Renewable energy stocks had a rough year in 2023. The iShares Global Clean Energy ETF (NASDAQ:ICLN), which holds some 135 different clean energy public companies, fell more than 20% in 2023. Similarly, the Global X Solar ETF (NASDAQ:RAYS), which holds about 54 different solar names, plummeted 35.1%. Renewable energy companies had not convinced equities traders and investors that they were worth investing in last year, especially as U.S. oil and gas prices continued to hit new lows.
Nonetheless, we have come upon a new year, and interest rate cuts are likely so 2024 could be a breakout year for a number of clean energy stocks. Below are three that investors should consider for the oncoming Green Revolution.
First Solar (FSLR)
Despite investor sentiment souring on clean energy stocks in 2023, solar panel manufacturer First Solar (NASDAQ:FSLR) was able to consecutively increase earnings while growing revenue by double-digit percentage points. First Solar also made gains on the manufacturing front with an announcement of a new $1.1 billion manufacturing site Louisiana, U.S. and a signed 15-year PPA that will guarantee power to a new manufacturing facility in Tamil Nadu, India.
Thus, First Solar has generated $3.2 billion in revenue on an LTM basis and, perhaps most importantly, the company is profitable with a 15% net margin over the last 12 months. Shares in First Solar returned just over 15% in 2023 and maintained volatility throughout that year. The stock currently trades at 14.3x forward earnings, which could be a good valuation to lock in as interest rates are projected to decrease in the latter half of 2024. First Solar is a manufacturer at firs. Therefore, the company partially relies on access to debt capital to get manufacturing facilities up and running.
Lower interest rates and government support from the Inflation Reduction Act of August 2022 could help First Solar expand its business footprint in the long run.
Plug Power (PLUG)
Plug Power (NASDAQ:PLUG) is the largest supplier of liquid hydrogen and the company produces hydrogen fuel cells for mobility applications. Many of Plug Power’s hydrogen fuel cells service supply chain and logistics industries. Companies within these sectors may want to decrease their carbon footprint and some go about this by deploying hydrogen-powered forklifts, trucks, buses and drones. Plug Power’s fuel cells are key to this. The hydrogen fuel cell developer has successfully formed several strategic partnerships with major players in the mobility and logistics sector. This includes Amazon (NASDAQ:AMZN), Walmart (NYSE:WMT) and Airbus (OTCMKTS:EADSY).
Plug Power’s shares dropped 63.6% by the end of 2023, and the selling off pressure the ensued in the new year has caused the company’s valuation to trade at just 1.5x forward sales. In a recent interview, Plug Power’s CEO said he expected hydrogen tax rules, currently being proposed by the Biden Administration, to loosen before their implementation. If correct, this could help save the company millions in the long run. These attractive future prospects and the company’s currently cheap trading multiple should pique investors interest here.
Tesla (NASDAQ:TSLA) is one of the dominant players in the global electric vehicle market. The automaker has been also playing an influential role in creating the basic infrastructure for electric vehicle charging, ultimately tackling the EV market from different angles.
Throughout 2023, Tesla defied skeptics broke records. In particular, Tesla’s quarterly earnings have come in above analysts’ estimates, and the price-cut strategy the automaker began to pursue in the beginning year has increased quarterly deliveries while also placing pressure on gross margins. Delivery numbers for Q4 2023 were released a week ago and continued to be solid. The automaker delivered 483,507 vehicles during the last three months of last year, beating Wall Street estimates. Despite growing competition from China’s BYD and fears that EV demand in Tesla’s geographic end-markets may be waning, Tesla remains a good for those wanting to allocate to renewable energy companies.
Tesla will likely remain not just relevant but also a key player in the space.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.