The share of U.S. electricity generated from alternative energy sources like biofuels, wind and natural gas has expanded rapidly over the last decade, supporting the nation’s efforts to reduce greenhouse gas emissions. To this end, technological advancements have played a critical role in bringing down the cost of electricity generation from alternative energy sources and storing the same.
Buoyed by such factors, stocks in the Zacks Alternative Energy industry have put up an impressive show so far this year, outperforming the broader market. Evidently, the industry has lost 0.7% year to date compared to the S&P 500 index’s 4.8% decline.
Catalysts Working in Favor
New onshore wind capacities, such as multi-year federal tax incentives combined with renewable portfolio standards, remain major drivers for alternative energy stocks. In particular, with wind power generating the maximum renewable electricity in the United States, it does not come as a surprise that the nation is the largest and fastest growing wind market worldwide. According to American Wind Energy Association, the U.S. wind industry installed 612 megawatts (MW) in the third quarter of 2018, reaching year-to-date installations to 1,644 MW. Meanwhile, per the U.S. Energy Information Administration’s (EIA) October report, in the first half of 2018, net natural gas exports from the United States more than doubled from the average daily net exports in 2017.
Such encouraging statistics must have bolstered investors’ confidence in the alternative energy stocks, resulting in the solid year-to-date performance.
Alternative Energy Roadmap for 2019
Now the question is, will alternative energy stocks continue to excel the broader market's performance next year as well? Let’s try and gain some clarity on that.
While it’s difficult to foresee the year, there's reason to believe that 2019 might turn out to be as good as 2018 for the alternative energy industry. In particular, if this winter (2018-2019) turns out to be colder than normal, the expected surge in electricity demand might boost the adoption of alternative energy resources.
In view of the encouraging prospects, we have picked three alternative energy players with a Zacks Rank of #1 (Strong Buy) or 2 (Buy) for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.
Evergy Inc. (EVRG - Free Report) provides clean, safe and reliable energy in Kansas and Missouri, generating a substantial volume of electricity from wind assets. The Kansas City, MI-based stock, sporting a Zacks Rank #1, has an expected earnings growth rate of 15.8% for the next year. Over the past 60 days, the company has seen earnings estimates for 2019 move up by 0.7%.
Ameresco, Inc. (AMRC - Free Report) is a leading renewable energy and energy efficiency company offering ESPC-funded energy solutions for public and private organizations. The Framingham, MA-based stock, with a Zacks Rank #2, has an expected earnings growth rate of 7.5% for the next year. Over the past 60 days, the company has seen the Zacks Consensus Estimate for 2019 earnings increase 2.5%.
FuelCell Energy, Inc. (FCEL - Free Report) manufactures megawatt-scale fuel cell systems, serving utilities, industrial and large municipal power users. The Danbury, CT-based stock, with a Zacks Rank #2, has an expected earnings growth rate of 31.3% for the next year. Over the past 60 days, the company has seen the loss estimate for 2019 move 2% south.
In addition to the stocks discussed above, would you like to know about our 10 top tickers to buy and hold for the entirety of 2019?
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