Renewable Stocks Are Lagging Despite Big Opportunity. Should You Buy In?

UKRAINE – 2021/05/08: In this photo illustration, an Albemarle Corporation logo of the US Chemical … [+] SOPA Images/LightRocket via Getty Images Our theme on Renewable Energy Stocks – which includes U.S.-based solar panel manufacturers, lithium miners, and hydrogen fuel cell producers – continues to underperform the broader market. The theme remains down by about 2% year-to-date, compared to the broader S&P 500 which is up by close to 19% over the same period. The theme is being weighed down by rising bond yields, which have hurt futuristic and growth stocks, and some delays in the passage of the U.S. infrastructure bill, which earmarks funds to accelerate the development of renewable energy solutions.

Near-term issues aside, the theme is still worth a look for investors wanting to play the long-term transition to renewables. The Biden Administration is serious about doubling down on renewables to tackle climate change. The White House is targeting 80% renewable energy use by 2030 while looking at deriving all U.S. electricity from renewables by 2035. This would mark a massive transition in a fairly short time frame, as the U.S. presently derives just about 20% of its electricity from renewable sources. [ 1 ] This is likely to result in considerable regulatory incentives for renewables in the coming years. The estimated cost of a move toward renewable energy could stand at about $342 billion, per a report from researchers at Harvard University, Georgia Institute of Technology, and Syracuse University, translating into solid demand growth for renewable energy companies.

Within our theme Albemarle stock has been the strongest performer year-to-date, rising by about 52%. The company is one of the world’s largest producers of lithium, which is used in the batteries that go into electric vehicles and electric storage systems. On the other side, Sunrun has been the weakest performer, with its stock down by about 37% year-to-date. The company designs, develops, installs, and maintains residential solar energy systems.

[8/12/2021] Renewable Stocks To Pick As IPCC Sounds Alarm Bells On Climate Change

Our theme on Renewable Energy Stocks – which includes U.S.-based solar panel manufacturers, lithium miners, and hydrogen fuel cell producers – has underperformed year-to-date, declining by about 2.5% versus a 19% return on the S&P 500, although it has recovered a bit since our last update in early June when it was down by roughly 15% year-to-date. That being said, there has been a notable development that makes a compelling case for investing in this theme.

A few days ago the Intergovernmental Panel on Climate Change published an alarming report – which is seen as one of the most detailed reviews of climate change ever conducted – outlining how climate change was accelerating. For instance, the report expects that the Earth’s average temperature will reach 1.5 degrees Celsius above preindustrial levels around 2030, a decade earlier than was projected just three years ago. The Secretary-General of the United Nations has deemed the report a “code red” for humanity, noting that it should serve as a “death knell” for the fossil fuel industry.

We believe that renewable energy companies stand to benefit considerably from the greater urgency to tackle climate change. Although returns for renewable energy stocks have been a mixed bag in recent years, due to higher costs or lower practicality versus conventional sources and significant dependence on subsidies, the sector’s time has probably come. Governments are likely to accelerate regulation favoring green energy alternatives while also investing more in renewable infrastructure. Corporates are also likely to do the same. The addressable market is also massive, as fossil fuels are a multi-trillion dollar industry.

Within our theme, Albemarle has been the strongest performer this year, with its stock rising by 60% year-to-date. The company is one of the world’s largest producers of lithium, which is used in the batteries that go into electric vehicles and electric storage systems. On the other side, Sunrun – a company that designs, develops, installs, and maintains residential solar energy systems – has been the worst performer, with its stock down by about 29% year-to-date.

[6/7/2021] Even Big Oil Is Getting Serious About Renewables. Which Clean Energy Stocks Should You Pick?

Our theme on Renewable Energy Stocks – which includes U.S.-based solar panel manufacturers, lithium miners, and hydrogen fuel cell producers – has underperformed year-to-date, declining by about -15% versus a 13% return on the S&P 500, as investors have rotated out of higher-growth stocks to more cyclical and value stocks to play the re-opening of the economy following Covid-19. However, this might be […]

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