The Top 10 Clean Energy Stocks For 2021 An Oilprice.com Exclusive Report The State of Mind This is where it all moves from pure enthusiasm to market reality … We’ll talk about the great transformation …. the clean energy revolution and its myriad catalysts that are all lining up simultaneously for true growth potential … but the key to investing in renewable energy requires a state of mind that is rather more modern that many investors tend to be. Betting on renewable energy isn’t about crunching profit numbers and counting everything that comes off the assembly line. It’s not always about fundamentals—yet. It’s a leap of faith, and one that stands to be extremely rewarding for investors willing to hedge on a grand idea … not a balance sheet. And in this case, the “grand idea” is indeed … grand. It was already riding some serious tailwinds prior to the global pandemic. Then it shifted into overdrive and we are convinced it will remain there. Tesla should have painted a clear enough picture of how the “modern” way of thinking goes—and how much it can be rewarded. The world is changing. As investors, we can change with it and even stay ahead of it by investing in stocks that represent our energy future rather than our energy past. Alternatively, we can plod along with marginal rewards for steadfastness. Again, it’s a state of mind, and the stocks we will be examining in this report largely—but not exclusively--fall into the “modern” state of mind: Major potential growth rather than presently sound fundamentals. The Top 10 Clean Energy Stocks For 2021 2 The State of Play The transformation of our energy systems from reliance on high-carbon fuels like oil, coal and gas towards carbon-neu- tral energy sources such as wind, solar and geothermal heat is well and truly underway. Renewable power is booming, as innovation brings down costs and drives the electrification of large sectors of the economy such as transport and heating. A November HYPERLINK “https://www.iea.org/reports/renewables-2020”IEA report found that almost 90% of new electricity generation in 2020 was renewable, with just 10% powered by gas and coal. The Top 10 Clean Energy Stocks For 2021 3 The International Energy Agency has predicted that green electricity will end coal’s 50-year reign by 2025. Even Big Oil is on board … The inexorable march of renewables has continued to gather momentum during the ongoing pandemic, with renewable energy emerging as the energy sector most resilient to Covid19 lockdown measures. Clean energy investors have been making money hand over fist, as investors continue to snap up theiShares S&P Global Clean Energy Index ETF (NASDAQ:ICLN)--a catch-all bet on clean energy. The slim majority the Democrats have won in the Senate is likely to enhance President-elect Joe Biden’s chances of fulfilling his pledge to promote clean energy and EVs though sweeping legislation, such as his $5-trillion climate plan, are still on ice. ICLN, a fund that offers broad exposure to companies that produce energy from renewable sources, has racked up handsome gains to the tune of 178% over the past 12 months. ICLN’s top three holdings are Plug Power (NAS- DAQ:PLUG), Enphase Energy (NASDAQ:ENPH) and Meridian Energy (OTC:MDDNF), which speaks volumes about where things are headed. With this in mind …. The Top 10 Clean Energy Stocks For 2021 4 The TOP 10 Renewable Energy Stocks For 2021 The company’s renewables unit, NextEra Energy Re- #1 sources, is the largest generator of wind power in North America, generating 42,807,582 MWh of wind power in NEXT ERA ENERGY 2019 and another 7,059,936 MWh of solar. NextEra has also drawn up plans to develop Wall Street’s latest renewable darling: Hydrogen. During its second quarter earnings call, NextEra’s CFO Rebecca Kujawa said the company is “...particularly ex- cited about the long-term potential of hydrogen” and dis- cussed plans to start a pilot hydrogen project at one of its generating stations at Okeechobee Clean Energy Center owned by its subsidiary, Florida Power & Light (FPL). Over the past 15 years, the world has been rapidly shift- ing to cleaner electricity, and few, if any, companies have Jumping in on NEE a decade ago would have navigated this transition in the U.S. better than Flori- da-based utility giant, NextEra Inc. (NYSE:NEE). meant a 520% return today, blowing away pretty much any mainstream energy offering. NextEra has grown into the largest electric utility not only in the U.S. but the entire world, thanks to its for- ward-thinking management that has wisely deployed the Every step of the way, NextEra seems to have been company’s stable cash flows from its regulated Florida ahead of the game, and that’s been very