Humans have relied on non-renewable energy sources for decades, the consequences of which we are facing today. The term of best renewable energy stocks is emerging to battle the repercussions of excessive usage of fossil fuels. Non-renewable resources such as oil, coal, natural gas, etc., have severely damaged the carbon profile of our environment. The whole world is facing the worst climate change of history as it is leading to global warming. Glaciers are melting more rapidly resulting in water shortage and new microbes that were never discovered before.
Currently, renewable energy sources are supplying a quarter of total energy consumption. But experts are expecting this rate to increase in the upcoming years. The global costs of solar panels, windmills, rechargeable batteries are far less when compared to crude oil prices, which is a point of interest for environmental stocks. People are increasingly shifting their attention towards renewable sources to deal with the inflating rates of crude oil. Several companies are signing their power purchase agreements (PPA) with companies that are operating on renewable resources.
Why Invest In Renewable Energy Stocks?
During the COVID-19 pandemic, the world came to a halt. All kinds of industries like manufacturing or transport ceased their operations. It gave a significant jolt to the demand and supply of oil goods. The stocks rapidly dropped due to global economic instability. Currently, there has been seen a rapid surge in the fares of oil supplies owing. As COVID-19 is receding, the transport and manufacturing industries are resuming their operations, which has given rise to a significant gap in the demand and supply of crude oil.
The industry is facing an uncertain situation that is shifting people’s attention to a relatively more stable and pocket-friendly alternative. The whole world is now looking towards renewable energy sources as a ray of hope. It will not only fill the demand and supply gap but will also restore the damaged air profile. Many public and private companies are rapidly investing in renewable energy stocks to reverse the damage to some extent. Several different types of renewable energy sources are being explored, such as hydropower, geothermal energy, solar energy, biogases, and wind energy, etc. Such energy sources are highly efficient, and reusable with the added advantage of being budget-friendly.
Report on Renewable Energy Stocks
A report by Bloomberg New Energy Finance (BNEF) quoted that 77% of the future investments would be in renewables by 2050. International Renewable Energy Agency (IRENA) published a report in 2020 which shed some light on the economic perspective of renewable stocks. It stated that although environmental stocks would require an investment of $19 trillion more than usual, it would give a return of $50-$142 trillion by 2050.
In light of all the economic surveys and reports, it is quite evident that investment in environmental stocks will not only restore the air profile of our environment but will also lead to an economic boost. New jobs will be created in the sector of research, design & development, and manufacturing sections. In a similar report by IRENA, it has discussed that job opportunity in the renewable energy sector might hit 42 million by 2050, which is quite massive as compared to the current enrolment of a mere 11 million worldwide.
Here are our top 5 picks, which are an excellent opportunity to invest your funds in renewable energy stocks.
1. Next Era Energy
With a total market capitalization of $169.3 billion, Next Era Energy is the world’s leading company in producing wind and solar energy. It has shown an exceptional performance with a 700% return over the past decade. Next Era has earned the award of “Dividend Aristocrat” due to its record-breaking accomplishment of increasing its dividend for consecutive 25 years. Owing to continual investments in the environmental stocks sector, the company celebrates an annual growth rate of 6-8% growth.
2. Solar Edge Technologies
Solar Edge focuses on augmenting the output of solar panels through an optimized inverter system. It has become the leading solar inverters company by delivering 50% of annualized return since it sold its shares in IPO. The company currently cherishes $14.1 billion of capital which is expected to surge in upcoming years. The world energy reports are predicting an increase from 11% to 38% in solar energy products which is a clear indication of a promising future for solar inverters.
3. Brookfield Renewable
Brookfield holds a remarkable capital of $10.7 billion, making it the world’s largest producer of hydroelectric power. Expanding its expertise in other sectors also such as wind, and solar energy, etc. Owing to the annual total return of 20% and active investment in new projects, Brookfield has experienced an increase of 10% in annual turn rate over the past decade. Experts are predicting the annual return rate to surge up to 20% by 2025.
4. First Solar
First Solar ($10.1 billion market capitalization) is known for the production of highly efficient thin-film solar panels. These panels can generate more useable energy as compared to similar products in the market. First Solar has registered itself as a credible company due to a 9.5% annualized return since its first IPO. With $1.5 billion in net cash, the company is looking forward to doubling its production capacity by 2025.
5. Clearway Energy
Clearway Energy has established itself as the leading producer of renewable energy in the USA. It has also signed power purchase contracts with other companies that promise a steady growth of the business. It has achieved an annual return rate of 10% since its first IPO. Due to its partnership with Global Infrastructure, there has seen a surge in the annual return rate.