Renewable energy stocks in focus as IEA projects global capacity more than 60% above 2020 levels by 2026
The International Energy Agency projects global renewable energy capacity will rise more than 60% from 2020 levels by 2026, with a separate IEA outlook calling for 95% of world energy generation to turn renewable on the…
Key takeaways
- The IEA projects global renewable energy capacity will rise more than 60% above 2020 levels by 2026, with a separate IEA outlook calling for 95% of world energy generation to be renewable on the same timeline.
- Renewable energy stocks span eight production segments: solar, wind, biofuel, hydroelectricity, biomass, geothermal, tidal, and cogeneration.
- Companies in focus include Brookfield Renewable, Sunrun, Clearway Energy, Enphase Energy, SolarEdge Technologies, and Atlantica Online, plus First Solar (NASDAQ: FSLR) and Tesla (NASDAQ: TSLA).
- Three metrics guide stock selection in the space: earnings per share, the price-to-earnings ratio, and average daily trading volume.
- Renewable names trade at a higher volatility premium than established oil and gas names like ExxonMobil (NYSE: XOM) and BP (NYSE: BP), reflecting the cost of developing newer generation technology.
The International Energy Agency projects global renewable energy capacity will rise more than 60% from 2020 levels by 2026, with a separate IEA outlook calling for 95% of world energy generation to turn renewable on the same timeline. Those numbers put a cluster of names in focus: Brookfield Renewable, Sunrun, Clearway Energy, Enphase Energy, SolarEdge Technologies, and Atlantica Online on the pure-play side, plus First Solar (NASDAQ: FSLR) and Tesla (NASDAQ: TSLA) on the technology end. The next confirmable milestone is whether that capacity buildout converts to earnings-per-share expansion at the company level.
The sector map
Renewable energy stocks span eight production segments: solar, wind, biofuel, hydroelectricity, biomass, geothermal, tidal, and cogeneration. The commercial history runs longer than the recent investor attention implies. Coal powered steam boats and trains in the early 1800s. The first hydropower plant produced electricity in 1882. The first solar panel followed in the mid-1900s.
On the nonrenewable side, ExxonMobil (NYSE: XOM) and BP (NYSE: BP) carry the lower-volatility profile that comes with established industrial processes. Renewable names trade at a higher volatility premium, which reflects the cost of developing newer generation technology. The two categories are not mutually exclusive in a portfolio.
What the print shows
Three metrics guide stock selection in this space. Earnings per share, calculated by dividing net income by total shares outstanding, flags names running at a loss. The price-to-earnings ratio indicates whether a stock is trading at a premium or discount to earnings. Average daily trading volume sets the liquidity floor, and thin volume in a renewable name widens spreads at entry and exit.
Benzinga's current watchlist spans Brookfield Renewable, Sunrun, Clearway Energy, Enphase Energy, Atlantica Online, SolarEdge Technologies, and Southern Copper Corporation.
What to watch
The setup for renewable energy stocks rests on long-duration capacity additions, which push positioning decisions toward a longer horizon than a single earnings cycle. The sector does not trade with the stability of established oil and gas names, so tracking earnings-per-share trends and balance-sheet efficiency matters alongside the capacity pipeline itself. The IEA's 60%-above-2020-levels target by 2026 is the aggregate marker against which individual company results will be measured.
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Filed via benzinga.com