Ever since the election, investors have been focused on identifying which sectors are going to benefit the most from a Joe Biden presidency. While there are plenty of options to choose from, the clean energy sector is probably the one that investors can bank on with the most confidence. Mr. Biden has been very open in communicating his plans to achieve net-zero emissions, economy-wide, by no later than 2050. One of his first orders of business is to make a $2 trillion accelerated investment in infrastructure, the auto industry, transit, housing, agriculture, and innovation to build a “clean energy economy”.
While clean energy stocks have already been on a strong run over the last few quarters, it’s hard to deny that many of these companies will receive a boost from Biden over the next few years. That’s why we’ve put together a list of 3 clean energy stocks that will likely benefit from the massive investment in clean energy on the way from the Biden administration.
Renewable Energy Group, Inc (NASDAQ:REGI)
The first name on our list is Renewable Energy Group, a company that is the nation’s largest biodiesel producer. If you aren’t familiar with biodiesel, it’s a renewable and biodegradable alternative fuel that is made from a mix of modified vegetable oils and diesel fuel. This company essentially takes used cooking oils and transforms them into high-quality and low-carbon fuel that is used in diesel engines. Renewable Energy’s Q3 earnings were solid, with revenues of $576 million and Adjusted EBITDA of $58 million and the company could see an even better Q4 as the economy rebounds.
While most investors are focused on electric vehicles, the concept of biodiesel is an attractive opportunity that should not be overlooked. Electric vehicles might be the new norm later on down the road, but for now, there are plenty of diesel-based vehicles in use that can switch to biodiesel to help with environmental conservation efforts. The company plans to expand its renewable diesel plant in Louisiana to 340 million gallons per year, which could be a growth catalyst for the company. The stock is up over 45% year-to-date, so look to add shares after consolidation or a major pullback if you are interested in the company for the long-term.
A big part of Biden’s plan is to reduce the number of carbon emissions from the U.S. electricity sector, which bodes well for a company like Enphase Energy. It’s a leading provider of energy management solutions such as semiconductor-based microinverter systems. These systems help homeowners use solar energy to power their homes, which is a big reason why it should be on investor’s radars going forward. Enphase is also involved in home energy storage solutions, a market with big potential in the alternative energy sector.
In Q3, Enphase saw its revenues increase by 42.2% sequentially, which is a great sign for investors since solar installations have taken a hit during the pandemic. The company also reported a record non-GAAP gross margin of 41% in Q3 driven by disciplined pricing and cost management. Enphase recently announced an expanded partnership with Solar Optimum to include battery storage, which could be a long-term growth driver for the company. Additionally, the recent news that the company’s Enphase Storage systems have expanded compatibility could also help to drive the stock price higher in the coming weeks.
This company designs, manufactures, installs, and operates fuel cell power solutions, which is a type of clean energy technology that could be in high demand throughout the Biden presidency. These fuel cell systems serve a variety of different customers including utilities, industrial, and large municipal power users. Hydrogen fuel cell power plants are definitely in the spotlight at this time and FuelCell Energy is likely to benefit from the $160 million in federal funding that was recently announced by the Department of Energy.
Last week, the company reported a 54% year-over-year increase in Q4 revenues but also reported a loss. The stock dipped after the report but received a boost after Biden announced a move to rejoin the Paris Climate Agreement and enacted several executive orders related to climate change. This type of reaction tells us that FuelCell should favor well under the Biden Administration going forward. Keep an eye on this one but be careful about adding at this time as the stock has rallied considerably over the past few months.
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