Most renewable energy stocks struggled in 2023. The iShares Global Clean Energy ETF (NASDAQ:ICLN), which holds some 135 different clean energy public companies, fell more than 20% in 2023. Similarly, the Global X Solar ETF (NASDAQ:RAYS), which holds about 54 different solar names, plummeted 38%.
Elevated interest rates and relatively lower oil prices fomented an overall disinterest in renewable energy stocks, many of which rely on debt capital to build out their facilities and products. However, with interest rates likely to come down in 2024, coupled with the number of government incentives flooding the sector, 2024 could turn out to be a much better year for clean renewable energy stocks.
Below are three such stocks that have, in my opinion, entered Buy territory.
First Solar (FSLR)
Solar panel manufacturer First Solar (NASDAQ:FSLR) shares increased 14% in 2023. However, since the start of the year, the company’s stock price has pretty much erased all of those gains. Nonetheless, as we anticipate Federal Reserve rate cuts, I think FSLR is trading in Buy territory. The stock currently trades at 11.2x forward earnings. This solar company will not only stand to benefit from rate cuts but also secular tailwinds guiding the renewable energy industry, from government incentives to changes in consumer preferences.
First Solar has already responded well to opportunities to open up new manufacturing facilities. Last year, the company announced a new $1.1 billion manufacturing site in Louisiana. Additionally, FSLR signed a 15-year PPA guaranteeing power to a new manufacturing facility in Tamil Nadu, India. On top of these, First Solar just acquired a distribution facility in Ohio to continue expanding its manufacturing footprint.
With a good valuation and a plethora of growth prospects, FSLR stock is making a good sales pitch.
General Electric (GE)
The iconic, 131-year-old industrials giant General Electric (NYSE:GE) has been undergoing a major transformation recently under the leadership of CEO Larry Culp, who has worked to divest the company from non-core assets, reduce debt and improve profitability.
In 2023, General Electric was able to exceed Wall Street’s expectations. In the second quarter, GE generated double-digit growth in orders and revenues due to strong demand in its aerospace and renewable energy segments. Similarly, in the company’s Q3 earnings report, its aerospace and renewable energy segments beat estimates on revenue and profitability, respectively. The industrials giant also increased guidance for the full year.
GE nearly doubled its share price in 2023 off the back of solid earnings and better than expected macroeconomic forecast heading into 2024. While the stock definitely trades less cheaply than in early 2023, GE’s valuation is still only around 13.9x forward EBITDA.
The company has enormous potential in the next few quarters, and investors should take notice.
BYD (OTCMKTS:BYDDF) continues to surprise EV enthusiasts and investors worldwide. In tandem with having an undisputed market position in China, the company also became the world’s top EV maker in 2023, trouncing American rival Tesla (NASDAQ:TSLA) in terms of electric vehicle sales. Moreover, BYD also dethroned Volkswagen (OTCMKTS:VWAGY) as the number one selling car brand in China. While BYD is less known in the U.S., it has a dominant presence in China and is growing its sales in overseas Asian markets.
The stock is immensely undervalued. BYD’s growth has been nothing but impressive, but an economic slowdown in China coupled with fears of an EV market slowdown have definitely dampened the sentiment on its shares. BYD trades at about 12x forward earnings, which is less than competitors like Tesla.
On the date of publication, Tyrik Torres did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.