The election continues to be a hot topic for news viewers and investors. And the Electoral College could be more newsworthy than it’s been in a while when it meets in January. But there are renewable energy stocks that don’t care about what happens politically.
Three Motley Fool contributors found renewable energy stocks that are set up for success in 2021. And the leaders are JinkoSolar Holding (NYSE:JKS), Brookfield Renewable Partners (NYSE:BEP), and Bloom Energy (NYSE:BE).
The manufacturing leader
Travis Hoium (JinkoSolar): One of the most under-the-radar solar energy stocks right now is JinkoSolar. The company may not be a household name, but it is one of the biggest and most advanced solar manufacturers in the world. And with a manufacturing base in Asia and customers all over the world, JinkoSolar doesn’t care who is in the White House in 2021 as long as the solar industry continues growing.
You can see in the chart below that even the last four years have been good for JinkoSolar. Revenue has nearly doubled, margins have improved since mid-2017, and the company is solidly profitable. U.S. tariffs that were a hiccup in 2017 are well in the rearview mirror now.
The solar manufacturing business has gone through a number of ups and downs over the last two decades, but now we’re reaching the point where scale and cost are the differentiators that will keep competitors at bay. As one of the biggest manufacturers in the world, JinkoSolar is built to succeed and with just a $2.9 billion market cap, or 22 P/E ratio, it’s a good value for investors as well.
On track for double-digit returns
Howard Smith (Brookfield Renewable Partners): The trend toward more renewable energy generation is going to continue regardless of the election results, and Brookfield Renewable Partners just reaffirmed that it is going to continue to play a big part, with plans to give shareholders and unit-holders above-average returns.
Brookfield Renewable operates or is developing 38,000 megawatts of renewable energy assets globally. Its largest recent investment brought Terraform Power’s portfolio of North American and European solar and wind assets into its fold after an all-stock acquisition. Brookfield says the transaction will be immediately cash accretive.
During the recently reported third quarter, the company said its funds from operations (FFO) per unit — a more appropriate measure of operating performance than net income — rose 12% compared to the year-ago period.
Brookfield also has an excellent balance sheet, with $3.3 billion in liquidity and no material debt maturing over the next five years. This is an advantage that is used along with the scale of the business. As an example, the company recently closed on a major solar development project in Brazil. The project has 75% of its generation contracted under long-term agreements. Brookfield said it is able to leverage its local expertise to contract the remainder and will be able to lower equipment and operating costs using its global scale.
In addition to its solid balance sheet, Brookfield takes the approach of acquiring assets, increasing their value through its expertise and operations initiatives, and recycling them to generate income for new attractive investments.
Investors can expect this approach to continue providing above-average returns. Management says it plans to continue to grow the business and said it still expects “to deliver on our target of 12-15% long-term returns to equity holders.” The results of the election weren’t going to change that plan one way or another.
Bigger than any one country
Jason Hall (Bloom Energy): Bloom Energy is in the middle of a major transformation that could prove pivotal in the future of renewable energy. For years, hydrogen’s proponents have crowed about its potential, while the economic realities of producing hydrogen have kept it from gaining any sort of mass adoption.
However, the combination of the falling cost of renewable electricity production from wind and solar, paired with Bloom’s solid oxide fuel cells to electrolyze hydrogen from water, are set to move hydrogen from the few niches it solves and into the mainstream. The bottom line is, using renewables-produced hydrogen to store energy has immense potential. Hydrogen has enormous energy density, making it an ideal fuel for heavy transportation on land and sea, as well as a great way to store excess energy from renewables that can be used when the wind isn’t blowing or the sun isn’t shining. The company has signed some pretty big deals over the past year to further the development of its technology for large-scale applications, including fuel cells to power container ships, and serve the utility-scale electricity industry to generate hydrogen and convert that hydrogen to electricity.
And while there’s still a ways to go for those development deals to play out, the economic factors get a little better with every new generation of solar panels and wind turbines, driving down the cost to generate the electricity to power the electrolyzer. The global focus on climate change and energy security is providing enormous tailwinds for Bloom. With shares down almost 28% over the past month, investors willing to ride out a lot of volatility over the next few years might want to consider making a risk-reward investment on Bloom’s prospects to finally solve the hydrogen puzzle for good.
Renewable energy has the tailwind
You’ll notice that the theme here is that tailwinds are firmly behind renewable energy stocks and with global opportunities, the politics of one country isn’t going to change the momentum. JinkoSolar, Brookfield Renewable Energy, and Bloom Energy have a bright future no matter the political landscape.