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In this piece, we will take a look at the eleven best wind power and solar stocks to buy. For more stocks, head on over to 5 Best Wind Power and Solar Stocks To Buy.
The race to a renewable future where emissions for humanity's energy requirements do not cause climate change has spurred investments into newer energy forms that use freely available resources to generate power. Wind, solar, and geothermal power are examples of such forms of power, and all of them have the advantage of being climate friendly. While coal and crude oil have powered humanity so far and enabled the benefits of industrialization, the tide is now shifting to renewable energy, especially as 2022 impresses upon everyone the fragility of the global crude oil supply chain.
While not as large as the crude oil or the coal markets, the wind and solar power segments are still worth billions of dollars. Additionally, since they are relatively underdeveloped, they have far more optimistic growth estimates when compared to oil, which is one of the most developed industries in the world. For instance, a research report from Allied Markets Research outlines that global wind power energy was worth $62 billion in 2019. From then to 2027, it will grow at a compounded annual growth rate (CAGR) of 9.3% and sit at an estimated $127 billion by the end of the forecast period.
Some driving factors behind this growth are the push for renewables and the fact that wind energy is far more efficient than fossil fuels; while others such as the high costs of setting up the wind turbines and their susceptibility to damage from storms are some headwinds. Asia Pacific accounted for the largest revenue share, as countries such as India and China become focused on reducing their emissions, and Europe will be the fastest growing region through a 10.7% CAGR that will outpace the broader industry. Additionally, industrial users have expressed the most interest in wind power, as it can often bring power to remote and isolated areas.
Moving towards solar, the segment was valued at $170 billion in 2020 believes Fortune Business Insights. It goes on to state that from the $184 billion that the industry was worth in 2021, it will grow at a CAGR of 6.9% and have a value of $293 billion as 2028 ends. This growth comes after the industry contracted during the coronavirus pandemic.
Today's piece will focus on both solar and wind power companies, and it will include firms that make equipment for the industry as well as those that harness alternate power sources. Some top picks are Berkshire Hathaway Inc. (NYSE:BRK-A), Tesla, Inc. (NASDAQ:TSLA), and Enphase Energy, Inc. (NASDAQ:ENPH).
Pixabay/Public Domain
Our Methodology
We studied both the solar and wind power energy industries to take a look at which firms are providing their services and products. The selected companies are ranked through hedge fund holdings gathered via Insider Monkey's Q3 2022 survey of 920 funds.
11 Best Wind Power and Solar Stocks To Buy
11. Vestas Wind Systems A/S (OTCMKTS:VWDRY)
Number of Hedge Fund Holders: N/A
Vestas Wind Systems A/S (OTCMKTS:VWDRY) is a Danish wind turbine company. The firm manufactures and sells wind power plants and other equipment. It also provides support services for its products and is headquartered in Aarhus, Denmark.
Vestas Wind Systems A/S (OTCMKTS:VWDRY) has a strong business model, through which it has neatly divided its operations into part equipment sales and part maintenance contracts. This lets the firm make money by servicing equipment even when sentiment in investing in wind power is lower. Vestas Wind Systems A/S (OTCMKTS:VWDRY) has 138 gigawatts of active wind service contracts, and an average duration of 10 years per contract - providing it with a stable source of revenue. Additionally, the firm also has $18.6 billion in equipment order backlogs and a stronger $30.8 billion in service contract backlogs - both of which provide it with stable order flows.
Vestas Wind Systems A/S (OTCMKTS:VWDRY) joins Tesla, Inc. (NASDAQ:TSLA), Berkshire Hathaway Inc. (NYSE:BRK-A), and Enphase Energy, Inc. (NASDAQ:ENPH) in our list of top solar and wind power stocks.
10. Northland Power Inc. (OTCMKTS:NPIFF)
Number of Hedge Fund Holders: N/A
Northland Power Inc. (OTCMKTS:NPIFF) is a Canadian company that generates electricity from renewable power sources. These include wind, solar, natural gas, and hydro-power. The firm is headquartered in Toronto, Canada.
Northland Power Inc. (OTCMKTS:NPIFF) is aiming to grow its operating income by a strong 7% to 10% CAGR between 2022 and 2027. The firm aims to do this via investing in new projects which will increase its contract life from an average of ten years to fourteen years to let it earn between $1.7 billion and $1.9 billion in operating income in 2027. Northland Power Inc. (OTCMKTS:NPIFF)'s fiscal third quarter saw the company bring in $290 million in operating income which marked a 38% annual growth over the year ago quarter. Additionally, it also nearly doubled its adjusted free cash flow per share to $0.28 in Q3 2022, from Q3 2021's $0.15 per share.
