While energy stocks are making a killing, it is important for investors to invest in some alternative energy stocks as well. This will help you make your portfolio more balanced and bring in a good short-term as well as long-term growth prospects.
The good thing about these stocks is that they have tremendous potential. As the sector is still growing, it is imperative to tap into the caliber of making money in this sector. The US has a strong prospect for renewable energy, given its ample wind, solar and natural gas resources, amongst others. Therefore, investing in a domestic-faced company will also be a great idea.
Here are the top 5 alternative energy stocks that you can buy in 2019.
1. NextEra Energy Partners, LP (NEP)
The limited partnership NextEra Energy Partners, LP is formed by NextEra Energy Inc. It specializes in clean and renewable energy projects that focus on long-term cash flows. The Florida based company has some natural gas assets in Texas. It has seven natural gas pipelines in total, the biggest of which- NET Mexico Pipeline, supplies low-cost energy to Mexico. It has an extensive focus on both solar and wind energy projects in the US.
The second-quarter results of the company showed 15% growth in distributions YoY, which is expected to bring distribution growth until at least 2024. It has also completed the acquisition of about 600-megawatts of solar and wind projects. It has also entered into agreements for repowering two wind power facilities that will add another 275 megawatts to its capacity. Given the US’ potential for solar and wind power, NextEra is uniquely positioned to give investors exposure to this sector for years to come.
2. Renewable Energy Group, Inc. (REGI)
The biggest news for the Renewable Energy Group came in the form of its sale of Life Sciences business without needing financing. The company posted second-quarter results, suggesting the production of 127 million gallons of fuel and sale of 197.4 million. The company suffered because of the challenging margin environment in Q2, especially owing to exemptions in small refineries and BTC. Despite these problems, it managed to improve the sales of fuel by 15%.
The Bitcoin Evolution has also been bringing forward modernisation, which has led the company to announce that BTC will reinstate, which could push its strong performance. The average selling price per gallon has reduced by 13.2%, but the company remains a good buy for those looking for significant clean energy exposure. Note that institutional investors are increasing their stake in the company, which is a clear sign of its strong long term prospect.
3. MKS Instruments, Inc. (MKSI)
MKS Instruments beat analyst expectations for the second quarter of 2019 as it increased its revenue by 2% to $474 million. It also decreased $50 million from its Term Loan Credit Facility. Note that MKS Instruments isn’t directly involved in clean energy.
Instead, it is a technology provider that enables other firms to create advanced solutions for their respective businesses. Overall, MKS Instruments provides a highly diversified stock for investors. The company was expected to provide earnings of $1.07. However, the real result was $1.12. Overall, it is a stable, dependable stock that will add more weight to your portfolio.
4. First Solar, Inc. (FSLR)
The company is reaching new heights with its Series 6 product. If the company achieves the cost targets for this product, it will become on par with silicon-based products. This would be a significant boost to the company’s growth in the future. As a young company, First Solar has gone through several upheavals, including internal guidance issues, some strategic mistakes and its lack of transparency.
In Q2 2019, the company missed Wall Street expectations for the third straight quarter, and now it depends on Series 6 to be its saving grace. The company is currently looking to invest in its stable prospects. The latest quarter was its largest production run. Bookings crossed 2 GW in July, and some new factories are upcoming which could help the company come back in shape again.
5. Pattern Energy Group Inc. (PEGI)
If you are looking for a high-value stock that brings high yields as well, Pattern Energy Group should be your choice. In 2019, the company announced a two-year plan that was designed to bring its dividend to 7.4%. The company’s cash flow is expected to increase by double-digits annually to reach this goal. The payout ratio is also expected to go to 80% instead of 99%. The company seems to be working on this plan well.
Overall problems with the market made the company experience decreased YoY production. However, it completed the acquisition of two wind farms in Canada- North Kent and Belle River, which will add 57 MW to its capacity. It would also help the company reach its target for 2019 and 2020 growth.
The company is also planning to make further acquisitions, as signaled by its recent $250 million bank loan that will help introduce more liquidity to the company. Overall, Pattern Energy is a strong stock with a robust plan for the near and long term. So far, it is right on track to achieve its goals, making it a good buy for investors.
Conclusion
Renewable energy stocks are for investors who don’t want to trade constantly and invest in short term prospects. Though the alternative energy sector has been a literal land mine for investors, it is an industry that can provide strong results in the long run. In essence, these stocks are “buy and forget.” If you constantly kept up with stock prices in this sector, you are in for some stress.
However, since you are investing for a fairly long term, you need to focus on stocks that have a strong presence in the market and have robust fundamentals. A good sign will be to check the amount of institutional investment in a stock. Check out the company’s management, future goals, and current potential in generating revenue to decide if the stock is worth a buy. If you feel overwhelmed, start with the five stocks mentioned above and use them as a benchmark to decide the stocks you pick for your portfolio.
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