With concerns about climate change and the state of the environment continuing to draw headlines, there is no doubt that the markets are also paying attention to clean and renewable energy resources. As oil prices have risen from their recent lows, traditional energy companies will no doubt dominate the energy sector, but alternative energy is here to stay. The alternative energy companies on this list have the potential to make investors some money over the rest of this year.
The stock charts on each of these companies show positive developments that could create upward momentum in the final months of 2018. All figures are current as of Sept. 6, 2018. (See also: Why You Should Invest in Green Energy Right Now.)
Formerly known as NRG Yield, Inc., this company is not a pure alternative energy play, but it does own and operate renewable energy assets. The company was founded in 2012. The stock began forming an upward price channel in February 2017. Despite a downtick in the price at the end of November and into December, shares ended 2017 up nearly 19% for the year. While the stock saw sharp declines in February 2018, it has recovered dramatically since then, likely in a positive response to a transformation that is under way for the company. Former controlling stakeholder NRG Energy, Inc. (NRG) recently finalized the sale of its interest in the company to Global Infrastructure Partners. The ongoing transition has lowered the company's debt and could pave the way for growth in its renewable energy business.
This San Francisco-based company owns wind energy projects. It makes its living selling energy to local utility companies. Projects are in the United States, Canada and Chile. The stock price rose throughout the early part of 2017, but it began to see declines starting in September. While the shares struggled to post gains over the first half of 2018, at current levels, Pattern Energy Group offers an attractive dividend yield of 8.28%. The company has ambitious plans to boost its renewable energy assets via acquisitions, and if it meets those goals, shareholders could benefit from the resulting growth. (For more, see: Clean or Green Technology Investing.)
- Average Volume: 1,215,042
- Market Cap: $1.981 billion
- P/E Ratio (TTM): 14.57
- EPS (TTM): $1.38
- Dividend and Yield: $1.69 (8.28%)
Atlantica owns renewable energy assets, generating power through solar and wind technology. Revenues have shown solid gains for four straight years, and operating income has grown dramatically during that period. In volatile 2017 price action, the stock consistently found support at around $19, and it broke out into October. After testing the $25 level in mid-November, shares ticked downward into 2018, seeing more volatility into the current level of $20.51. Algonquin Power & Utilities Corp. (AQN) announced in March 2018 that it had acquired a 25% stake in Atlantica Yield, which could be a growth driver. Furthermore, Atlantica's 6.59% dividend yield could be appealing to income investors (See also: Atlantica Yield Posts Narrower-than-Expected Q1 Loss.)
- Average Volume: 227,328
- Market Cap: $2.055 billion
- P/E Ratio (TTM): N/A
- EPS (TTM): -$0.57
- Dividend and Yield: $1.36 (6.59%)
Covanta Holding provides waste services to cities in the United States and Canada. Covanta's energy-from-waste plants convert roughly 20 million tons of waste per year into clean energy for more than one million homes. The company also recycles over 500,000 tons of metal annually that is a byproduct of the waste-conversion process. Daily volatility for this stock can be high, so this is one to buy only for those who are willing to ride out some dramatic moves in the stock price. Similar to the other stocks on this list, Covanta may be enticing to those investors seeking dividend yield.
- Average Volume: 596,196
- Market Cap: $2.307 billion
- P/E Ratio (TTM): 7.44
- EPS (TTM): $2.37
- Dividend and Yield: $1.00 (5.70%)
The Bottom Line
Alternative energy is mainstream enough now that investors can find companies that are extremely viable. All the companies on our list have a track record of securing contracts for their products and services. Nevertheless, the companies are relatively small compared with the giants of the energy sector, so they are subject to being nudged out of the competition. Owning alternative energy stocks means staying abreast of news in the field. (For more on alternative energy, check out: Top 5 Alternative Energy ETFs.)