It used to be that alternative energy was an up-and-coming industry with all of the opportunities and challenges inherent in a fledgling sector. Now, though, alternative energy is booming, with a number of globally dominant companies paving a path forward in the energy sector that doesn't rely on fossil fuels. Companies like Vestas Wind Systems A/S and First Solar Inc. (FSLR) have emerged as leaders in the areas of wind and solar energy, and there are new products and subcategories of alternative energy emerging all the time. All of this combines to make alternative energy an exciting growth opportunity for investors.
January of 2019 was an exciting time for alternative energy stocks. Many companies reversed a significant slump which had depressed stock prices toward the end of 2018. At the same time, the development of new technologies offers promising potential for the alternative energy space. Microgrids, local energy grids which can operate individually or as part of a larger, more traditional energy grid, are continuing to develop around the world, with preliminary results showing that these systems can be significantly more efficient than traditional alternatives. Further, analysts have noted that solar and wind sources have reached grid parity with traditional electricity generating methods, meaning that they can be utilized for the same price. As these technologies continue to evolve, they will present an even stronger case in the face of traditional energy sources.
Here's a look at the top performing individual alternative energy stocks from January 2019. Companies were considered for inclusion on the list if they have market cap of at least $2 billion. The list here is presented in order of monthly performance based on the opening stock price as of January 2, 2019 and closing price as of January 31, 2019. The performance has been compared to the S&P Global Clean Energy Index average returns of 13.78% as a benchmark.
1. MKS Instruments, Inc. (MKSI)
- Market Cap: $4.44 billion
- Performance: 25.54%
2. BWX Technologies, Inc. (BWXT)
- Market Cap: $4.88 billion
- Performance: 23.19%
3. First Solar, Inc. (FSLR)
- Market Cap: $5.10 billion
- Performance: 21.44%
4. Cosan (CZZ)
- Market Cap: $2.78 billion
- Performance: 19.74%
5. Pattern Energy Group, Inc. (PEGI)
- Market Cap: $2.07 billion
- Performance: 15.91%
MKS Instruments is an Andover, Massachusetts-based manufacturer of parts related to nuclear fuel processing, uranium conversion and nuclear accelerators. This company focuses on developing sensors, valves and other related products and holds more than 600 patents.
MKS has had an exceptional start to 2019. At the end of January, the company reported Q4 results for the previous year. Total revenue for 2018 was $2.1 billion, an 8% increase year-over-year. Revenue for advanced markets and for semiconductors specifically also increased over the previous year. Also early on in the year, MKS announced the completion of the acquisition of a micro-machining company, Electro Scientific Industries.
Virginia-based BWX Technologies also touted stock price gains of more than 20% for the first month of the new year. Founded more than 150 years ago, BWX now focuses on the development, design, manufacturing and distribution of nuclear reactors and related components.
Like MKS, BWX may have benefited in January from the massive momentum of nuclear stocks in particular and energy stocks more broadly. This class of companies was among the most successful for the month when it comes to stock price increases. On one hand, these gains may have been fueled by an increase in oil prices, as the energy sector tends to move fairly closely with the price of crude. On the other hand, nuclear energy is increasingly seen as a viable alternative to fossil fuel sources, helping to push these stocks up in the new year.
First Solar is an Arizona-based solar technologies company focused on R&D. The company markets itself as having the "strongest balance sheet in the industry." Development emphasis tends to focus on increasing energy yield and grid stability as well as on decreasing costs.
First Solar offers strong value, and in the first month of the year it was able to generate substantial growth as well. Solar panel demand has increased in recent weeks, with expectations set high for new demand across 2019 and beyond. As a dominant player in the solar panel space, and in light of the fact that First Solar is excluded from tariffs on solar panels, this company is poised for continued success going forward.
Based in Brazil but with operations across South America and in the U.K., Cosan is a conglomerate with interests in the bioethanol space, among others. Through its Raízen Energia arm, the company generates 940 MW of sugarcane bioethanol, placing it among the most highly productive providers of bioenergy.
The election of President Bolsonaro has been widely viewed as a boon for companies capitalizing on the nation's vast natural resources. Aside from continued strong performance overall, Cosan likely also saw a boost from the shift in leadership that took place recently.
Pattern Energy Group
U.S.-based Pattern Energy has utility-scale projects in the U.S., Canada and Japan, as well as other enterprises in Mexico. The company owns roughly two dozen wind power facilities and has several more in the pipeline as well. Dedicated to renewable energy practices, the San Francisco-based operation sells electricity and renewable energy credits to utilities companies.
Prior to this year, Pattern Energy experienced a pullback in share price. With a strong performance in the first weeks of 2019, it seems that investor sentiment on the company has officially turned, even as wind power generally becomes an increasingly attractive option worldwide.
Many analysts believe that alternative energy sources will continue to play a larger and larger role in the development of electricity around the globe. The companies listed above are well-positioned to take advantage of the change of focus.