Four renewable energy stocks that could take a slice of $369 billion in funding

Analysts take a look at renewable energy stock quotes after seeing profit opportunities following the introduction of the US climate bill – Photo: Getty

Renewable energy stocks gained ground after the recent passage of the Reducing Inflation Act, dubbed the Climate Bill, allocating $369 billion in funding to renewable energy projects, which made analysts bullish on companies in the sector.

Read on to find out which four renewable energy stocks could benefit from a boost.

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Renewable energy stocks to watch

First Solar (FSLR) Pricing Chart

Photovoltaic (PV) solar power is becoming the cheapest option for electricity generation in most countries around the world, which should propel investments in the coming years, according to the International Energy Agency (OUCH).

Apart from that, solar technology – which converts sunlight into electricity – reduces the use of fossil fuels and is also sustainable and safe.

First Solar (FSLR), an American manufacturer and supplier of eco-efficient photovoltaic (PV) solutions, works across the entire solar value chain, designing, engineering and building grid-connected photovoltaic power plants – and is well positioned , according to analysts , to take advantage of the US climate bill.

Indeed, it will be able to take advantage of tax credits on the production of solar panels – and orders are at a record high, the group’s chief executive said in a press release on July 28 after the company announced its second quarter results.

“We now have a record order book of over 44 GW, extending the horizon of planned future deliveries to 2026. The 10.4 GW of new bookings since our previous earnings call in April brings our total bookings year-to-date at 27.1 GW,” Mark Widmar, chief executive of First Solar, said.

In an Aug. 8 research note, JP Morgan downgraded First Solar shares from “neutral” to “overweight” and raised the company’s price target from $83 to $126 — and on Aug. 20 , Morgan Stanley also upgraded First Solar from an “underweight” to an “equal weight” rating in a note to clients. He currently has a price target of $136 on the renewable energy stock, down from $54 previously.

The solar company’s stock has gained 33% this year and shares are currently trading near $122.

Enphase Energy (ENPH) Pricing Chart

Enphase Energy (ENPH) is another solar company that could benefit from the US climate bill. It was one of the S&P’s 10 best performing stocks at the start of August.

As previously reported by Capital.com, the group, which makes solar microconverters, monitoring software and battery energy storage products, has seen its share price soar 60.99% since the start of the l year – and the stock is up another 38.05% in the past month.

Reviewing analyst ratings for the stock, JP Morgan raised its price target from $261 to $321 and maintained an “overweight” rating, which essentially means an analyst thinks the stock price of the company should perform better in the future. On August 11, Keybanc also maintained its “overweight” rating for the stock and set a price target of $363 from $230. The shares are currently trading at around $285.

With investments in solar power as a way to replace fossil fuels and help solve the energy crisis, many investors view the growth of the solar industry as inevitable.

Nextera Energy (NEE) Price Chart

The American company NextEra Energy (NEE) has a subsidiary called NextEra Energy Resources, which also produces renewable wind and solar energy. The group is listed as the largest renewable energy company by market capitalization – at $175.63 billion.

The energy company is also set to benefit from the US climate bill, securing tax incentives and rebates for investing in renewable energy, according to the announcement. Subsequently, this could lead to an increase in demand for wind turbines and components supplied by the group.

NextEra Energy also posted promising results for the second quarter of 2022, with operating revenue totaling $5.18 billion, significantly higher than the $3.92 billion recorded in the second quarter of 2021.

Reviewing analyst ratings for the stock, on August 18, Morgan Stanley raised its price target from $83 to $94. Wells Fargo also raised its price target on NextEra Energy from $107 to $115 and rated it “overweight” on Aug. 9.

NexEra shares are down about 7% year-to-date, but have risen 3% in the past month and are currently trading at $87.

Price table of RWE AG (RWE)

Piero Cingari, commodities analyst at Capital.com, previously pointed out that companies like Encavis AG and RWE AG (RWE) could also benefit, when it emerged that solar power was on track to account for 60% of the global growth of renewables in 2022. – and now with the climate bill, the company could get a boost as it plans to build an offshore wind supply chain in Louisiana in conjunction with Greater New Orleans and GNOwind Alliance.

“Encavis AG, a small independent power producer that acquires and operates solar and onshore wind farms, is trending positively in the stock market, and its shares have risen since the outbreak of war in Ukraine, indicating that investors are beginning to expect higher earnings growth. In the coming years, the large RWE AG could also experience exciting growth,” Cingari said.

Regarding recent analyst ratings on the stock, Barclays Director Peter Crampton maintained his positive view in a research note to clients with a “Buy” rating and kept the price target at €53 on August 22. On August 12, Deutsche Bank also had a positive outlook on the stock with a “Buy” rating and kept the target price at €52 – and on August 11, JP Morgan also listed the stock as “Buy” with a target price of €60.

Year to date, RWE AG (RWE) stock has gained 20.30% and is currently trading at the €40 level.

Benefit from the push for renewable energies

The war in Ukraine has certainly accelerated the green transition as many countries, especially in Europe, can no longer rely on Russia to meet their energy needs, including natural gas and crude oil.

Member states have increasingly looked to the United States for help – putting upward pressure on commodity markets – and forcing world governments to encourage alternatives – especially in investments in renewable energies.

Carbon Emissions Futures Price Chart (ECFZ21)

“Green power is going to be key and those who are already established are going to be at the forefront of the push. Of course, there will be opportunities for everyone in the space as the desperation to become self-sufficient means the investments will be heavy,” Craig Erlam, market analyst at OANDA, told Capital.com.

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