Elevated fuel prices and supply woes triggered by the Russia-Ukraine war have compelled several countries to lay greater emphasis on renewable energy sources. According to the International Energy Agency or IEA, the annual renewable capacity additions increased 6% to 295 gigawatts (GW) in 2021 despite supply chain challenges, construction delays, and higher input prices. IEA estimates renewable capacity to further increase by over 8% to 320 GW in 2022.
Given the favorable long-term trends for renewable and green energy stocks, we used the TipRanks Stock Comparison tool to compare SolarEdge, Plug Power, and Brookfield Renewable Partners to pick the stock with higher upside potential.
SolarEdge Technologies (NASDAQ: SEDG)
SolarEdge is an Israel-based company that provides inverter solutions and power optimizers for the photovoltaic industry.
Shares of SolarEdge and other solar stocks rallied earlier this month when U.S. President Joe Biden announced a 24-month tariff exemption for solar panel products imported from Cambodia, Malaysia, Thailand and Vietnam, and invoked the Defense Production Act to encourage domestic production. The waiver is expected to drive utility-scale solar development projects, thus benefiting solar inverter suppliers like SolarEdge.
Recently, Oppenheimer analyst Colin Rusch upgraded SolarEdge to a Buy from Hold with a price target of $334 as he finds it displaying a highly defensible technology position that is capable of delivering outsized growth despite trading compelling risk-reward levels.
Rusch believes that the global solar industry will grow by three to five times over the next decade and that SolarEdge will be a key beneficiary with easing supply bottlenecks and incremental operating leverage.
All in all, the Street is cautiously optimistic on SolarEdge with a Moderate Buy consensus rating based on 12 Buys and five Holds. At $357.65, the average SolarEdge price target implies 29.87% upside potential from current levels. Shares are down 1.8% year-to-date.
Plug Power (NASDAQ: PLUG)
Plug Power develops hydrogen fuel cell solutions to power electric motors, primarily in the electric mobility and stationary power markets.
The company reported a wider-than-anticipated loss for the first quarter citing increased hydrogen molecule costs associated with higher natural gas prices. Revenue grew 96% to $104.8 million but fell short of expectations.
On the brighter side, Plug Power recently won an order to deliver one gigawatt (GW) electrolyzer to hydrogen company H2 Energy Europe. Further, the company announced that it will build a 100-megawatt green hydrogen generation plant at Port of Antwerp-Bruges in Europe, which will produce up to 12,500 tons per year.
Susquehanna analyst Biju Perincheril highlighted that Plug Power has made meaningful progress in the past few months in advancing agreements for electrolyzer deployments, especially in Europe as hydrogen plays a major role in the region’s attempts to lessen its reliance on Russia.
Perincheril estimates that Plug Power could finish the year with more than double the original target with additional wins expected in the second half. Although the analyst is not increasing electrolyzer shipment estimates at this time, he thinks there’s likely significant upside to his forecasts.
Perincheril reiterated a Buy rating on Plug Power, with a price target of $30.
Overall, consensus among analysts is a Strong Buy based on 11 Buys and three Holds. With shares down 43.5% year-to-date, the average Plug Power price target of $34.62 implies 118.84% upside potential from current levels.
Brookfield Renewable Partners (NYSE: BEP)
Brookfield Renewable operates hydroelectric, wind, solar, and storage facilities in North America, South America, Europe, and Asia. Its portfolio comprises 21,000 megawatts of installed capacity and nearly 69,000 megawatts in the development pipeline.
Brookfield’s funds from operations (FFO) grew 18% on a normalized basis to $0.45 per unit in the first quarter, driven by strong asset availability, increased power prices, and recent acquisitions.
Following the Q1 results, TD (TD) Securities analyst Sean Steuart upgraded Brookfield to a Buy from Hold and maintained his price target at $41. Back in April, Stuart had downgraded the stock to a Hold from Buy, but given the sell-off in the stock since his rating downgrade, the analyst sees the pullback as an attractive opportunity and thus upgraded it to a Buy.
Steuart believes that the company is poised to navigate near-term sector headwinds and gain from long-term tailwinds for clean power and global decarbonization.
Overall, the Street has a Moderate Buy consensus rating based on three Buys and two Holds. The average Brookfield price target of $41.50 suggests 24.12% upside potential from current levels. Shares are down 6.7% so far this year.
Wall Street analysts are currently more bullish on Plug Power’s long-term prospects.
Moreover, they see higher upside potential in the stock from current levels compared to SolarEdge and Brookfield Renewable.