Use weakness in some of the hottest green stocks as an opportunity. According to Grand View Research, the global renewable energy market’s value could reach $1.21 trillion due to a global shift towards low-carbon fuels and stricter environmental regulations.
Rising interest rates weighed heavily on the industry in 2023, promises of lower rates could send many battered names higher. If the Federal Reserve cuts rates as promised, renewable energy stocks could shine. Here are seven of the hottest green stocks to watch in 2024.
First Solar (FSLR)
With a good deal of negativity priced into First Solar (NASDAQ:FSLR), the stock is regaining lost ground. Helping, Morgan Stanley just upgraded FSLR to an overweight rating, with a $237 price target.
They note FSLR is “a major beneficiary of several recent policy changes in the U.S.,” including the Inflation Reduction Act, as noted by Seeking Alpha.
The solar giant is also among TD Cowen’s top ideas for 2024, arguing that FSLR “has a disruptive cost profile versus peers and generally a better product versus crystalline silicon modules.”
Earnings have been stronger, too. Net sales in its most recent quarter came in at $801 million, a decrease of $10 million quarter over quarter. The good news is FSLR saw third-quarter net income of $2.50, compared to $1.59 year over year.
Global X Solar ETF (RAYS)
We can also look at an ETF, such as the Global X Solar ETF (NASDAQ:RAYS) for diversification at a low cost. With an expense ratio of 0.51%, it’s investing in top names in the global solar industry.
While higher interest rates crushed the RAYS ETF, I am looking for it to rally back to $19 a share once the Federal Reserve does cut rates.
iShares Global Clean Energy ETF (ICLN)
Another one of the hottest green stocks to consider is the iShares Global Clean Energy ETF (NASDAQ:ICLN). The ETF recently rebounded from $12.75 to $14.85 and could rise further after the Fed’s action.
With an expense ratio of 0.41%, the ETF tracks some of the hottest green stocks.
Enbridge (ENB)
With a yield 7.38%, Enbridge (NYSE:ENB) had a rough outing in 2023, but it’s coming back strong. In fact, after diving to a low of about $31, it’s now back to $36.50.
Now, if it can break through resistance, it could soon test $43 again shortly. As one of the biggest renewable energy companies in Canada, it has invested in 23 wind farms, 15 solar energy operations, a geothermal project with. 22 MW capacity, and a power transmission project.
The company just raised its annual dividend to CAD$3.66 from CAD$3.55. The base business aims to generate EBITDA of CAD$16.6B-CAD$17.2B in FY 2024, a 4% growth compared to the midpoint of its CAD$15.9B-CAD$16.5B guidance range for 2023, with distributable cash flow of CAD$5.40-CAD$5.80/share, according to Seeking Alpha.
NextEra Energy (NEE)
There’s also NextEra Energy (NYSE:NEE), a regulated utility company and a renewable energy company, with a 3.03% yield to boot.
Over the last year, the company did say higher rates made it difficult for the company to fund its growth plans. However, with the Federal Reserve likely to cut rates this year, NEE should see a quick reversal.
Helping, Morgan Stanley has NEE listed as one of its top high-conviction stocks for the year. Better, Citi analysts just initiated coverage of NEE with a Buy rating and $69 price target.
Plug Power (PLUG)
There’s also hydrogen, which Goldman Sachs and Bank of America say could create an $11 trillion opportunity.
One of hydrogen’s biggest near-term catalysts could be President Biden’s hydrogen tax credits. While currently seen as restrictive for growth, companies like Plug Power (NASDAQ:PLUG) believe the issues could be loosened.
While the PLUG chart is still ugly, don’t write it off just yet. Buy it. Forget about it. And check back on it a year or so from now.
Once regulatory issues are resolved, PLUG could significantly increase in value.
Albemarle (ALB)
Finally, let’s again revisit Albemarle (NYSE:ALB) – the lithium sector’s 800 lb. gorilla. Knocked down by supply issues and interest rates, the stock has seen better days.
However, with the world fighting to go green, and global leaders pounding the table for electric vehicles, we need as much lithium as possible. Unfortunately, we may not have enough.
That’s where a company like ALB can help. Despite supply concerns, lithium producers like ALB remain optimistic. That being said, I’d use weakness as an opportunity with lithium stocks, like ALB.
On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.