I can’t blame anyone for wanting to invest in renewable energy stocks. There are only so many fossil fuels that mankind can burn, and the Earth is sending out serious signals about the planet’s health and global warming.
But you also can’t jump headlong into solar, wind, or other renewable energy names without doing your homework. Because there are plenty of bad choices sprinkled in among the good.
Renewable energy stocks represent companies involved that use solar, wind, hydroelectric and geothermal energy to generate electricity. Investing in renewable energy stocks is a way to support environmentally friendly initiatives while getting in on the ground floor of what could be a disruptive technology.
But it’s not for the faint of heart. Challenges in scaling the technology make investing in these companies challenging, because many renewable energy stocks are still losing money. There are always questions about if the government will continue to subsidize renewable energy companies, because a change of administration could mean an abrupt shift in national policy.
We’re using the Portfolio Grader today to look at some renewable energy stocks to avoid based on metrics like earnings performance, revenue and profit growth, momentum and analyst sentiment. Unfortunately for the names on this list, these renewable energy stocks are getting some pretty low scores.
NextEra Energy Partners (NEP)
NextEra Energy Partners (NYSE:NEP) is a limited partnership that was formed by NextEra Energy (NYSE:NEE). NextEra Energy Partners has wind and solar interests in the U.S. and natural gas infrastructure assets in Pennsylvania.
The company sees a strong future in renewable energy, with the current market opportunity of 175 gigawatts of U.S. renewable and storage demand growing to 250 gigawatts by 2030.
NextEra brought in #308 million in renewable energy sales in the third quarter, up from $236 million a year ago. But profits are down significantly, dropping from $79 million and 93 cents per share a year ago to $53 million and 57 cents per share in the third quarter of 2023.
NEP stock is down 66% in the last year, and it gets a “D” rating in the Portfolio Grader.
Clearway Energy (CWEN)
Clearway Energy (NYSE:CWEN) is a New Jersey-based developer of clean energy projects. The company operates clean energy platforms across 34 states.
The company does everything from delivering clean energy to governments and residential and commercial customers to developing the infrastructure and providing financing.
Income has been down, however, dropping to $15 million in the third quarter from $62 million a year ago. Regardless, Clearway seeks to invest heavily to grow the business, including a solar project in Texas and a wind project in Maryland.
CWEN stock is down 25% in the last year and gets an “F” rating in the Portfolio Grader.
Spruce Power Holding (SPRU)
Spruce Power Holding (NYSE:SPRU) is a Colorado-based solar energy provider. It owns residential solar systems on over 75,000 properties and provides a subscription-based service that allows homeowners to maintain rooftop solar and battery storage.
Additionally, the company has had to make modifications to its stock in order to remain listed on the New York Stock Exchange. Spruce Power instituted a 1-for-8 reverse stock split in October simply to comply with the index’s listing requirements.
The company got brought in net revenue of $23.3 million in the third quarter, thanks to an aggressive expansion, but ended up losing $19.3 million for the quarter, or $1.2 million on an adjusted basis. That included an $11 million payment as part of a settlement with the Securities and Exchange Commission related to the merger of XL Fleet, Spruce Power’s predecessor company.
I’m never a fan of any company that relies on smoke and mirrors to keep compliance with its listing. SPRU stock is down 66% in the last year and gets a “D” rating in the Portfolio Grader.
Sunnova Energy (NOVA)
Solar energy company Sunnova Energy (NYSE:NOVA) works with residential and commercial customers, allowing customers to gather and store their own power through its solar and battery charging solutions.
With coverage in 48 U.S. states, Sunnova also provides options for homeowners to use solar power to charge their electric vehicles and offers standby generators powered by natural gas or propane for emergencies. In all, the company has nearly 390,000 customers.
Revenue of $198.3 million in the third quarter improved from $149.3 million a year ago. But the company also expanded its losses, posting a loss of $56.5 million versus a loss of $32.3 million in the same quarter of 2022. Sunnova attributed the higher losses to greater interest expenses.
NOVA stock has been up and down in the last year but currently is off 49% from a year ago. It gets a “D” rating in the Portfolio Grader.
The AES Corporation (AES)
The ACS Corporation (NYSE:AES) has major power subsidiaries in Ohio and Indiana, but also has global power interests. The company operates in Argentina, Brazil, Chile, the U.K., Bulgaria, Kazakhstan, Jordan, the Netherlands, Vietnam and the Philippines.
The company completed 3.5 gigawatts of renewable projects in 2023, nearly doubling its renewable power capacity. It has a varied approach, with interests in wind, solar, and energy storage projects.
But those projects haven’t helped the bottom line, at least not yet. Net income in the third quarter was $291 million, down from $466 million in the previous year. And earnings of 32 cents per share was down 27 cents per share from the previous year.
AES stock is down 37% in the last year and gets a “D” rating in the Portfolio Grader.
Atlus Power (AMPS)
That brings us to Atlus Power (NYSE:AMPS), which develops, owns and operates on-site commercial solar systems for businesses.
The Connecticut-based company, which went public in 2021, recently acquired Unico Solar Investors, which has operations in Denver and Seattle and solar arrays in North Carolina and South Carolina from Project Hyperion.
The company’s growth shows up in its revenue report, which, at $45.1 million in the third quarter, was up 48% from a year ago. The company also turned a profit of $5.3 million, or 3 cents per share.
However, there are concerns about profitability margins. Despite its increase in revenue, the net margin was only 12%.
AMPS stock is off to a bad start in 2024, down more than 20% since Jan. 1. It gets a “D” rating in the Portfolio Grader.
Eco Wave Power (WAVE)
Eco Wave Power (NASDAQ:WAVE) is a Swedish company working to create clean energy from the sea. The company converts energy from ocean and sea waves to generate electricity.
It’s a fascinating idea. Currently, Eco Wave has power projects in Israel and Gibraltar, with the latter array being the world’s only grid-connected wave energy platform.
This is a company that’s just getting off the ground floor. Revenue in the third quarter was $49.2 million, up from just $285,000 a year ago. Net income of $7.2 million meant a profit of 7 cents per share.
To say this company is a volatile risk is an understatement. Eco Wave only has a market cap of $7 million and trades at less than $1.50 per share. The stock is down 65% in the last year.
WAVE stock gets a “D” rating in the Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.