Are These Energy Stocks Worth The Attention Now?
Energy stocks have had a volatile year so far no thanks to the COVID-19 pandemic. With planes grounded and people staying at home, the demand for energy has certainly taken a toll. We can see that in the shares of oil giants like Shell (RDS.A Stock Report) and Chevron (CVX Stock Report), both of which have fallen at least 40% this year. The outlook for the energy sector however does seem bright for investors. We are living in an energy-driven world after all. At the end of 2018, we consumed approximately 158,000 TWh of energy. That’s 13 times what our ancestors did a century ago. These are mind-blowing figures obviously, but they do make sense if you think about it.
The world population is at 7.8 billion right now and we are living in an energy-dependent world. Electricity powers our healthcare system, our homes, and tech. It also drives our transportation and allows businesses to stay open. With the population only expecting to plateau by the end of the century, energy companies will continue to see huge demand. With that, you can expect these energy companies to reap the benefits of this ever-increasing demand.
Energy giants like Shell and Chevron are already diversifying their energy portfolio. The two companies are often associated with the petroleum industry and have made their fortune through it. However, they too have adapted and invested heavily into renewables. With the oil industry nearing its lifecycle end, the need for renewables is clear. If these titans in the energy field are making huge changes to their business model, it is no surprise that investors have been looking for renewable energy stocks to buy in the stock market. Here are 3 top energy stocks that you can consider adding to your energy portfolio.
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Best Energy Stocks To Buy [Or Sell]: NextEra Energy
Having the title of the world’s largest generator of renewable energy from wind and sun is no easy feat. NextEra (NEE Stock Report) however does it with its impressive energy portfolio. The company has an impressive generating capacity of 45,500 megawatts. It also has planned investments of $50 – $55 billion into American infrastructure through 2022. NextEra has enjoyed a year-to-date increase of 25.8% in its share price. This is despite the setback from the COVID-19 pandemic.
The company had beat expectations when it reported a strong second-quarter fiscal in July 2020. NextEra had posted Q2 revenue of $1.286 billion, up by 13% to a year earlier, and earnings per share of $2.61. Its subsidiary Florida Power & Light company continues to deliver affordable power for its customers and plans to retire its last remaining coal unit. The company has also had a 945% total shareholder return in the last 15 years. This is a testament to NextEra’s profitability and management, which is something investors are always looking out for.
NextEra is also heavily committed to sustainable development. Over the past decade, the company had invested nearly $90 billion into clean energy infrastructure. By investing in smart infrastructure and innovative clean energy solutions, NextEra is creating a sustainable future. In the last 15 years, the company has consistently grown its adjusted earnings per share, with a compound annual growth rate of nearly 8.5%. These consistent returns have resulted in NextEra outperforming all other companies in the S&P Utilities Index. Will NEE stock’s winning streak continue in the coming years or even decades?
Best Energy Stocks To Buy [Or Sell]: First Solar Inc.
First Solar (FSLR Stock Report) is a leading global provider of comprehensive PV solar solutions. The renewable energy company has enjoyed success over the last few years. The reason being that the world has been shifting its energy demands to renewables. Coupled with decreasing production costs and low-cost energy storage, the company has positioned itself for a promising future. With a share price of $83.10, an increase of 157% since March reflects the company’s success in navigating through the pandemic.
In its second-quarter fiscal posting in August 2020, the company reported net sales of $642 million, a 20% increase to the prior quarter. Boasting one of the steadiest and most profitable businesses in the solar industry, the company has a net cash balance of $1.2 billion. The company also expects to produce 5.9 gigawatts of solar panels in 2020. Analysts expect this figure to grow over 7 gigawatts in 2021.
To facilitate this production increase, First Solar will be upgrading its Series 6 facility in Malaysia to be able to cope with this demand. The Series 6 PV module sets a new industry benchmark for reliability and environmental performance. It is also generating more energy per module than its competitors. As long as First Solar continues to maintain its technological edge, is FSLR stock the solar stock to buy for the long term?
Best Energy Stocks To Buy [Or Sell]: Enphase Energy
The solar energy company Enphase (ENPH Stock Report) has enjoyed an upswing of 63% in its stock price in the last 4 weeks. As the possibility of a Democratic president becomes clearer, the solar stock rally is picking up momentum. With the most recent Pew Research poll suggesting a 10-point national lead of Democratic presidential candidate Joe Biden over the Republican incumbent, this seems to be the case. Biden’s platform includes plans that will make America a carbon-free power sector by 2034. You can bet solar energy is involved as far as carbon-free emissions are concerned.
Also, with the COVID-19 disruption, solar energy will come up on top as the world realizes how urgent this shift towards renewable is. Despite the pandemic, Enphase has approximately quadrupled in market capitalization since March. The company has consistently outperformed expectations. Despite reporting a lower Q2 revenue of $125.5 million, this figure is impressive given the industry being hit hard by the pandemic.
The company is becoming an increasingly dominant force in the solar industry as it is expanding its market into the home energy industry. With the adoption of solar panels increasing across the country, Enphase is expecting a revenue increase of $160 million to $175 million. With such an exciting development surrounding Enphase, this makes it a top solar stock to watch.