Clean energy stocks had a challenging year in 2023, with factors such as high interest rates and supply-chain issues related to the pandemic leading to a significant decline in the stocks of solar, wind, hydrogen, and biofuels companies. The WilderHill Clean Energy Index experienced a sharp 47% drop over the past year.
Struggles for Clean Energy Stocks
In the current year, only a small number of stocks out of the 70 in the index managed to see gains, with just four of them having market capitalizations exceeding $1 billion. The main issue lies in the fact that interest rates have remained high, making it costly to finance capital-intensive projects like wind turbines and solar installations. Certain sectors, such as hydrogen, are not experiencing sufficient demand to sustain the market, while others like biofuels are facing challenges due to oversupply and ineffective government policies.
Differentiating Factors for Winning Stocks
Despite the overall downturn, a few stocks have managed to outperform. These companies stand out for their role in facilitating clean energy projects without taking on the financial burden of financing them.
Nextracker: The Leader in Solar Panel Movement
Nextracker specializes in creating cutting-edge equipment that enables solar panels to track the sun’s movement, ultimately enhancing their efficiency. After going public last year as a spin-off from Flex, the company has managed to accumulate a remarkable backlog of orders. In addition, their fourth-quarter earnings surpassed analyst expectations by almost double. As the demand for utility-scale solar power continues to soar, Nextracker occupies a lucrative position in this rapidly expanding industry.
MYR Group: Pioneering in Renewable Energy Integration
MYR Group focuses on manufacturing electrical equipment such as power lines and substations, essential for integrating renewable energy projects into the existing grid infrastructure. With the surge in utility investments towards renewable energy sources, MYR’s services are experiencing a surge in demand. Analysts are predicting a 19% increase in earnings for MYR Group this year.
Quanta Services: Driving Growth in Power Project Engineering
Quanta Services is a prominent engineering and contracting company that spearheads significant power projects. Collaborating with renowned entities like Enphase Energy (ENPH), a leading solar equipment provider, Quanta Services is instrumental in establishing factories in the U.S. to capitalize on incentives outlined in the Inflation Reduction Act. Since the passing of this legislation in 2022, the industry has witnessed a substantial influx of clean energy projects totaling over $280 billion.
In the Spotlight: Gentherm Auto Supply Company
Gentherm is a leading provider of innovative products for the automotive industry, specializing in heated seats and steering wheels. With the advancement of electrical systems in vehicles, Gentherm has continuously evolved its product offerings to meet the demands of the market.
Diversified Product Portfolio
In addition to their renowned heated seats and steering wheels, Gentherm has also developed cutting-edge technology for monitoring temperatures in batteries. This demonstrates their commitment to staying at the forefront of automotive innovation.
For more information about Gentherm’s products and services, visit their website at Gentherm.com.