Stock Market Crash Alert: 3 Must-Buy Renewable Energy Stocks When Prices Plunge

Stocks to buy

Investing in renewable energy stocks is a surefire way to gain exposure to the global shift away from fossil fuels. Industry leaders in this sector are currently working hard to eliminate carbon emissions and utilize natural resources to create usable power. As sentiment and government regulation have shifted in the past years, sources of renewable energy including solar, wind and hydroelectric infrastructure have risen as lucrative investment opportunities.

So why should you be bullish if renewable energy stock prices plunge in the stock market? Currently, any renewable energy companies are being impacted by high inflation and interest rates. Risk to their infrastructure and capital funding makes them the first to sell off the hardest when markets get volatile. Nonetheless, as pullbacks inevitably create pockets to buy companies at discounted prices, investors better have these three must-buy renewable energy stocks at the top of their list. 

Enphase Energy (ENPH)

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Enphase Energy (NASDAQ:ENPH) is an American solar technology company based in Fremont, CA. Wall Street analysts have remained relatively bullish on the stock despite being down by nearly 15% so far in 2024. They have a consensus average price target of $129.96 and a street-high target of $255.00 which is more than double ENPH’s current price. 

This solar company produces state-of-the-art micro-inverters that take your home’s DC power from solar panels and convert it to AC power. Users can use Enphase’s software platform to control power usage and send diagnostic information back to an Enphase solar professional. As Enphase begins launching new products into Europe, management expects to see continued double-digit revenue growth and customer diversification.

Enphase, and most solar companies, are impacted by cyclical demand. In times of economic hardship, fewer customers are likely to sign up for their plans. Although Enphase has a 10-year revenue CAGR of 22%, it has seen declining revenue for the past three quarters. On the bright side, shares currently trade at 8.6x sales and about 40x forward earnings, some of its cheapest multiples over the past five years. For investors looking to get into the renewable energy space before the economy and consumer sentiment strengthen, Enphase is a clear choice.

NextEra Energy (NEE)

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NextEra Energy (NYSE:NEE) is an American energy company that ranks eighth in the world in terms of market cap in the energy sector. Wall Street analysts have an average price target of $72.75 with a one-year range of $44.00 to $102.80. The high end of this range indicates a more than 30% upside from NextEra’s current price. 

NextEra is one of the largest producers of solar and wind energy which it sells mostly to corporate customers through power purchase agreements (PPA). Not only is NextEra Energy a pioneer in renewable energy creation, but it also treats its shareholders well. Shareholders have earned more than 2,600% in returns since its IPO and have benefited from a dividend yield of 3.12%. In fact, NEE is a certified Dividend Aristocrat and has raised its payout for more than 25 consecutive years. 

Over the past ten years, NextEra has seen witnessed its annual revenue growth at a CAGR of 6.0%. Shares are currently trading at 4.9x sales and 19.4x forward earnings which is slightly higher than the industry average. Still, NextEra is a clear leader in American renewable energy and has a long track record of market-beating shareholder returns. 

Clearway Energy (CWEN)

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Clearway Energy (NYSE:CWEN) is an American renewable energy company that was founded in 2012. Similar to Enphase, Clearway’s stock has fallen by nearly 15% in 2024 which has underperformed the broader market. Despite this, analysts have remained bullish on CWEN with an average price target of $32.33 and a Wall Street high target of $41.61 which indicates about an 80% upside from today’s price. 

This company specializes in solar, wind and energy storage, with nearly 6,000 MW of installed infrastructure. Unlike other renewable energy companies, Clearway also has a sizable investment of 2,500 MW of natural gas facilities. This stock also pays out a generous 6.97% dividend yield, with the most recent distribution totalling about $0.40 per share. 

Looking at its financials, CWEN currently trades at relatively cheap multiples. Shares are priced at about 2.0x sales and 29.6x forward earnings with a 10-year revenue CAGR of 13%. Just as with Enphase, revenue growth should resume as the economy strengthens. Until then, the stock price’s deflated price could prove to be a nice entry point into the coming years. 

On the date of publication, Ian Hartana and Vayun Chugh did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chandler Capital is the work of Ian Hartana and Vayun Chugh.

Ian Hartana and Vayun Chugh are both self-taught investors whose work has been featured in Seeking Alpha. Their research primarily revolves around GARP stocks with a long-term investment perspective encompassing diverse sectors such as technology, energy, and healthcare.

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