Clean Energy Stocks for 2019

Can You Make Money Investing in Clean Energy?

•••

Getty Images 

The world’s population isn’t getting any smaller, and the demand for energy is only expected to grow over time. For decades, energy companies have been reliable sources of return for investors. This will continue to be the case, but the energy industry is changing, with new companies emerging to cash in on the demand for more renewable energy sources.

Energy Trends That Will Impact Your Pocket

Petroleum and coal companies aren’t going away just yet. But we can see more and more money being directed to providers of solar, wind, natural gas, nuclear, and hydroelectric power.

The Energy Information Institute projects that clean natural gas will provide a larger share of the nation’s electricity in the coming years, along with the use of wind and solar energy. Meanwhile, the use of coal will decline. Other sources of energy such as biomass, geothermal, hydroelectric, and tidal power are showing increasing promise.

There are some current headwinds to the growth of clean energy companies. The current administration has shown little enthusiasm for pro-environment causes and has opposed tax credits for things like electric cars or the use of renewable energy. Moreover, the implementation of higher tariffs on solar panels, steel, and aluminum has brought added costs to renewable energy firms.

That said, the overall demand for renewable sources of electricity in the coming years could make certain clean energy companies a good bet for investors.

Key Questions to Consider Before Investing

If you are looking to invest in clean energy stocks, here are some things to examine:

  • What energy sources does it focus on? Not all clean energy sources are the same. Some are more expensive to produce than others. Some sources are more likely than others to make up a significant portion of overall energy production.
  • What are the barriers to its growth? Is the company waiting for a certain technology to advance before it can ramp up production? Are there regulations or laws that currently stand in its way? (Consider that natural gas didn’t truly take off until fracking was permitted in many places across North America.)
  • How well capitalized is the company? Developing technology and exploring for new energy sources is expensive. Many new energy companies are small, with good ideas but a lack of robust infrastructure or resources.
  • Does it have a competitive edge in the marketplace? Is the company an established leader? Does it have something proprietary that differentiates it from competitors? Why is this company going to succeed versus another?
  • How global is the company? While the current political environment isn’t too friendly to renewable energy, there are many other countries worldwide focused on cleaning up their energy grids. Those companies with a global footprint will be best positioned for growth.

With all that said, here’s a look at some prominent clean energy stocks that could be worth your investment.

5 Clean Energy Stocks in 2019

First Solar: It’s been an up and down ride for the maker of solar panels and related equipment. While it has built and operated many of the world’s largest solar power plants, its operation is frequently impacted by the whims of solar power demand, pricing, and even geopolitical uncertainty.

The company is profitable, reporting net income of $144.3 million in 2018 on revenues of $2.2 billion. (It touts itself as having the “strongest balance sheet in the industry.” But those figures are down from more than $4.1 billion in revenue and $593 million in net income in 2015.

The Arizona-based company made headlines as one of the worst-performing stocks during the Obama Presidency. But the company has sold out its orders for the next couple of years and continues to ramp up production capabilities. If the world continues to move to more solar energy usage, it should be able to cash in.

BWXT: It’s an open-ended question as to whether we’ll see a revival of nuclear energy in the United States. But this company, which develops and manufactures nuclear reactors and related items, got off to a good start in 2019—seeing its share price rise more than 30% since hitting a bottom at the end of December 2018. The good price movement coincided with the announcement of a record $478 million in revenue in the fourth quarter, up 11% from the same period a year prior. During that same period, net income hit $21.9 million, up from a loss of $15.8 million.

It’s unclear, however, whether BWTX’s good results stem from its nuclear power business. The company said it expected new revenue in 2019 to come from the production of nuclear submarines and aircraft carriers, and a newly acquired medical isotope business.

Cheniere: Based in Houston, this company is America’s leading producer of liquified natural gas. In 2018, natural gas produced 1.47 trillion kilowatt hours of electricity in the U.S. That represents 35% of the electricity from all sources, according to the U.S. Energy Information Administration. And the EIA projects that it could top 40% by 2020 as fracking operations in the U.S. and Canada have led to large quantities of natural gas to be extracted at low prices.

The natural gas producer operates four liquefaction units in Louisiana, with a fifth planned for 2019. Cheniere says that it has enough land double capacity.

As of March 2019, the company's shares were trading close to their 52-week high, and they have risen nearly 20% during the year. The company reported $7.9 billion in revenue, with net income of $471 million in 2018. That’s up from $5.6 billion in revenue, and a loss of $393 million the prior year.

Brookfield: This energy company's share price rose 20% in the first three months of 2019. That came after a rather dismal last half of 2018, when operations were hurt by the lack of rain.

The company owns and manages 876 electricity-generating facilities in the U.S., with hydroelectricity comprising about 76% of its portfolio. And the lack of rain led to relatively low output from its hydroelectric dams.

The good news is that Brookfield intends to grow its holdings in wind and solar energy in the coming years. This could lead to growth in share price over time, and that’s very nice considering the company also pays a healthy $2.06 per share annual dividend. (Based on prices in March of 2019, that’s a 6.66% yield.) The company reported $2.98 billion in 2018 revenues, up from $2.63 billion in 2017. Net earnings rose to $1.3 billion from $1.1 billion.

Tesla: This company may be best known as a carmaker, but it can also also be viewed as a clean energy company due to its investments in solar energy and battery technologies.

In 2017, founder Elon Musk merged Telsa with SolarCity, the maker of residential and commercial solar panels. The company has been a pioneer in developing battery technology that powers Tesla cars but also has a wide range of other possible uses.

Longer-lasting batteries promise to make electricity grids more efficient and enable wider use of alternative energy sources like wind and solar. Tesla’s share prices aren’t cheap, but the company is betting on a sales boost after the introduction of its Model 3 in March of 2019.

The Bottom Line

Changes in the energy industry will create many short-term and long-term opportunities. And clean energy stocks could generate big profits for investors in 2019. Before you pick a stock, make sure to evaluate company infrastructure and resources, growth prospects, competitive edge, global positioning, and other factors that could impact share price.