Green energy stocks got a lift thanks to the clean energy incentives in the Inflation Reduction Act of 2022 (IRA), along with the dual catalysts of rising demand and lower costs.
Donald Trump reclaiming the White House has investors questioning how much of the IRA will survive. Reuters reported less than 10 days after the election, for example, that the once and future president's "transition team is planning to kill the $7,500 consumer tax credit for electric-vehicle purchases as part of broader tax-reform legislation."
Such a move could have a deep but disparate impact on the EV market. The IRA is about much more than EVs, though, and key decision-makers wonder how far the president-elect's people are willing to go to roll back an effective piece of legislation.
"We believe the IRA provides growth visibility for a broad range of low-cost clean energy solutions, in a predictable way and for a long time," said NextEra Energy (NEE) CEO Ted Ketchum during his company's Q2 2024 earnings conference call. "In this environment, low-cost renewables will help drive long-term value for our customers and our shareholders and unitholders."
Ketchum questioned whether the incoming administration would cut credits "that are creating jobs, creating a much-needed property tax base in rural America, that flow to customers that result in lower power prices, that attract new investments and that provide much needed faster deploy resource at a time when demand is accelerated."
As Deloitte explained in its 2024 renewable energy industry outlook, the IRA extended wind and solar tax credits for projects that started construction before 2025 through at least 2032.
State clean energy policies have also provided a boost, with 22 states and Washington, D.C., targeting 100% renewable energy or 100% carbon-free electricity by 2040 to 2050. Moreover, 43 of the 45 largest U.S. investor-owned utilities have committed to reducing their carbon emissions by raising the use of renewables. Meanwhile, based on data collected by S&P Global Market Intelligence, private investment in renewables reached $14.58 billion in 2023.
"America is in the midst of an energy transition," according to the 2022 report by "Wind turbines, solar farms and battery storage facilities are popping up across the nation to deliver clean, affordable electricity."
In the past decade, U.S. corporations' demand for clean power has surged 100-fold, according to a recent report from the trade group trade group American Clean Power, as solar and wind power costs have fallen substantially due to increased competition and efficiencies.
As S&P Global reported in a June 2024 note, "As of this year, corporate renewable procurement capacity continues to show momentum, with 15.8 GW contracted in the first quarter, growing 36% year on year. Europe led in capacity, while the Asia-Pacific region led in the number of deals. In terms of countries, corporates have been particularly active in the US, Australia and India."
With that in mind, here are nine of the best green energy stocks for investors looking to profit on the growing trend toward sustainability.
Data is as of November 12. Price target data is provided by S&P Global Market Intelligence.
GE Vernova
- Sector: Industrials
- Industry: Specialty industrial machinery
- Market value: $88.7 billion
- Median price target: $302.46 (6.6% implied downside)
The name "General Electric" does not exactly evoke the image of renewable energy. But the April 2024 division of the venerable industrial conglomerate's remains into two separate businesses has changed all that.
GE Vernova (GEV, $323.71) incorporates the old General Electric's operations in renewables, power, digital and energy financial services under the leadership of CEO Scott Strazik.
The spinoff accomplished GE's goal of dividing itself into three companies focused on energy, aviation and healthcare. The other entity created in April, GE Aerospace (GE), includes the aviation assets. The spinoff of GE HealthCare Technologies (GEHC) was completed in early 2023.
Vernova's focus, according to Strazik, is on addressing climate change and fostering sustainable development. Its businesses include onshore wind turbines with rated capacities of 2 to 6 megawatts (MW) for different environments, offshore wind with 6 to 14 MW capacities for tougher conditions, hydropower generation, hybrid renewable energy and storage, grid solutions and related solutions.
The Inflation Reduction Act has provided a lift for Vernova, as it has for other green energy stocks, despite questions about its long-term viability in a second Trump administration. As Morningstar analyst Joshua Aguilar noted at the time of the spinoff, "Favorable U.S. legislation provides a backdrop of more certainty around timing of wind-related projects, and a combination of better project selectivity, a focus on the North American market, and rightsizing should help drive the profits GE investors have long been clamoring for."
Indeed, since April 2, when GEV debuted on the New York Stock Exchange, the stock is up more than 136%. Noting the underlying strength of GE Vernova's gas power and electrification businesses as well as its wind turbine backlog in a note on the company's third-quarter earnings, Morningstar's Brett Castelli writes, "While we are positive about the company's business outlook, we think the market's current expectations are elevated, and investors should wait for a more attractive valuation before buying."
