With oil prices on the rise, it’s logical for many investors to be moving into, or adding to their positions, in oil and gas stocks. But, there’s still room to invest in renewable energy stocks.
The Biden administration is making it clear that it has no intention of slowing down its approach to accelerating our nation’s clean energy transition. And that means no matter where you stand on climate science, it’s a good idea to consider renewable energy stocks in your portfolio.
Sentiment is Buidling for this Form of Clean Energy
Hydrogen may finally be having its moment. In the Inflation Reduction Act of 2022, the Biden administration earmarked $9.5 billion for green hydrogen projects. Green hydrogen is different from other forms of hydrogen because it only uses water to produce electricity. And Plug Power, inc. (NASDAQ: PLUG) is one of only a handful of pure play green hydrogen stocks for investors to own.
Plug Power is committed to building an green hydrogen ecosystem that accounts for every stage of operations. The company has contracts for mobility applications with Amazon.com, Inc. (NASDAQ: AMZN). It also is proving hydrogen’s use in providing stationary power in applications like data centers.
In fact, in 2022, Plug Power partnered with Microsoft Corporation (NASDAQ: MSFT) on a hydrogen fuel cell power plant that will supply backup power for Microsoft’s data centers.
Plug Power is not yet profitable, and there is a commited base of short sellers as evident in the stock’s 23% short interest. But if you believe in the long-term story, there is an opportunity for patient investors.
You Won’t be Overpaying For this Lithium Company
2023 was supposed to be a monster year for lithium stocks. Lithium is a key component to the lithium-ion batteries that are the de facto standard for electric vehicles (EVs). But the industry is beset by supply-demand imbalances. Nevertheless, Livent Corporation (NYSE: LTHM) is up more than 17% in 2023. And the outlook for the pure play lithium producer looks bright.
According to Forbes Business Insights, revenues from lithium mining are forecast to grow at a compound annual growth rate (CAGR) of 6% through 2028. And Livent will benefit as it can extract lithium via Direct Lithium Production (DLP) or via Direct Lithium Extraction (DLE). Both methods are benefiting from technological advancements that will increase efficiency. Livent also benefits from access to low-cost production through its assets in Argentina.
And after a mixed earnings report in August, LTHM stock may be creating an attractive entry point for investors. The stock dipped after the company missed just over 6% on revenue. However, the stock is off its lows as investors may be paying more attention to the 10% beat on earnings. And with a forward P/E ratio of just over 10x, the stock offers an attractive valuation.
Buy the Demand for Solar With This Company
First Solar, Inc. (NASDAQ: FSLR) is another beneficiary of the Inflation Reduction Act. One week after beating the top and bottom lines in its second quarter earnings report, First Solar announced a potentally $1.1 billion investment in what would be the company’s fifth factory in the United States.
This investment is in addition to the $2.8 billion that the company has invested to ramp up production at its other facilities. Yet, the company still is working through a backlog of orders.
Investors may be concerned about taking a new position in a stock that’s up 79% in the last 12 months. However, First Solar continues to grow both revenue and earnings on a year-over-year basis. And while the company’s forward P/E ratio of 27x may raise some concerns, this is a company with a debt-to-equity ratio of 0.7 which is significantly below the average of its industry, sector, and the S&P 500.
