The Best Renewable Energy Stocks to Watch in 2022

January 19, 2022 15:00 UTC
Reading time: 32 minutes

As the world endeavours to combat climate change, renewable energy sources are increasingly beginning to replace the fossil fuels upon which we were once reliant. Although the process of leaving harmful fossil fuels behind will undoubtedly take time, it is already underway, and for those who are interested in investing in a more environmentally friendly future, there are plenty of promising renewable energy stocks to consider adding to your portfolio in 2022.  

In this article, we will take a look at why investing in renewable energy could be a good idea, examine two renewable energy stocks to watch and show you how to invest in renewable energy stocks with Admirals! 

What Is Renewable Energy? 

Renewable energy is energy obtained from sources which are not only naturally and constantly replenished, but which are also virtually inexhaustible.

For example, the sun is an example of a source of renewable energy, as it constantly shines; although our ability to exploit its energy depends on the season and weather. The same can be said of wind.

Whilst we may think of renewable energy as a fairly new concept, the truth is that mankind has been harnessing nature’s power for centuries. The ancient Greeks used waterwheels for irrigation and milling grain, Europeans used windmills in the 12th century for similar purposes and the Romans used geothermal energy to provide space heating for their buildings as early as the first century.

Renewable energy has certainly come a long way since these early applications and the industry has expanded significantly in recent years. So, is 2022 a good time to invest in renewable energy stocks? And what are some of the best renewable energy stocks to consider?

Why Invest in Renewable Energy Stocks? 

Renewable energy capacity has been increasing fairly quickly in recent years and, as climate change becomes more and more of a hot button issue, this capacity is likely to continue to grow at a faster rate going forwards. 

According to a report by the International Energy Agency (IEA), in 2020, renewable energy sources accounted for around 28% of the world’s total electricity generation and the IEA estimates that, by 2030, this figure will be 45%, provided countries stick to new pledges made in 2021. 

As renewable energy has begun to supply an increasing amount of global energy, accordingly, renewable energy stocks have performed increasingly well in recent years. If our demand for more environmentally friendly energy continues to grow, then renewable energy stocks are bound to continue to enjoy the benefits of this.  

However, after particularly strong performances in 2020 - last year, 2021, was not a great year for renewable energy stocks, with oil and gas industries stealing the limelight. But with new pledges made by countries around the world at the COP26 climate conference, we could see a shift back in favour of renewable energy stocks this year. 

To learn more about investing in renewable energy shares, check out our below webinar on the topic, in which expert trader Jens Klatts talks about why green energy stocks deserve a place in your portfolio!

Free Trading Webinars from Admirals

Interested in learning more about trading? At Admirals, we regularly host trading webinars, like the one above, about a variety of different trading topics and they are absolutely free! Click the banner below to see the upcoming schedule and register for a webinar today:

Free trading webinars

Tune into live webinars hosted by our trading experts

REGISTER FOR FREE

 

Two Renewable Energy Stocks to Watch in 2022 

As renewable energy continues to increase its capacity worldwide, the number of renewable energy stocks available also continues to increase. 

These days, there are many companies dedicated either entirely or partially to the production of renewable energy. Therefore, it can be difficult to know which companies make a worthwhile investment and which do not. This is why we have highlighted two renewable energy stocks to watch in 2022. These renewable energy stocks are: 

  • Brookfield Renewable
  • SolarEdge Technologies

In the following sections, we will take a look at each of these companies in a bit more detail. 

Brookfield Renewable 

The first of our best renewable energy stocks to watch is Brookfield Renewable. Brookfield Renewable Partners is one of the world’s largest renewable energy producers, with a generating capacity of over 20,000 megawatts (MW) from a combination of hydroelectric, wind and solar. Their portfolio of power generating facilities numbers almost 6,000 across the Americas, Europe, India and China. 

Brookfield Renewable sells the majority of its generated power to utilities and large corporations through purchase agreements, which in turn generate a reliable fixed cash flow for the company. 

Although this renewable energy stock performed disappointingly in 2021, with share price falling by 17%, its five-year performance (2017 – 2021) is more than 126%. This impressive performance does not factor in quarterly dividend payments, of which Brookfield Renewable is a reliable distributer. At the time of writing, their dividend yield is a respectable 3.4%, making it one of the highest yielding renewable energy dividend stocks. 

When we factor in these dividend payments, in the two decades leading to the end of 2020, Brookfield Renewable provided investors with an annualised total return of 20%

Depicted: Admirals MetaTrader 5 – Brookfield Renewable Partners (BEP) Weekly Chart. Date Range: 21 June 2015 – 4 January 2022. Date Captured: 4 January 2022. Past performance is not a reliable indicator of future results. 

 

Of course, past performance is not a reliable indicator of future results. However, with a vast number of development projects lined up - which should more than double the company’s current generating capacity, a large amount of cash (more than $3 billion as of November 2021) to facilitate future investment and acquisitions, and the growing global focus on decarbonisation, Brookfield Renewable looks well positioned to continue providing value to shareholders. 

SolarEdge Technologies 

Our second renewable energy stock to watch is SolarEdge Technologies a younger company than Brookfield Renewable which, as the name suggests, operates in solar energy.  

