Best Renewable Energy Stocks for 2022

Wind farm with solar panels in southern California.
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Energy has been a hot topic lately, and rising prices for oil and gas have brought renewable energy to the forefront. But what is renewable energy? Is investing in renewable energy a good idea? What are the best renewable energy stocks for 2022?

Here’s what you need to know about renewable energy and the companies that provide it.

Read: Looking To Diversify In A Bear Market? Consider These 6 Alternative Investments

What Is Renewable Energy?

Renewable energy is energy derived from natural sources that are replenished at a higher rate than they are consumed, according to the United Nations. Solar and wind are examples of renewable energy because energy can be harvested from these sources, and they continue to produce more.

Energy that is derived from fossil fuels, on the other hand, is not renewable. Oil, gas and coal are used to produce energy, but these resources are finite — there is only so much of them, and once they are used up, they cannot be replaced. In addition, these kinds of fuels emit greenhouse gasses when they are burned, further harming the environment.

Kinds of Renewable Energy

There are several different kinds of renewable energy, each with its own advantages.

Solar Energy

Solar energy is intercepted by the earth at a rate 10,000 times the rate at which energy is consumed, making it the most available kind of renewable energy. It can be used for heating, cooling, electricity and fuel.

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Sunlight is converted to energy through photovoltaic (PV) panels — these are the panels you see at so-called “solar farms” or on the roofs of houses — or mirrors. Solar is one of the most cost-effective types of renewable energy, and costs continue to drop as technology advances and solar becomes more widely used.

Wind Energy

Wind turbines convert energy from moving air to usable energy. Wind energy can be harnessed on land or in offshore water. Offshore wind farms offer tremendous potential since there is no development to block the wind from reaching the turbine — and no complaints from the neighbors!

Hydropower

Moving water in rivers and reservoirs generates hydropower, which is currently the largest source of renewable energy for electricity. Hydropower requires more infrastructure than solar or wind energy and is impacted by drought, so it has some limitations for large-scale use.

Bioenergy

Naturally occurring materials, such as charcoal, wood and manure — called biomass — can be used to create bioenergy and are popular in rural areas and developing countries. Greenhouse gas emissions are created by burning biomass, but not at the same high levels as fossil fuels. It is most suited to smaller applications in rural areas.

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Geothermal Energy

The heat from the earth’s interior is extracted via wells to create geothermal energy. This method has been used to generate electricity for over 100 years.

Renewable Energy Stocks

Companies that create renewable energy are becoming popular as the importance of this energy source becomes more apparent.

What is the best renewable energy stock? Here are some renewable energy stocks to consider.

First Solar

First Solar, Inc. (FSLR) provides PV solar panels to utilities, developers, distributors, commercial and industrial applications and more. The company, which was founded in 1999, had $2.9 billion in net sales in 2021. The company has approximately 9 GW of manufacturing capacity worldwide, and First Solar modules can be found in more than 45 countries.

First Solar is up nearly 50% year to date, from $88.58 to $132.31 as of Sept. 27, 2022. Analysts seem to feel that it’s reached its peak, however, with an average 12-month price target of $133.26. Of the 17 analysts who weighed in in September, eight recommended holding First Solar. Six called it a buy, and three said it’s a strong buy.

NextEra Energy

NextEra Energy, Inc. (NEE) is the world’s largest utility company, with a market cap of over $100 billion. NextEra owns Florida Power & Light Company, NextEra Energy Resources LLC and subsidiaries that run nuclear power plants in Florida, New Hampshire and Wisconsin.

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The company has set a goal to eliminate carbon emissions from its operations by 2045. Its plan will use a mix of wind, solar, nuclear, battery storage, green hydrogen and other renewable sources to generate energy that is free of carbon emissions. The company cites studies indicating that its “Real Zero” plan could create up to 150,000 jobs and increase GDP by $15 billion in Florida through 2045.

NextEra Energy is down for the year, but not as much as some companies. It traded at $81.08 on Sept. 27, 2022, down from $91.66 at the beginning of the year. The company’s forward dividend is $1.66, with a yield of 2.01%. Fifteen analysts have made their recommendations for NextEra in September. Of those, five rate it a strong buy, eight rate it a buy and two recommend holding it. The average 12-month price target is $96.99.

Brookfield Renewable Partners

Brookfield Renewable Partners LP (BEP) has a portfolio of hydroelectric, solar, wind and storage facilities in North America, South America, Asia and Europe. Brookfield has approximately 21,000 megawatts of generating capacity, including 8,100 MW of hydro from 229 generation facilities; 5,400 MW of wind capacity; 2,600 MW of installed solar capacity, 1,400 MW in it distributed generation portfolio and 2,700 MW in its pumped storage portfolio.

Brookfield’s stock has been up and down since the beginning of the year. It traded at $35.85 on Jan. 3, and then rose as high as $41.28 in March. It dipped again to $33.41 in June and rebounded to $40.33 in August. As of Sept. 27, 2022, it was trading at $32.20. Brookfield’s stock has a forward dividend of $1.28 with a yield of 3.63%.

Just four analysts made their recommendations in September — two strong buys, one buy, one hold — but 13 analysts followed it in August, with 10 rating it a buy, one rating it a strong buy and two recommending holding. The average 12-month price target is $41.88.

SolarEdge Technologies

SolarEdge Technologies, Inc. (SEDG) designs, manufactures and installs solar energy systems, consisting of inverters and power optimizers. The company monitors installations in 133 countries on five continents. Founded in 2006, SolarEdge began shipping solar photovoltaic systems in 2010 and has since shipped over 31.5 gigawatts of inverter systems.

SolarEdge is down slightly year to date. It was trading at $282.45 at the beginning of the year, and, on Sept. 27, 2022, it closed at $249.58. Twenty-seven analysts reported on SolarEdge in August, with six rating it a strong buy, 14 rating it a buy and five recommending that investors hold the stock. Two rated it an underperformer. The average 12-month price target is $357.50.

iShares Global Clean Energy ETF

If you don’t want to put all your eggs into one renewable energy basket, consider the iShares Clean Energy ETF (ICLN). This exchange-traded fund tracks the results of an index of global equities in the clean energy sector. It holds positions such as Enphase Energy, Inc., SolarEdge Technologies, Inc., First Solar, Inc., Consolidated Edison, Inc., Plug Power, Inc. and more.

The fund is down 7.10% year to date and has an expense ratio of 0.40%.

Takeaway

The future of energy is renewable, and these companies are at the forefront of the technology that will make this possible. This sector is one to watch as we move toward more sustainable methods of heating our homes and driving our cars.

FAQ

  • Is investing in renewable energy a good idea?
    • According to GreenPortfolio, renewable energy tends to perform better than fossil fuel stocks – returns of 192.3% for renewable energy stocks compared to 97.2% for fossil fuels.
  • What is the best green energy company?
    • This list is a good place to start, but you should also consider companies that are environmentally friendly in general, rather than only those that produce renewable energy. Some to consider include Adobe, Best Buy and Xylem.

Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.

Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.

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About the Author

Karen Doyle is a personal finance writer with over 20 years’ experience writing about investments, money management and financial planning. Her work has appeared on numerous news and finance websites including GOBankingRates, Yahoo! Finance, MSN, USA Today, CNBC, Equifax.com, and more.
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