Could These Energy Stocks Provide Massive Returns In The Long Run For Investors?
Energy stocks are experiencing volatility so far this year. During the onset of the coronavirus pandemic, global energy demand fell precipitously. Oil futures even briefly went negative in April. The novel coronavirus has been brutal to the oil industry, to say the least. As pessimistic as the whole industry may appear to be, the sector isn’t dead. As people had to stay at home and businesses had shuttered, even top energy stocks like BP (BP Stock Report) Exxon Mobil (XOM Stock Report) took a huge hit. For these reasons, these companies have had to rethink their strategies in adapting to this pandemic. How will energy stocks perform in 2020 and beyond?
My take is that energy demands will no doubt increase again. As economies reopen and businesses restart, these energy stocks will pick up from where they left off. There are 7.8 billion people living on Earth right now and this number is set to increase in the decades to come. With that in mind, there is a lot of potentials for some of the top energy stocks to watch to grow. The reason being that our hunger for energy will never stop as more people live in this world. We need energy to power up our homes and businesses. We need energy to move from one point to another. And you are reading this article through a smartphone or computer that is powered by energy. Look around you and I bet you can find an appliance that is powered by electrical energy as well.
As an investor, we consider the following: with energy stocks at an all-time low, is this the perfect time to jump right in before a rebound? Would this be the right time to buy energy stocks again? Let us look at how the following energy stocks are performing right now.
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Top Energy Stocks To Buy Now [Or Avoid]: Bloom Energy
Bloom Energy (BE Stock Report) is an energy company that manufactures and markets solid oxide fuel cells (SOFC). SOFC is an electrochemical conversion device that produces electricity directly from oxidizing a fuel. This energy stock has enjoyed a 129% price hike in its stock price year-to-date. This is despite losing over 78.2% of its share value when the COVID-19 caused the market crash. The reason for this surge is due to the potential the fuel cell industry has in the energy sector. Fuel cells have high power efficiency, low emissions, and costs to boast. These factors mean that fuel cells may just be what we need to replace mainstream fuels in the near future.
The company had announced its second-quarter results in June 2020 with a revenue of $187.9 million. This 19.9% increase quarter to quarter shows that Bloom Energy can rebound quickly from the devastating effects of the pandemic. In September, the company announced plans that it was partnering with South Korea to deploy two new clean energy facilities in Gyeonggi Province. This deployment marks the first-ever SOFC project financed in Korea, with $118.7 million of equity financing. With this, the company is set to expand its market as more customers convert to fuel cell energy.
The company is setting a precedent to be able to meet today’s energy demands while contributing to the betterment of the environment. Bloom Energy is a leader in fuel cell technology after all and this positions the company to tackle the energy demands of the near future. With that in mind, would you consider adding BE stock to your portfolio?
Top Energy Stocks To Buy Now [Or Avoid]: Algonquin Power & Utilities Corp.
Like most energy companies, Algonquin Power & Utilities (AQN Stock Report) have had a rough start in 2020. Unlike most energy companies, however, it is now up by 43% since the pandemic in March. This company offers solid growth along with dividend payouts. It provides utilities to power more than 800,000 connections in the United States and Canada. These utilities contribute to about 75% of its revenue.
The company has already installed 2 Gigawatts of capacity in its renewable portfolio of wind, solar, and hydroelectric generating facilities. It currently has another 1.4 GW of renewable capacity under construction. By investing in renewables, the Ontario-based company is investing in the future. The company has posted solid Q2 earnings, with a revenue of $ 343.6 million that is consistent with the previous year. This is an impressive feat for the company, given the fact that there is an ongoing pandemic right now. AQN has also posted a net margin of 31.62% and a return on equity of 8.01%.
Large investors have also recently bought shares of the company. TD Asset Management Inc. lifted AQN shares by 37.4% in the second quarter. Aside from private investors, the Canada Pension Plan Investment Board also owns a stake in AQN. With both private and public backing, the company does show a very good outlook. With the company making all the right moves, is AQN stock the potential energy stock to buy?
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Top Energy Stocks To Buy Now [Or Avoid]: SunPower Corporation
SunPower (SPWR Stock Report) is a photovoltaic cell and solar panel manufacturer. In late August, the company had cleared all regulatory hurdles and separated from its solar module manufacturing segment, Maxeon Solar (MAXN Stock Report). Reorganizing the company was done to simplify its cash flow generating business, which could appeal to the broader investor base. By removing the unfavorable procurement liabilities to Maxeon, SunPower’s income statement will improve greatly in profitability and cash flow.
SunPower has recently posted its 2021 earnings outlook and it provides detailed information regarding the company’s separated operating metrics. It expects a shipment growth of 30-50% in 2021 and an estimated deployment of 375 to 410 Megawatts in residential deployments. These numbers are promising and SunPower does have the fundamentals to back their 2021 earnings outlook.
The solar energy stock has increased by a staggering 431% since March. This impressive growth can be attributed to the increase in solar power generation in the United States despite the pandemic. The Energy Information Administration (EIA) noted that solar power generation had grown over 22% year-over-year in the US. This along with a potential shift to a Democratic White House could reignite solar installations across the US after lagging developed countries in the past decade. With so many prospects for SunPower, could SPWR stock be a top energy stock to buy in the months and years to come?