Wind, Water and Sun: 6 Stock and ETF Ideas for Renewable Returns

A variety of headwinds are supporting renewables -- including falling costs for green energy and political and corporate support for addressing climate change. Infrastructure spending will also boost the prospects for wind and solar power, as well as water projects. Several leading investment advisors and contributors to MoneyShow.com review some favorite stocks and ETFs to participate in these trends. Sean Brodrick, Wealth Megatrends President Biden's massive $2 trillion infrastructure package contains expanded subsidies for the renewable energy industry. Is it the real dawn of a new type of green era? The plan will create new tax credits worth $100 billion for the construction of 20,000 megawatts of high-voltage transmission lines, a major hurdle in the expansion of renewable energy. And it includes a 10-year extension of wind, solar and battery tax credits, which are currently set to expire in coming years. That's the carrot. There's a stick, too: a provision that would require every state to generate all of its electricity by 2035 from fuels that do not produce any of the carbon emissions linked to global climate change. The Evergreen Collaborative, an environmental group, calculated in a recent study that the U.S. would need to install 40 to 100 gigawatts of new wind and solar capacity every year to meet a goal of zero-carbon electricity by 2035. Last year saw 33 gigawatts installed -- the most the U.S. has ever deployed in a single year. Many states are positioned to generate significant amounts of solar and on- or off-shore wind. And 13 states have already set a goal of obtaining all of their electricity from zero-carbon sources by at least 2050. Will the red state-blue state divide derail the Biden plan? Sure, states that have large fossil fuel industries will probably kick and scream. But red states are already four of the 10 states that generate the highest share of their electricity from all carbon-free sources. Five red states -- Texas, Oklahoma, Iowa, Kansas and North Dakota -- rank among the top 10 in the amount of electricity produced from wind and solar power. That's mostly due to massive wind farms. Wind power will get special attention in the Biden plan. The president wants to jumpstart offshore wind energy projects, installing hundreds of turbines off of both coasts, 30 gigawatts worth, by 2030. That's enough to power 10 million homes. Clean energy is one priority; the tens of thousands of jobs offshore wind will bring with it is another. The White House figures the resulting offshore boom could support 44,000 union jobs. Look, the U.S. was going to build a lot more wind and solar anyway. That's because both of these green energy sources are now cheaper than coal. Even without Biden's green energy plan, the shift to alternatives is inevitable. The U.S. Energy Information Administration figures that renewables will be a bigger and bigger part of our energy picture going forward. The First Trust Global Wind Energy ETF tracks the ISE Clean Edge Global Wind Energy Index. Its top holdings include: Siemens Gamesa Renewable Energy S.A. , Northland Power Inc. , Vestas Wind Systems A/S (VWDRY), Orsted A/S (DNNGY), China Longyuan Power Group Corp. Ltd. , Alliant Energy Corp. . Most of these companies are based overseas, with only tracking stocks traded on the over-the-counter market. That makes them harder for U.S. investors to buy individually. But you can scoop them all up with FAN. And foreign corporations stand to do very well in the Biden green energy boom. They're already lining up to build offshore wind turbines from New England to California. About 13.7% of FAN's holdings have primary listings in the U.S., 15.9% are in Denmark and 15.7% are in Canada. FAN also has a dividend yield. It's not big, recently 0.91%. But it is projected to grow 35.5% per year for the next three years. And we like dividend growers. FAN is already in a nice uptrend. It spent the early part of this year consolidating gains. Now, it seems ready to move higher. FAN is back above the 10-period moving average on a weekly chart, which corresponds to the 50-day moving average on a daily chart. This is often seen as the dividing line between bull and bear. Biden's green energy plan is just a plan. It has to get through the U.S. Senate. But, if Democrats can use reconciliation for the infrastructure bill, and that seems to be the case now, the door is open to a greener future -- both for the environment and your portfolio. Buy First Trust Global Wind Energy ETF at the market. Then, place a 30% active stop. Jim Powell, Global Changes & Opportunities The economic and political pendulum is swinging towards wind power -- markets that have the ability to produce extraordinary amounts of electricity. In late March, the Biden administration gave wind power a boost by designating a large part of the Atlantic continental shelf open for offshore wind power installations. Putting the turbines several miles offshore largely removes the public's biggest objections to them: their rhythmic swooshing sounds upset many people, and (to many) they are unsightly. Our renewable energy stocks also continue to look very good. Vestas Wind Systems (VWDRY) is in first place now, but SunPower also has exceptional long-term promise. Although prices are now correcting, I welcome the opportunity to buy more of them for today's lower prices. One thing about America's power needs is certain: fossil fuel power will continue to lose ground to wind and solar. The renewables clearly have the greatest potential for appreciation. Stephen Leeb, Real World Investing Partly in a nod to our expectation of rising silver prices, we're