rewarding for investors throughout 2020. We see even more catalysts power utility (70% of revenue) to help into renewable in- ahead for 2021. vestments (currently 30% of revenue). If you had invested in NEE stock a decade ago, you would be sitting on 520% return--a truly phenomenal return for an energy company. By contrast, a similar investment in ExxonMobil Corp. (NYSE:XOM) you have seen your investment lose 25% after factoring in dividends. NextEra’s dividend (currently yields 1.73%) is considered as safe as investment-grade bonds. The Top 10 Clean Energy Stocks For 2021 5 While NextEra ranks #1 on our list of renewable energy space, Tesla Inc. (NASDAQ:TSLA), has been running stocks for 2021, adding an alternative that hasn’t already amok, with TSLA stock up nearly 800% over 52 weeks, shot through the roof isn’t a bad idea, either … giving the EV maker a market cap of $834 billion as of the second week of January 2021. Alternative Buy: Algonquin Power & Utilities Corp. Tesla appears to have earned its stripes, though—even if plenty would still disagree, and even though short-sellers With a P/E GAAP (TTM) of 40.98 against a sector median have consistently lost on this one. of 20.60, NEE stock is decidedly expensive. Value investors searching for a comparable but cheaper al- Tesla short-sellers lost a collective ternative might want to consider Algonquin Power & Util- $40 billion in 2020 ...lesson learned? ities Corp. (NYSE:AQN) with P/E GAAP (TTM) of 21.20. Algonquin Power owns and operates a portfolio of elec- For years, naysayers and short-sellers like Citron Re- tricity generation, distribution, and transmission utility search were willing to bet the house that Elon Musk’s assets in the United States and Canada and the United high-wire act wouldn’t end well, with the preordained de- States. It generates and sells electrical energy through nouement being a bankruptcy or a sale. non-regulated renewable and clean energy power gener- ation facilities. And just like its bigger peer, the utility has been rapidly expanding its renewable generation portfolio But those speculations were short-lived: Tesla and Musk including hydroelectric, solar, wind, and thermal facilities. quickly proved to the world that there’s robust demand for EVs and the future truly is electric. In December 2020, Algonquin Power agreed to acquire a 50% stake in a portfolio of four wind facilities in Texas with an aggregate capacity of 861 MW from RWE Group (OTCPK:RWEOY) at price corresponding to an enterprise value of ~$600M. #2 Tesla The company has lately been defying bearish expecta- tions that historically low oil prices would weaken its val- ue proposition as it seeks to displace the internal com- bustion engine. With the electrification drive in full swing, the EV sector has lately been sizzling hot. The de facto leader of the Tesla has continued to beat delivery estimates, thanks The Top 10 Clean Energy Stocks For 2021 6 to injecting its large-scale manufacturing capabilities into 1M deliveries as early as 2021. Musk’s inspired improvisation. Tesla is now looking to deliver an astounding 1 million EVs in 2021, double the Biden has unveiled a plan to build 500,000 new EV 1M tally for 2020. charging stations, a move that could spur sales of ~25M EVs in the coming years. Tesla will no doubt be one of the In its latest shareholder letter, Tesla revealed that its Fre- biggest beneficiaries of that government largesse. mont, California factory can churn out 500,000 Model 3 + Y units and another 90,0000 Model S + X units per year. Tesla’s parabolic rally and apparent overvaluation does not appear to deter Wall Street, with Bank of America re- Meanwhile, Tesla’s new Shanghai factory has ramped up cently assigning a new price objective of $900 to TSLA, capacity at an incredible clip and now has the capacity good for 8.5% upside. for 250,000 Model 3 vehicles annually. Adding that up brings us to Ferragu’s lowball estimate of 840,000 deliv- The alternative could potentially be exciting, too … eries in 2021. Alternative Buy: Fisker But Tesla has a number of other gigafactories in the pipe- line, which could significantly increase its production ca- pacity as the quarters roll on: A Model Y factory in Austin, Texas and a similar one in Berlin, Germany, with both under construction. Meanwhile, the company is adding a Model Y production line at its Shanghai factory. At 23X EV/sales and 118x EV/EBITDA, Tesla’s valuation is hard to wrap your head around...even for diehard bulls. Fisker, Inc.(NYSE:FSR), a company that designs and manufactures electric vehicles and mobility solutions, could reward investors with the same phenomenal re- turns that early Tesla investors have enjoyed.