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Brookfield Renewable Partners
- Sector: Utilities
- Industry: Utilities – renewable
- Market value: $7.21 billion
- Median price target: $30.46 (20.4% implied upside)
Brookfield Renewable Partners (BEP, $25.29) is a renewable energy company that operates hydroelectric, wind, utility-scale solar and storage facilities in North and South America, Europe and Asia.
Brookfield Renewable has a track record of investing in and operating high-quality renewable energy assets. It's part of Brookfield Asset Management, which manages more than $1 trillion in assets.
"The tailwinds for renewables continue to be driven by accelerating corporate demand, primarily from the global technology players to enable their data center and AI development. Our scale and geographically and technologically diversified business is uniquely positioned to meet this growing need in all political environments," management said in its Q3 2024 earnings release.
What's more, Brookfield has also positioned itself to benefit from a renaissance in the nuclear power industry.
Brookfield and its institutional partners formed a strategic partnership with Cameco (CCJ) to acquire Westinghouse, one of the world's largest nuclear services businesses, for $7.9 billion in 2023.
According to Brookfield, nuclear power and hydroelectricity are "the only forms of clean, dispatchable, baseload power generation and will be a key enabler of the rapid growth of intermittent solar and wind."
Westinghouse services about half the global nuclear power generation sector and is the original equipment manufacturer to more than half of the global nuclear reactor fleet. Brookfield and its partners own 51% of Westinghouse, while Cameco holds 49%.
"Westinghouse is well positioned to capture the increasing global tailwinds for nuclear," according to Brookfield.
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Tesla
- Sector: Consumer discretionary
- Industry: Auto manufacturers
- Market value: $1.0 trillion
- Median price target: $222.68 (32.2% implied downside)
The share price of Tesla (TSLA, $328.49) has surged in the aftermath of Donald Trump's victory in the 2024 U.S. presidential election, with CEO Elon Musk playing a prominent role in both the campaign and the transition period ahead of the January 20, 2025, inauguration.
TSLA suffered some as Musk acquired Twitter, turned it into X and extended his reach into social media and politics. But his bet on Trump – "a poker move for the ages," according to Dan Ives of Wedbush Securities – appears to be paying off.
And, of course, a new Trump administration plan to eliminate a tax credit for EV purchases would likely benefit Musk's company, as Kiplinger's Kelley Taylor writes. "Tesla representatives have expressed support for ending the subsidy to Trump's transition committee. This may seem counterintuitive but seems to align with CEO Elon Musk's previous statements."
Tesla is showing signs of operational progress too. The EV maker delivered 462,890 vehicles during the third quarter, a 6.4% year-over-year increase. Management has guided to a lower electric car delivery growth rate for the full year compared to 2023, when deliveries were up by more than 30%.
As Morningstar analyst Seth Goldstein observed in a 2022 research note, Tesla is a major beneficiary of the Inflation Reduction Act, which made its Model 3 and Model Y cars eligible for tax credits.
Goldstein also noted that Tesla went from a startup to a globally recognized luxury automaker in less than a decade. One of the largest battery electric vehicle automakers in the world, Tesla is well positioned to grow its solar panel and storage businesses in similar fashion.
But Tesla stock has other drivers now.
"We believe Trump in the White House changes the landscape for Elon Musk and Tesla," Ives said during a post-election appearance on CNBC. Ives said Musk's "major strategic bet" could prove "very bullish for Tesla’s AI/autonomous story."
Reflecting his bullish view on Trump's victory and its potential impact on Musk's company, Ives raised his price target for TSLA from $300 to $400.
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NextEra Energy
- Sector: Utilities
- Industry: Utilities – regulated electric
- Market value: $152.7 billion
- Median price target: $88.20 (18.8% implied upside)
NextEra Energy (NEE, $74.26) is typically found on lists of the best green energy stocks to buy. The world's largest producer of wind and solar energy, NextEra also owns Florida Power & Light, the biggest electric utility in the U.S., providing clean electricity to more than 12 million people.
And it's a corporate leader in sustainability, having been awarded the S&P 500 Global Platts 2020 Energy Transition Award for ESG leadership.
The utility stock will continue to benefit from the IRA, which CEO John Ketchum described as "transformational for our industry and our business" when it was passed.
Ketchum and NextEra Energy "expect the credits to remain in place—the wind, the solar, the battery storage. All in all, while we would expect the heated rhetoric through the fall campaign, we feel good about where things stand.”
NextEra Energy Resources again added approximately 3 gigawatts of new renewables and storage projects to its backlog during Q3, matching its achievement of Q2. Management also completed agreements with two Fortune 50 customers for the potential development of renewables and storage projects totaling up to 10.5 gigawatts between now and 2030.