9. Siemens Energy AG (OTCMKTS:SMNEY)
Number of Hedge Fund Holders: N/A
Siemens Energy AG (OTCMKTS:SMNEY) is a German company that is one of the oldest of its kind as it was set up in 1866 and is headquartered in Munich. The firm sells equipment such as steam and gas turbines, electrical systems, offshore wind farm connectors, wind turbine designs, and maintenance services for wind farms.
Siemens Energy AG (OTCMKTS:SMNEY)'s Gamesa segment is its largest and it accounts for 36% of the firm's revenues. This segment focuses on wind energy, and it aims to grow its non Chinese wind power installation by a whopping 28% CAGR. During its fourth fiscal quarter of 2022, Siemens Energy AG (OTCMKTS:SMNEY) reported EUR38 billion in orders for the full fiscal year, which marked a 12% annual growth at a time when Europe was struggling with record high inflation levels. Gamesa service revenue grew by 14% to EUR2.2 billion, and the segment also had strong backlogs that were worth EUR17.8 billion for the service segment.
8. ?rsted A/S (OTCMKTS:DNNGY)
Number of Hedge Fund Holders: N/A
?rsted A/S (OTCMKTS:DNNGY) is a Danish company that builds, develops, and operates onshore and offshore wind farms and solar farms. It is headquartered in Fredericia, Denmark, and has facilities in the U.K., Denmark, Germany, the Netherlands, and the United States.
?rsted A/S (OTCMKTS:DNNGY) is the largest company in the world when it comes to onshore wind farms. The firm is a Danish state owned enterprise and has turned around its business from relying on coal to becoming a leader in the renewable space. ?rsted A/S (OTCMKTS:DNNGY) owns 22% of the global offshore wind farm power generating capacity. ?rsted A/S (OTCMKTS:DNNGY) also has a massive portfolio, as it has a total of 29,426 megawatts of power generation capacity.
7. Brookfield Renewable Partners L.P. (NYSE:BEP)
Number of Hedge Fund Holders: 19
Brookfield Renewable Partners L.P. (NYSE:BEP) is a Bermuda based company that generates power through several renewable sources such as wind, solar, and biomass. It has roughly 21,000 megawatts of capacity and is headquartered in Hamilton, Bermuda.
Brookfield Renewable Partners L.P. (NYSE:BEP)'s third quarter saw the firm bring in $243 million in funds from operations, which marked a healthy 15% annual growth. The firm also has a massive development pipeline in the U.S., the total planned capacity of which is greater than 60 gigawatts across the different sources that it uses for power generation. Brookfield Renewable Partners L.P. (NYSE:BEP) also aims to add another 1,400 megawatts of capacity by the end of this year, which will grow its funds from operations by $50 million.
Insider Monkey's Q3 2022 survey of 920 hedge funds revealed that 19 had held a stake in Brookfield Renewable Partners L.P. (NYSE:BEP).
Out of these, Robert Joseph Caruso's Select Equity Group is Brookfield Renewable Partners L.P. (NYSE:BEP)'s largest shareholder through owning 1.9 million shares that are worth $61 million.
6. Array Technologies, Inc. (NASDAQ:ARRY)
Number of Hedge Fund Holders: 29
Array Technologies, Inc. (NASDAQ:ARRY) is an American company that provides solar tracking systems. These include hardware such as a single axis tracking system and software that uses machine learning to boost energy production. The company is headquartered in Albuquerque, New Mexico.
Array Technologies, Inc. (NASDAQ:ARRY) is uniquely suited to grow along with renewables, as its products form the backbone of operating solar farms. The firm's torque tubes and structural fasteners will receive tax subsidies due to the Inflation Reduction Act, and the firm has a total of $1.9 billion of projects in its pipeline as of November 2022. Additionally, the bulk of solar projects in America use single axis tracking, which falls neatly in line with Array Technologies, Inc. (NASDAQ:ARRY)'s primary product. According to Berkeley labs, 90% of all solar power projects in 2019 had used solar power tracking, so if the Inflation Reduction act further ends up stimulating solar, then Array Technologies, Inc. (NASDAQ:ARRY) is uniquely positioned to benefit from the growth.
As of this year's third quarter, 29 out of the 920 hedge funds polled by Insider Monkey had bought Array Technologies, Inc. (NASDAQ:ARRY)'s shares.
Array Technologies, Inc. (NASDAQ:ARRY)'s largest investor is Jos Shaver's Electron Capital Partners which owns 5 million shares that are worth $84 million.
Along with Berkshire Hathaway Inc. (NYSE:BRK-A), Tesla, Inc. (NASDAQ:TSLA), and Enphase Energy, Inc. (NASDAQ:ENPH), Array Technologies, Inc. (NASDAQ:ARRY) is a strong wind and solar power stock.
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Disclosure: None. 11 Best Wind Power and Solar Stocks To Buy is originally published on Insider Monkey.
