3 Alternative Energy Stocks to Buy Amid Hydrogen Investment Lag

Alternative Energy Industry Report

Introduction

The alternative energy industry encompasses companies involved in the generation and distribution of alternative energy sources such as wind, natural gas, biofuel, hydro, and geothermal. It also includes companies engaged in the development, design, and installation of renewable energy projects. Additionally, some companies in the industry offer fuel cell energy solutions. The industry has seen significant investment, with over $150 billion in capital investment announced for clean energy projects and manufacturing facilities since August 2022.

Trends Shaping the Future of the Alternative Energy Industry

Wind Energy – A Key Growth Catalyst

Wind energy has been experiencing notable growth in the United States. In the first quarter of 2023, wind announcements increased by 61% compared to the same period in 2022. Ten U.S. states have set offshore wind targets totaling more than 81,000 MW. The U.S. wind market is projected to increase its share of the generation mix from 11% in 2022 to 12% this year, presenting a significant opportunity for the industry’s expansion.

Persistent Lag in H2 Investment

While Asia and Europe invest approximately $2 billion per year in hydrogen as an energy carrier, the United States lags behind in government funding for hydrogen adoption. However, the U.S. Department of Energy announced its intent to issue $750 million in funding to reduce the cost of clean-hydrogen technologies, although this amount is still lower than investments made by other regions.

EV Market Boom to Boost Clean Energy

The electric vehicle market is experiencing rapid growth, with a projected CAGR of 25.4% from 2021 to 2028. Favorable government policies, declining battery prices, and increased environmental awareness are driving the switch from gasoline-powered vehicles to EVs. The U.S. EV market is expected to reach $137.43 billion in 2028. This growth presents opportunities for clean energy stocks, particularly those offering electric vehicle charging networks.

Zacks Industry Rank Reflects Grim Outlook

The Zacks Alternative Energy industry is ranked #168 out of more than 250 industries, placing it in the bottom 33%. The industry’s earnings outlook is negative, with analysts losing confidence in its growth potential. Earnings estimates for the current fiscal year have decreased by 18.1% since April 30.

Industry Performance and Valuation

Industry Lags S&P 500 & Sector

The Alternative Energy Industry has underperformed the Zacks S&P 500 composite and the Oils-Energy Sector over the past year. While the industry has collectively lost 12.7%, the sector has grown by 6.8%, and the S&P 500 composite has gained 12.4%.

Current Valuation

The industry’s trailing 12-month EV/EBITDA ratio, used for valuing alternative energy stocks, is 7.29, compared to the S&P 500’s ratio of 14 and the sector’s ratio of 3.01. Over the past five years, the industry has traded between a high of 9.35X and a low of 6.91X, with a median of 7.44X.

Alternative Energy Stocks to Consider

Excelerate Energy (EE)

Excelerate Energy is a provider of floating liquefied natural gas terminals. The company reported revenues of $211.1 million in the first quarter of 2023, with earnings per share of 26 cents. EE has a Zacks Rank #1 (Strong Buy).

TC Energy (TRP)

TC Energy is an energy infrastructure provider focused on natural gas transmission. The company posted second-quarter 2023 earnings per share of 24 cents. TRP has a Zacks Rank #2 (Buy).

Enlight Renewable Energy (ENLT)

Enlight Renewable Energy develops, finances, constructs, owns, and operates utility-scale renewable energy projects. The company recently signed a power purchase agreement for an additional 394 megawatts of clean energy. ENLT has a Zacks Rank #2.

For more information and additional stock recommendations, download the full report from Zacks Investment Research.

SDGs, Targets, and Indicators

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 7: Affordable and Clean Energy
• SDG 9: Industry, Innovation, and Infrastructure
• SDG 11: Sustainable Cities and Communities
• SDG 13: Climate Action

2. What specific targets under those SDGs can be identified based on the article’s content?

• SDG 7.2: Increase substantially the share of renewable energy in the global energy mix.
• SDG 9.4: Upgrade infrastructure and retrofit industries to make them sustainable.
• SDG 11.6: Reduce the adverse per capita environmental impact of cities.
• SDG 13.2: Integrate climate change measures into national policies, strategies, and planning.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Share of wind energy in the U.S. generation mix (indicator for SDG 7.2)
• Government funding for hydrogen adoption in electricity generation (indicator for SDG 9.4)
• Electric vehicle market size and growth rate (indicator for SDG 11.6)
• Investment in hydrogen as an energy carrier in Asia and Europe compared to the U.S. (indicator for SDG 9.4)

Table: SDGs, Targets, and Indicators

Behold! This splendid article springs forth from the wellspring of knowledge, shaped by a wondrous proprietary AI technology that delved into a vast ocean of data, illuminating the path towards the Sustainable Development Goals. Remember that all rights are reserved by SDG Investors LLC, empowering us to champion progress together.

Source: finance.yahoo.com

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