recommending an exciting small-cap solar energy company with outsized potential: Switzerland-based Meyer Burger Technology (Switzerland: MBTN) (OTC: ). The company has superior technology that allows it to use less silver in its photovoltaic cells, conferring a significant cost advantage that will become increasingly important as silver prices rise. Meyer Burger is currently in the midst of a company-transforming transition. Until now it has operated as a supplier of leading-edge manufacturing equipment and technologies to the solar industry, and in particular to China. But motivated by declining margins, it decided a better way to maximize the gains from its superior technology would be to become an integrated producer of solar modules. It plans to start production in the next month or so of solar cells that in terms of cost per watt should set the standard. The company has a partnership with, and a significant stake in, a private company called Oxford PV. A spinoff from Oxford University, this company is a leader in perovskite solar cells, a cheaper alternative to silicon, today's standard material. By creating transparent perovskite cells, Oxford's cells can sit on top of silicon. Using perovskite in conjunction with other technologies, Meyer Burger is able to produce cells comparable in size to today's silicon cells but much more efficient. They can convert additional wavelengths of sunlight into energy, generating more energy per cell area. The German-based Fraunhofer Institute has assessed the Meyer technology as up to three years ahead of standard technology. By the end of this quarter Meyer Burger expects to be up and running, with initial production scheduled to reach 400 MW. By mid-decade, the company should be approaching production of 5 GW of cells and modules. Today Meyer's valuation is a bit south of $1 billion, suggesting that this admittedly speculative stock has multifold potential. It is widely agreed that solar represents the least expensive and most scalable renewable energy. Projections are that that photovoltaic installations will multiply by 20-fold between 2021 and 2030. Meyer is positioned to play a role in this tornado of a market. Gordon Pape, Internet Wealth Builder Water management is not a very exciting subject. Unless a toxic wastewater pond overflows or a city's drinking water is contaminated, we don't hear much about the business of getting potable water into our homes or taking it away. In fact, it's a huge business and growing at a steady rate of 6.5% annually, according to a report published last year by London-based Meticulous Research. In it, the British firm estimates that the global market for water and wastewater treatment could be worth US$211.3 billion by 2025. Here are two ways you can invest in the water industry. Xylem Inc. is based in Rye Brook, New York. It is a leading global water technology provider, enabling customers to transport, treat, test, and efficiently use water in public utility, residential, and commercial building services, and in industrial and agricultural settings. It makes pumps and control systems used in management of wastewater and the collection and distribution of drinking water. It also offers smart metering, network technologies, and advanced data analytics for water, gas, and electric utilities. Xylem does business in more than 150 countries. The company's fourth-quarter and fiscal 2020 financial results beat expectations, despite the economic impact of the pandemic. The company announced an 8% increase in the quarterly dividend, the 10th year in a row it has hiked its payout. The new rate is $0.28 per share ($1.12 per year) for a yield of 1%. The stock has been a strong performer over the past year, almost doubling from its 52-week low of $56.63 (figures in U.S. dollars). Xylem is forecasting a strong year in 2021, with revenue up 6-8% to between $5.16 billion and $5.26 billion. It is forecasting adjusted earnings per share of between $2.35 and $2.60. American Water Works Company , which traces its history back to 1886, is the largest and most geographically diverse U.S. publicly traded water and wastewater utility. It employs more than 7,000 people who provide regulated and market-based drinking water, wastewater and other related services to more than 15 million consumers in 46 states. The business involves the ownership of water and wastewater utilities that provide services to residential, commercial, and industrial customers, treating and delivering more than 1 billion gallons of water per day. Fourth-quarter and year-end results for 2020 were impressive. Operating revenue for the final quarter was $923 million, up from $902 million in the prior year. Net income attributable to common shareholders was $145 million ($0.80 per share, fully diluted), a healthy increase from $98 million ($0.54 per share). For the full year, AWK reported revenue of almost $3.8 billion, up from about $3.6 billion the year before. Net income was $709 billion ($3.91 per share) compared to $621 million ($3.43 per share) in 2019. The company is projecting 2021 earnings per share of $4.18 to $4.28 and a five-year annual compound growth rate of 7-10%. The stock pays a quarterly dividend of $0.55 a share ($2.20 annually) to yield 1.4%. The stock has had a choppy year, but the overall trend has been up. The shares did not drop below $100, even during the market plunge of March 2020. We are adding AWK to our Recommended List.

Wind, Water and Sun: 6 Stock and ETF Ideas for Renewable Returns

Even without Biden's green energy plan, the shift to alternatives is inevitable. These names should be beneficiaries of both renewable and infrastructure trends.

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