Stock Analysis & Ideas

2 Wind Energy Stocks to Benefit from the Climate Bill

Story Highlights

The climate bill that President Joe Biden signed on August 16 has come as a huge positive for the renewable energy sector. Here are two wind energy stocks that could stand to benefit from the new law.

California-based NextEra Energy, Inc. (NYSE: NEE) and Massachusetts-based General Electric Company (NYSE: GE) are the two wind energy stocks that can be considered by investors, as they are likely to benefit from the climate bill that President Joe Biden signed on August 16.

As per the bill, the federal government will invest $375 billion to fight the impact of climate change. It will offer tax incentives and rebates to companies and people who invest in renewable energy. Consequently, the move is likely to lead to a significant rise in demand for wind turbines and components.

Both NEE and GE score a “Perfect 10” on TipRanks, implying that they have the potential to outperform the market. Now, let’s find out how these large-cap companies performed in the current earnings season.

NextEra Energy (NEE)

Headquartered in Florida, NextEra Energy has a power generating capacity of 58GW. Its subsidiary NextEra Energy Resources (NEER) generates renewable energy from wind and sun. NextEra Energy also owns Florida Power & Light, NextEra Energy Services, Gulf Power Company, and NextEra Energy Partners.

Last month, the utility company reported solid results for the second quarter of 2022. Adjusted earnings came in at 81 cents per share, compared to 71 cents in the previous year and the Street’s estimate of 76 cents per share.

Operating revenues totaled $5.18 billion, significantly higher than $3.92 billion in the second quarter of last year.

The President and CEO of NextEra Energy, John Ketchum, said, “Based upon the clear visibility into meaningful organic growth prospects across all of our businesses, we will be disappointed if we are not able to deliver financial results at or near the top end of our recently increased adjusted earnings per share expectations ranges in 2022, 2023, 2024 and 2025, while at the same time maintaining our strong balance sheet and credit ratings.”

The energy provider expects adjusted EPS to range from $2.80 to $2.90 in 2022, $2.98 to $3.13 in 2023, $3.23 to $3.43 in 2024, and $3.45 to $3.70 in 2025.

On TipRanks, the stock has a Moderate Buy consensus rating based on eight Buys and four Holds. NEE’s average stock forecast of $91.91 implies upside potential of almost 2%.

Further, what could intrigue the interest of a prospective investor is that financial bloggers, hedge funds, and retail investors tracked by TipRanks are Bullish on the stock.

General Electric (GE)

Based out of Boston, General Electric provides technologies and solutions for the aviation, healthcare, renewable energy, and power industries. It also offers data analytics, materials science and additive manufacturing solutions.

The conglomerate reported excellent results for the second quarter of 2022 on the back of the strong performance of the aerospace segment. Adjusted earnings stood at 78 cents per share, higher than the year-ago figure of 22 cents and the Street’s expectation of 37 cents per share.

Total revenues increased 2% year-over-year to $18.6 billion. Revenues of the GE Aerospace segment jumped 27% to $6.1 million and those of GE Healthcare rose 1% to $4.5 million. However, revenues of the Power segment slipped 2% to $4.2 million, and Renewable Energy revenues declined 23% to $3.1 million.

The Chairman and CEO of GE, H. Lawrence Culp, Jr., said, “We are improving delivery, price, and cost performance via lean and decentralization. Notwithstanding this progress, much is still uncertain about the external pressures companies are facing at this moment. We continue to trend toward the low end of our 2022 outlook on all metrics except cash, which is lower due to timing of working capital and Renewable Energy-related orders.”

Based on nine Buys and five Holds, the stock has a Moderate Buy consensus rating on TipRanks. GE’s average price target of $86.31 suggests upside potential of 8%.

Just like NextEra Energy, financial bloggers, hedge funds, and retail investors tracked by TipRanks are Bullish on GE stock.

Concluding Thoughts

Within the renewable energy sector, wind power is one of the fastest growing segments, primarily due to rising demand and falling costs. Government incentivizing companies involved in generating wind energy or manufacturing wind turbines and components has also benefitted the sector. Now, the new climate law is expected to increase the focus on the sector, which will eventually lead to increased use of renewable resources to generate power.

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