Renewable Energy Stocks

Global warming and climate change have had an undeniable impact on people around the world. Driven by the need to reduce carbon emissions and the limited supply of fossil fuels, investors are looking to back renewable energy companies in an effort to make life sustainable for future generations. Want to pitch in on protecting the planet? Here’s a guide to help you invest in renewable energy stocks that are growing steadily in the market.

Quick Look at the Best Renewable Energy Stocks:

• Brookfield Renewable
• Sunrun, Inc.
• Clearway Energy Inc
• Enphase Energy Inc
• Atlantica Online
• SolarEdge Technologies
• Southern Copper Corporation

Overview: Renewable Energy Stocks

Energy stocks can primarily be differentiated into 2 categories — renewable and nonrenewable energy companies. But, is renewable energy going to overtake the more traditional players on the energy market? When can that happen? Or, will more traditional energy companies be able to pivot? Because you don’t know, you need a diverse portfolio that will perform well when changes occur in the sector.

Firms that engage in the production and distribution of energy from limited resources such as coal, oil and natural gas are considered nonrenewable energy stocks. Companies that produce and distribute energy from renewable resources such as solar, biomass, wind and water are considered renewable energy stocks. At the same time, this industry could continue to grow and add new options for the investor.

Coal was used in the early 1800s to fuel steam-powered boats and trains. Then, wood became the main source of energy in the U.S. Wood was the only commercially traded resource for renewable energy until the first hydropower plant began producing electricity in 1882. However, it’s taken quite a long time for renewable energy resources to catch up with the rest of the market. In the 2020s, it’s clear that there’s quite a lot of work to do, with small startups and larger brands spreading across the world. Thus you must find a place where you can profit safely.

Even though oil prices have taken a hit over the last few years, traditional mega-cap oil companies like ExxonMobil (NYSE: XOM) and BP (NYSE: BP) are considered less risky investments. These oil and gas companies apply tried and tested industrial processes to produce energy. The value of renewable energy stocks is comparatively more volatile due to the increasing expenses of developing innovative technology for more efficient and eco-friendly energy generation. 

The first solar panel was developed in the mid-1900s and sparked a renewable energy revolution. Solar stocks like First Solar (NASDAQ: FSLR) and Tesla (NASDAQ: TSLA) are pioneering battery technology that can empower cars, homes and commercial complexes at affordable prices. Investing your money in renewable energy stocks can accelerate the research and give oil companies a run for their money. However, there’s no way to know which sectors of the renewable energy industry will rise or fall.

At the same time, oil companies still perform well because the energy market has not flipped. This means that some energy stocks may not grow as fast as you thought. A long position may be a better idea, but you should monitor the performance of these assets to make sure a long position is still a good idea. This means that you may need to adjust your investment strategy from time to time because certain assets will not perform well, but they might soar while others fall, given the state of the market and current events.

Types of Renewable Energy

Because the renewable energy market is so robust, there are several types from which you may choose. As you look to invest in renewable energy, remember that you can invest different segments of the market, including:

• Solar
• Wind
• Biofuel
• Hydroelectricity
• Biomass
• Geothermal
• Tidal
• Cogeneration

In these segments, you will encounter wind turbines, wave harvesting stations, decarbonization efforts and more. Moreover, you will run into companies working on ESG efforts that will make them more palatable to investors. Because renewable energy sources are so diverse, you must diversify your energy investing plan, look at where energy consumption is going and move your investments to anything from offshore wind farming to solar power and more.

Best Online Brokers for Renewable Energy Stock

Online brokers offer user-friendly tools for new and seasoned investors to improve their trading tactics. You can use these tools to research and filter stocks as per your financial goals. These platforms are integrated with a fully customizable stock screener. For example, you can set the price range between $0.1–$10 to quickly find stocks under $10. 

You should be comfortable with the platform you’re using. You want to fully understand how the broker works, get good customer service and have access to your account at all times. Take a look at these online brokers to begin your investment journey. When you choose the most appropriate broker for your situation, you’re more likely to be comfortable with the situation. At the same time, don’t be afraid to look for brokers that offer bonuses and additional perks that might appeal to you when you look into green energy stocks.

Features to Look for in Renewable Energy Stock

1. Earnings per share: You can calculate the earnings per share (EPS) of a company by dividing its net income by its total number of outstanding shares. Stocks with negative EPS are considered bad investments and may imply that the company is running under loss.

1. P/E ratio: The price-earnings (P/E) ratio helps you determine if a stock is undervalued or overpriced. The lower the P/E ratio, the better an investment it is. Many stocks under $5 have the lowest P/E ratios. 

1. Liquidity: Take into account the company’s average volume of shares traded per day before you make a decision. Renewable energy stocks can seem like an attractive investment but make sure there are enough takers before you buy into these stocks.   
2. Growth potential: Remember, you want to see growth potential in your assets. If you don’t believe you have growth potential, you may want to exit these positions to protect yourself. Energy efficiency is one thing, but the balance sheet of each business must also be managed efficiently.

Make Sustainable Investments

Global warming and climate change have raised concerns for our environment. Renewable energy companies are leading the change with innovative technology to produce energy with the least carbon footprint. You can consider investing in these clean energy stocks to shine the way for a better and brighter future. Remember that this segment of the economy is susceptible to massive swings in the market because it’s not fully ensconced amongst investors the same way an oil stock might be. You should monitor the performance of your holdings and exit positions that are no longer serving you.

You can also look at renewable energy assets as a way to balance the diversity of your portfolio when you also invest in non-renewable energy assets like oil and gas. Over time, you may find your portfolio leaning towards renewable assets, but you must maintain that diversity as much as you can.

Frequently Asked Questions