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Find the Next Breakout Wall Street Superstar in this Booming Industry

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Buying the next breakout Wall Street stock could be easier than you think. Narrowing your search to a crucial area of the economy that’s already in the midst of a revolution poised to reshape the world over the coming years and decades is a great way to start.

Investors searching for the next superstar stocks need look no further than the alternative, non-fossil fuel energy industry. This space is headed into hyperdrive, fueled by trillions of dollars a year of investment from Wall Street heavyweights and global superpowers including the U.S., China, Germany, and countless other rich nations.

Alternative energy stocks could soon find themselves in the same rarefied air as semiconductors, cloud computing, and other areas of technology. That’s because energy is the backbone of the entire global economy and it’s starting a transformation that will turn companies few have heard of into Wall Street titans of tomorrow.

Wall Street Stars in the Making

The alternative energy industry is loaded with stocks that offer investors potentially boundless upside. More than a few rather under-the-radar alternative energy stocks already crushed the likes of Tesla and other Wall Street darlings over the last five years.

The huge run that multiple alternative energy stocks have gone on makes sense considering the rapid revenue growth and massive ongoing expansion that’s helping embed these firms deeply into the economy. Arguably, they stand on firmer ground than even many current tech giants, which could far more easily fall out of favor or be replaced.

Alternative energy already accounts for 20% of total U.S. primary energy consumption and 40% of electricity generation. Renewables’ share (not including nuclear) of the U.S. electricity mix is projected to double again by 2050, having already doubled during the past decade.

Even though solar gets the lion’s share of attention, investors will be very glad to know that there are multiple areas within the wider alternative energy ecosystem gaining steam.

For example, one stock in a newly burgeoning area of energy, with potentially even more applications than solar and wind, is projected to grow its revenue from $700 million in 2022 all the way to $2.1 billion in 2024. Plus, its CEO projects sales will skyrocket to $20 billion by 2030. And it happens to be trading for around $10 a share today.

Projections like these are far from unrealistic because alternative energy sources are already deeply rooted in the U.S. and around the world. The momentum driving alternative energy forward is seemingly unstoppable as wealthy, powerful nations and multinational corporations throw their collective weight into the transformation of the energy landscape.

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Powerful Governments, Corporate Giants & Upstarts

Looking to the future beyond fossil fuels is no longer a niche effort of the environmentally conscious. The U.S. and other powerful governments around the world are spurring growth through tax incentives, direct spending, and other means.

Even OPEC nations who have oil and gas to thank for nearly all of their wealth such as the United Arab Emirates are spending billions on renewable energy projects. Elsewhere, financial titans and Silicon Valley icons are shelling out billions of dollars to fund alternative energy projects right now, with far more money to come down the road.

All of these efforts have already helped drive down renewable energy costs to make it more affordable, which is a factor that will help quickly expand its reach.

Alternative energies now account for over 75% of total global energy investment. A similar report from the IEA projected that total renewable energy investment topped $1.4 trillion in 2022. Various other reports expect annual global alternative energy investment to triple by 2030 to around $4 trillion—and keep climbing.

Alongside the ample runway ahead for solar and wind, Wall Street is searching high and low for the best and brightest names in next-gen nuclear, battery storage technologies, hydrogen, and other areas, including the still-theoretical.

Specific Growth Areas

Solar, despite the tangible progress, only generated roughly 4% of total U.S. electricity in 2022 putting it behind hydropower’s 6% and wind’s 9%. Yet, the EIA projects solar will account for 80% of the increase in renewables through 2050.

Even though solar panels are a catch-all and growing in popularity with businesses, governments, and homeowners, Wall Street has gravitated toward smaller, higher-tech and higher-margin solar segments.

Meanwhile, nuclear energy provided roughly 50% of America’s carbon-free electricity in 2022, making it the largest domestic source of clean energy, according to the U.S. Department of Energy. Yet, nuclear’s share of U.S. electricity generation has remained stagnant for decades.

Now, the push toward a lower carbon future and energy independence is forcing governments and companies to finally invest in the next generation of nuclear. Small modular reactors or SMRs could become mainstays in the U.S. and around the globe in the coming decades.

Plus, always-a-decade-away nuclear fusion (what powers the sun and stars) is making concrete progress. The U.S. Energy Department announced in December 2022 a major nuclear fusion breakthrough.

Separately, some industry experts and scientists predict that hydrogen, which is in practically endless supply, will transform into one of the biggest players in alternative energy, especially for large-scale transportation and industrials.

Hydrogen is the simplest and most abundant element on Earth and in the Universe, but it doesn't typically exist by itself in nature. Therefore, the next frontier that could make hydrogen-based technology a powerhouse is figuring out how to cheaply complete the electrolysis process to split water into hydrogen and oxygen.

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Thanks and Good Investing,

Ben Rains

Ben is Zacks Energy Stock Strategist. He manages our Alternative Energy Innovators portfolio.


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