Solar energy could be one of the ultimate sources of energy on the planet in the future. Nature already provides us with the power; our challenge is to develop technology that can harness that power efficiently enough for it to be a viable energy source going forward. 

SolarEdge Technologies is one such company which is dedicated to that challenge and are industry leaders in solar energy. They produce low-cost power optimisers and inverters which are designed to transform solar energy into functional electricity. The company’s focus on producing cheaper power optimisers than their rivals has allowed it to steal a considerable market share. 

As we noted earlier, 2021 was not a great year for renewable energy stocks and solar stocks were no exception. Despite posting better results in the first three quarters than in 2020, when the industry was negatively affected by a reduction in US investment, SolarEdge Technologies shed around 12% in the stock market in 2021. However, its five-year performance (2017 – 2021) is an incredible 2,160%.  

Unlike Brookfield Renewable, SolarEdge is not yet a dividend paying renewable energy stock, however, this is not surprising given that it was only founded in 2006. 

Depicted: Admirals MetaTrader 5 – SolarEdge Technologies (SEDG) Weekly Chart. Date Range: 5 July 2015 – 5 January 2022. Date Captured: 5 January 2022. Past performance is not a reliable indicator of future results. 

 

For such a young company, SolarEdge has a considerable amount of cash on the books ($525 million at the end of Q3 2021) which has allowed it not just to invest in expanding production, but also to diversify into other industries, such as electric vehicle charging.  

Risks of Investing in Renewable Energy

As with any investment, investing in renewable energy – such as wind energy stocks – carries a risk.

One of the biggest challenges facing renewable energy, is that it competes directly with energy produced from fossil fuels, such as oil. As we mentioned earlier, depending on seasonality, the sun does not shine at the same strength every day and the wind does not blow at a constant speed. Fossil fuels, on the other hand, can produce constant power and when prices are comparatively low, demand for renewable energy may be negatively affected, which in turn could cause renewable energy shares to fall.

Another risk of investing in renewable energy is changes in government policy. For example, when Donald Trump became President-elect of the USA in 2016, many renewable energy shares fell due to, well-founded, concerns about his potential approach to climate change policies.

How to Invest in Renewable Energy Stocks

If you are wondering how to invest in renewable energy shares, you will be pleased to know that you can do so with Admirals!

 

An Invest.MT5 account from Admirals allows you to invest in both of the renewable energy stocks highlighted in this article as well as many others including various wind energy stocks and solar energy stocks!

 

In order to learn how to invest in renewable energy stocks with Admirals, read the following steps.

  1. Sign up with Admirals
  2. Open an Invest.MT5 account
  3. Download the MetaTrader 5 trading platform
  4. Press Control + U to bring up the ‘Symbols’ window, where you can search for the renewable energy stocks you wish to invest in. Once located, highlight and press ’Show Symbol’ to add the stock to the Market Watch window
Depicted: Admirals MetaTrader 5 - Symbols 

 

  1. Locate your renewable energy stock in the Market Watch window on the left-hand side of the screen, right-click and press ‘Chart Window’ to open a price chart
  2. From the price chart, select ‘New Order’ from the toolbar at the top of the screen in order to bring up the order window shown below. Here, you can select the number of renewable energy shares you wish to purchase before clicking ‘Buy’ to send the order to the market
Depicted: Admirals MetaTrader 5 – Brookfield Renewable Partners (BEP) Weekly Chart – New Order. Date Range: 21 June 2015 – 5 January 2022. Date Captured: 5 January 2022. Past performance is not a reliable indicator of future results. 

 

Invest with Admirals 

As well as the renewable energy stocks highlighted in this article, Invest.MT5 account holders can buy shares in over 4,300 other companies from 15 of the largest stock exchanges in the world! Other benefits include: 

  • Opening an account with a minimum deposit of just €1
  • Competitive transaction fees and no account maintenance fee
  • Exclusive access to our Premium Analytics portal, at no extra cost!
  • Free use of the world’s number-one multi-asset trading platform, MetaTrader 5

To start enjoying these benefits and many more, click the banner below to open an account today: 

Invest in the world’s top instruments

Thousands of stocks and ETFs at your fingertips

START INVESTING

 

INFORMATION ABOUT ANALYTICAL MATERIALS:  

The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admirals investment firms operating under the Admirals trademark (hereinafter “Admirals”) Before making any investment decisions please pay close attention to the following:  

  1. This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
  2. Any investment decision is made by each client alone whereas Admirals shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
  3. With view to protecting the interests of our clients and the objectivity of the Analysis, Admirals has established relevant internal procedures for prevention and management of conflicts of interest.
  4. The Analysis is prepared by an independent analyst Roberto Rivero, Freelance Contributor (hereinafter "Author") based on personal estimations.
  5. Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admirals does not guarantee the accuracy or completeness of any information contained within the Analysis.
  6. Any kind of past or modelled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admirals for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
  7. Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.
Roberto Rivero
Roberto Rivero Financial Writer, Admirals, London

Roberto spent 11 years designing trading and decision-making systems for traders and fund managers and a further 13 years at S&P, working with professional investors. He has a BSc in Economics and an MBA and has been an active investor since the mid-1990s