidance 6 to 8 percent annual earnings growth. Those include the delayed but not yet entirely derailed merger with PNM Resources , the eleventh hour of a transmission line to bring cheap Canadian renewable energy into New England and failure to win a piece of New York's offshore wind auction. Given the high prices paid by the eventual winners, not overbidding the auction can be viewed as a testament to management discipline on returns. And with 4.9 gigawatts of projects in the works, Avangrid has plenty of development on its plate. Closing PNM still appears likely next year, when the regulatory commission is overhauled. I'm willing to stick to Avangrid as a buy for investors who don't already own it below $52. Encouragingly, there have been only insider buys for nearly two years. And with Wall Street analysts currently tilting bearish on supply chain concerns, it won't take much good news to bring back buyers. Meanwhile, Russia's invasion of Ukraine has understandably triggered mass selling of any company with perceived exposure. Among the damaged is Enel SpA (ENLAY), a recommendation in our aggressive model portfolio. Like many renewable energy-focused stocks, Enel has been sinking since hitting an all-time high in January 2021. Selling picked up steam as supply chain disruption and rising commodity costs raised doubt about wind and solar construction. And it's accelerated on Russia fears. Some 5.12 gigawatts of wind, solar and storage entered service last year alone, up 64.8 percent from 2020. Total renewables capacity is now 54 GW, with 6 GW to be added in 2022. The 2030 goal of 154 GW is supported by record high project backlog of 370 GW. And the company is spending big on transmission and distribution as well, including EV charging networks in multiple countries. Enel will likely have to show a few more quarters of resilience to narrow its discount to less aggressive utilities. Trading at just 10.6 times expected next 12 months earnings and with a well-covered growing dividend of nearly 7 percent, this stock looks very cheap now. I never recommend really loading up on any one stock. But Enel SpA ADRs traded under the ENLAY symbol are a great buy below my Dream Price of $7. Rida Morwa, High Dividend Opportunities Growing the overall contribution of renewables is critical to accomplishing the goal of energy independence; Atlantica Sustainable Infrastructure owns a diversified portfolio of renewable energy, efficient natural gas, electric transmission lines, and water infrastructure. The company's renewables sector represented approximately 74% of 2021 revenue, with solar power being the most significant. AY owns, manages, and operates infrastructure in North America (United States, Canada, and Mexico), South America (Peru, Chile, and Uruguay), and EMEA (Spain, Algeria, and South Africa). The company operates through long-term contracts with investment-grade rated partners, government entities, and other corporations. Its assets have a weighted-average remaining contractual life of around 16 years. This way, AY produces stable cash flows and sustains consistent dividend payouts. About 90% of AY's long-term debt is fixed rate or hedged, meaning the company will experience negligible impact from Fed rate hikes. Atlantica's current quarterly dividend of $0.44/share reflects a 5.1% annualized yield. In five years, the company has had an impressive 12% CAGR dividend growth. AY guides 5-8% CAGR CAFD growth until 2025, meaning investors can continue to expect growing dividends for the next few years. Atlantica is a solid dividend-growth pick in a sector that will continue to experience global political tailwinds for the foreseeable future. current quarterly dividend of $0.44/share reflects a 5.1% annualized yield. This is your chance to collect a well-covered yield, and the opportunity won't last.

7 Green Stock Favorites for 'Renewable' Gains

From biofuels and hydrogen fuel cells to wind and solar power, as well as renewable energy infrastructure here's how to invest in this trend.

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