Ketchum noted too that NextEra Energy Transmission has secured contracts to build transmission projects in the PJM Interconnection, California Independent System Operator and Southwest Power Pool footprints that will roughly double the size of its transmission investments. And management expects rapid growth in electricity demand from data centers supporting generative AI.
Highlighting the opportunity increased power demand is bringing to the utility sector, management said NextEra "will be disappointed if we are not able to deliver financial results at or near the top of our adjusted earnings per share expectations ranges each year through 2027, while maintaining our strong balance sheet and credit ratings."
NEE has enjoyed a solid 2024 despite the political uncertainty of the IRA, rising with other utility stocks amid surging data-center demand for power and outperforming the S&P 500 year to date.
NextEra is also one of the best dividend stocks, with Ketchum saying the company expects to raise its dividend by 10% a year through "at least" 2026.
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Canadian Solar
- Sector: Technology
- Industry: Solar
- Market value: $800.4 million
- Median price target: $19.55 (61.7% implied upside)
Canadian Solar (CSIQ, $12.09) has had a rough 2024 but remains one of Wall Street's best green energy stocks for the long term.
CSIQ is a solar power company that provides integrated solutions including solar power products, services and systems. It's one of the world's largest makers of solar photovoltaic products as well as one of the largest solar power plant developers. Canadian Solar sells to utilities, businesses and consumers.
Canadian Solar says it's delivered more than 125 GW of solar modules to thousands of customers in over 160 countries with another 26 GW of solar projects and 56 GWh of storage projects in the pipeline.
A combination of high interest rates making new projects prohibitively expensive plus policy changes at the state level has limited growth in residential solar demand this year. Changes to California's Net Energy Metering program have reduced the financial incentives for going solar, and other states have followed along. Altogether, the Solar Energy Industries Association now expects residential solar to contract by 19% in 2024, up from a previous estimate of 14%.
Still, since 2019 CSIQ's revenue has more than doubled, from $3.2 billion to $7.6 billion for fiscal 2023. And earnings are up to $3.87 per share in 2023 from $2.19 per share in 2019.
The share price reached a multiyear low in August after Canadian Solar missed analysts' expectations for its fiscal second quarter results and offered disappointing guidance for the third quarter as well.
“While we continue to navigate challenging market conditions, our focus remains on sustainable, profitable growth," CEO Shawn Qu said during the second-quarter call in August. The CEO said Canadian Solar is "beginning to see signs of market rationalization" and expects "stabilization in the second half of the year.”
Canadian Solar expects total module shipments of 9.0 GW to 9.5 GW in the third quarter of its fiscal 2024 and revenues to be in the range of $1.6 billion to $1.8 billion, with gross margin of 14% to 16%.
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SolarEdge Technologies
- Sector: Technology
- Industry: Solar
- Market value: $709.3 million
- Median price target: $27.35 (123.4% implied upside)
SolarEdge Technologies (SEDG, $12.24) is featured among the best green energy stocks because it's the largest maker of solar inverters. Solar inverters convert direct current from solar panels into alternating currents used in homes and electrical grids.
According to Morningstar analyst Brett Castelli, SolarEdge's DC optimizer is the leader in solar residential rooftop installations; the company has expanded its sales to include business and utility clients.
Because a majority of the company's revenue comes from Europe, SolarEdge was well-positioned to navigate a slowdown in U.S. residential solar demand "as California NEM 3.0 takes effect," Castelli said in a research note.
California's Net Energy Metering (NEM) policy calls for homeowners to get credit when their solar panels push excess electricity onto the grid when the sun is shining. This credit offsets the cost of electricity they use at nightfall. Under NEM 3.0, the rates homeowners receive are 75% lower than before. This means less savings for the homeowner and a drag on solar panel sales.
Beyond inverters, SEDG has expanded into energy storage, e-mobility, and uninterrupted power supply markets. However, the analyst believes two of these moves carry risks. An energy storage product "makes sense" but it departs from its policy of outsourcing manufacturing, he said. E-mobility may be a big and growing market but it requires more capital, carries execution risk and takes a long time to generate meaningful revenue.
And it has been a difficult 2024 for SolarEdge stock, which shed nearly 75% of its value before CEO Zvi Lando announced his resignation in August. SolarEdge reported a 64% year-over-year decline in Q3 revenue to $260.9 million. And it reported a $1.21 billion net loss vs a loss of $61.2 million a year ago.
The interim CEO, Ronen Faier, had been SolarEdge's CFO since 2011. Faier will lead the company in the short term as it confronts challenges including product-line differentiation and increasing competition in Europe, according to Castelli.
And SEDG stock is cheap. "SolarEdge’s results will rebound/normalize in the coming years," Castelli forecast. At the same time, "shares trade at among the lowest enterprise value/sales multiples in the company’s history."
