Top alternative energy stocks this quarter include Daqo New Energy Corp., the best for value and growth, and First Solar Inc., the best-performing alternative energy stock over the last 12 months.
Alternative energy stocks have matched the performance of the broader market over the past year. The iShares Global Clean Energy ETF (ICLN) is down less than 1% in the past year, slightly underperforming the Russell 1000’s 2% rise.
Here are the top renewable energy stocks in three categories: best value, fastest growth, and the most momentum. All data are as of April 21.
Best Value Alternative Energy Stocks
These are the renewable energy stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profit can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
| Best Value Alternative Energy Stocks | |||
|---|---|---|---|
| Price ($) | Market Capitalization (Market Cap) ($B) | 12-Month Trailing P/E Ratio | |
| Daqo New Energy Corp (DQ) | 43.85 | 3.3 | 1.8 |
| Brookfield Renewable Corp (BEPC) | 33.95 | 5.8 | 3.9 |
| Clearway Energy Inc (CWEN) | 31.51 | 3.7 | 6.3 |
Source: YCharts
- Daqo New Energy Corp.: Daqo is a Chinese solar energy company that manufactures polysilicon for sale to manufacturers of solar cells and modules. It also makes photovoltaic wafers. Daqo’s revenue and EBITDA both rose more than 100% in the fourth quarter of 2022 on higher sales prices and volumes.
- Brookfield Renewable Corp.: Brookfield operates hydroelectric, wind, solar, and storage facilities in North and South America, Europe, and Asia. As a global power producer, Brookfield has been able to realize higher prices on the back of escalating inflation, with funds from operations increasing 8% year-over-year in 2022.
- Clearway Energy Inc.: Clearway invests in and owns energy infrastructure and long-term contracted renewable energy assets. In the U.S., it invests in solar and wind projects. For the 2022 fiscal year, Clearway swung to profitability with $1.06 billion in net income, up from a loss of $75 million the year prior, thanks to the divestiture of its thermal business.
Fastest Growing Alternative Energy Stocks
These are the top renewable energy stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth.
Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general.
| Fastest Growing Alternative Energy Stocks | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | EPS Growth (%) | Revenue Growth (%) | |
| Daqo New Energy Corp (DQ) | 43.85 | 3.3 | 156 | 118 |
| Canadian Solar Inc (CSIQ) | 39.83 | 2.6 | 185 | 29 |
| Enphase Energy Inc (ENPH) | 223.61 | 30.5 | 176 | 65 |
Source: YCharts
- Daqo New Energy Corp.: See description above.
- Canadian Solar Inc.: Canadian Solar is one of the world’s largest solar technology and renewable energy companies. A leading manufacturer of solar solutions, Canadian Solar has developed, built, and connected solar power in 20 countries across the globe. The company brought in record revenue of $7.5 billion in 2022, up 42% year-over-year. With solar equipment costs declining, the company is beginning to realize economies of scale, helping to boost earnings.
- Enphase Energy Inc.: Headquartered in Fremont, California, Enphase develops and sells solar micro-inverters, energy storage systems, and electric vehicle chargers, primarily for home use. In the first quarter of 2023, Enphase saw a 9% downtick in U.S. revenue year-over-year, more than offset by European sales growth of 25%. Enphase also ended the quarter with strong free cash flow of $224 million.
Alternative Energy Stocks With the Most Momentum
These are the renewable energy stocks that had the highest total return over the past 12 months.
| Alternative Energy Stocks with the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| First Solar Inc (FSLR) | 27.7 | 7.3 | 178 |
| Array Technologies Inc (ARRY) | 22.48 | 1.2 | 144 |
| Maxeon Solar Technologies Ltd (MAXN) | 17.42 | 5.5 | 121 |
| Russell 1000 Index | N/A | N/A | -3 |
| iShares Global Clean Energy ETF (ICLN) | N/A | N/A | 3 |
Source: YCharts
- First Solar Inc.: First Solar designs and manufactures photovoltaic solar power systems and solar modules. Cash is king for First Solar—the company ended 2022 with $2.4 billion in its coffers. Moreover, it forecast 2023 net sales in the range of $3.4 billion to $3.6 billion, a 34% increase over 2022.
- Array Technologies Inc.: Array is a global provider of solar tracking technology. Array ended 2022 at the high end of forecasted ranges, with revenue of $1.6 billion and adjusted EBITDA of $129 million, up 91% and 200%, respectively, from the prior year.
- Maxeon Solar Technologies Ltd.: Spun off from SunPower Corporation in 2020, Maxeon designs, manufactures, and sells solar panels in 100 countries worldwide. Driven by strong demand for solar, Maxeon generated $323 million in revenue in the fourth quarter of 2022, up from $221.5 million the year before. Maxeon gave a promising 2023 forecast, with revenue expected to be between $1.35 billion and $1.55 billion, up from $1.03 billion in 2022.
Advantages of Alternative Energy Stocks
Government Initiatives: Both federal and state governments have taken an active step toward investing in alternative energy. For example, as part of the $1.2 trillion infrastructure bill passed by lawmakers in November 2021, $65 billion is allocated to investment in clean energy transmission, such as building new power lines to facilitate renewable energy.
More recently, $369 billion was flagged for clean energy and climate change initiatives as part of the Inflation Reduction Act (IRA). At the state level, many jurisdictions offer solar initiatives in conjunction with federal enticements, such as rebates, tax credits, and performance-based incentives.
Energy research and consulting firm Wood Mackenzie forecasts investment in renewables to reach $1.2 trillion by 2035. This presents an opportunity for investors to invest in companies that develop and manufacture renewable energy infrastructure and related components.
Risks of Alternative Energy Stocks
Intermittency: Alternative energy sources cannot be called upon at all times, making some forms of renewable technology in its current form unreliable. For instance, solar panels may generate sufficient energy sources in some locations during the summer months but not through winter. Similarly, wind turbines may produce enough energy in the spring but come up short of generating sufficient electricity in the fall.
In addition, newer technologies in the future have the potential to make some of today’s alternative energy sources redundant, adding disruption risk to the sector.
Storage Limitations: Due to the intermittent output of alternative energy, there’s a high need for storage. While there are many options currently available, such as batteries and the conversion of renewables into hydrogen, they are often costly and limited in the amount of energy they can store. An inability to store clean energy effectively in the quantities needed represents a risk to its widespread adoption and use. However, storage challenges should ease in the years ahead as new technological advancements improve capacity and reduce costs.