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General Motors
- Sector: Consumer discretionary
- Industry: Auto manufacturer
- Market value: $63.1 billion
- Median price target: $58.73 (2.3% implied upside)
Why is General Motors (GM, $57.41) on this list of the best green energy stocks to buy? Because the carmaker is going all in on an electric future.
The company has said that it plans to invest $35 billion in electric vehicle and autonomous vehicle (AV) production through 2025. By mid-decade, GM plans to sell a million EVs a year in North America.
In a 2023 letter to shareholders, CEO Mary Barra said the company's Chevrolet Bolt EV and Bolt EUV had record sales in 2022, which "demonstrates the importance of affordable EVs" in our portfolio. Bolt sales rose 72% to 38,120 in 2022, still a pittance compared to Tesla's 1.3 million.
GM also deepened its investment in AV company Cruise, buying SoftBank's stake for $2.1 billion and pouring in another $1.4 billion. Cruise develops self-driving cars for ridesharing and delivery. The Origin is designed to operate without a human driver, as there is no steering wheel. Cruise was the first AV company to offer driverless rides in a major city: San Francisco.
Cruise reportedly is expected to start operating robotaxis in Austin, Texas, and Phoenix, Arizona, as well as more cities this year. As for delivery, Cruise is looking to expand as well. Walmart (WMT), which is an investor, is testing the service in Phoenix, according to Reuters.
GM has said Cruise can generate $50 billion in annual revenue by 2030.
GM, which sells vehicles under the Chevrolet, Buick, Cadillac, Baojun and Wuling brands, also jointly developed its Ultium battery platform with South Korea's LG Energy Solution to mass produce battery cells. GM is projecting that its next-gen Ultium packs will cost 60% less than existing batteries in use today with double the energy density. GM is reusing or recycling these batteries.
General Motors posted Q3 2024 revenue of $48.8 billion, up 10.5% year over year. Earnings per share were $2.96, up from $2.28 a year ago.
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Amazon.com
- Sector: Consumer discretionary
- Industry: Internet retail
- Market value: $2.2 trillion
- Median price target: $230.12 (10.2% implied upside)
E-commerce giant Amazon.com (AMZN, $208.91) joins the list of green energy stocks to consider because it is far and away the largest buyer of clean energy in the U.S., according to trade group American Clean Power.
"Corporate buyers are a critical part of the energy transition" in America from fossil fuels to clean energy, the trade group's report said. "Their accelerated buying of clean energy provides an important source of demand, while their efforts to decarbonize their products and services puts pressure on their supply chain to do the same."
Last year, Amazon invested in more than 100 new wind and solar projects, and its renewable power purchase agreement capacity in 2024 is 34 GW. Once its more than 500 wind and solar projects are operational Amazon expects to produce 77,000 GWh of clean energy on an annual basis, enough to power 7.2 million homes.
Moreover, Amazon said it is on track to meet its 100% clean energy goal five years earlier than the 2030 it previously projected.
What's more, Amazon co-founded The Climate Pledge in 2019, which commits companies to achieving net-zero carbon emissions by 2040 or a decade earlier than the Paris Agreement.
Amazon reported Q3 2024 earnings per share of $1.43 on revenue of $158.9 billion, compared to 94 cents per share on revenue of $143.1 billion a year ago.
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Ørsted
- Sector: Utilities
- Industry: Utilities – renewable
- Market value: $22.0 billion
- Median price target: $23.64 (35.6% implied upside)
Ørsted (DNNGY, $17.43) is the largest multinational power company in Denmark. After selling its oil and gas fields in 2017, the company is now focused on renewables. It has the largest portfolio of offshore wind farm projects in Europe and is ramping up its American presence.
The company owns and operates the first U.S. offshore wind project, the Block Island Wind Farm, which replaced five diesel generators and now powers 17,000 homes in Rhode Island.
DNNGY said it is developing 5 GW of offshore wind capacity in Connecticut, Maryland, New Jersey and New York. It also is developing 4 GW of onshore wind, solar and storage projects in Texas, the Midwest and Southeast.
The company develops, constructs and operates wind farms, solar farms, energy storage facilities, renewable hydrogen and green fuels facilities and bioenergy plants. As of 2024 Ørsted operates 9.8 GW of offshore wind farms, with the biggest concentration of operations in the U.K.
The company's efforts are coming through on its financial reports, with Q2 2024 underlying EBITDA rising nearly 60% year over year.
In addition to being one of Wall Street's best green energy stocks, DNNGY was also named the world's most sustainable company in 2022 by Corporate Knight's 2022 Global 100 Index.
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