Best Alternative Energy Stocks to Watch in Q2 2023: Prices & Insights

Daqo New Energy Corp. and First Solar Inc. stand out as premier renewable energy stocks this quarter.

In Q2 2023, top alternative energy stocks include Daqo New Energy Corp., recognized for exceptional value and growth potential, and First Solar Inc., the highest-performing renewable stock over the past year.

Alternative energy equities have closely tracked overall market trends, with the iShares Global Clean Energy ETF (ICLN) experiencing less than a 1% decline over the last 12 months, slightly trailing the Russell 1000's 2% gain.

Below is a breakdown of leading renewable energy stocks categorized by value, growth, and momentum, with data current as of April 21, 2023.

Top Value Alternative Energy Stocks

These stocks feature the lowest 12-month trailing price-to-earnings (P/E) ratios, indicating investors pay less for each dollar of earnings, which can translate into strong dividend and buyback potential.

Source: YCharts

• Daqo New Energy Corp.: A Chinese solar polysilicon manufacturer supplying key materials to solar cell and module producers. In Q4 2022, Daqo's revenue and EBITDA surged over 100%, driven by higher sales volumes and prices.
• Brookfield Renewable Corp.: Operating hydroelectric, wind, solar, and storage assets across multiple continents, Brookfield benefited from inflation-driven price increases, boosting funds from operations by 8% year-over-year in 2022.
• Clearway Energy Inc.: Focused on U.S.-based solar and wind projects, Clearway achieved profitability in fiscal 2022 with $1.06 billion net income, rebounding from a prior $75 million loss, aided by divesting its thermal assets.

Fastest Growing Alternative Energy Stocks

Ranked by a balanced growth model combining year-over-year quarterly revenue and earnings-per-share growth, these firms demonstrate robust sales and profitability momentum.

Source: YCharts

• Daqo New Energy Corp.: Refer to the description above.
• Canadian Solar Inc.: A global solar technology leader with operations in 20 countries, Canadian Solar reported record $7.5 billion revenue in 2022, a 42% increase year-over-year, benefiting from declining equipment costs and scale efficiencies.
• Enphase Energy Inc.: Based in Fremont, California, Enphase produces solar micro-inverters, energy storage, and EV chargers for residential markets. Despite a 9% dip in U.S. sales in Q1 2023, strong European growth of 25% and $224 million free cash flow underscore its resilience.

Alternative Energy Stocks With Strongest Momentum

These companies delivered the highest total returns over the past 12 months, reflecting robust market performance.

Source: YCharts

• First Solar Inc.: A designer and manufacturer of photovoltaic solar systems, First Solar ended 2022 with $2.4 billion in cash and projects 2023 net sales between $3.4 and $3.6 billion, a 34% increase over 2022.
• Array Technologies Inc.: Specializing in solar tracking systems, Array exceeded forecasts in 2022 with $1.6 billion revenue and $129 million adjusted EBITDA, up 91% and 200% respectively.
• Maxeon Solar Technologies Ltd.: Spun off from SunPower in 2020, Maxeon serves 100 countries with solar panels. Q4 2022 revenue rose to $323 million from $221.5 million the prior year, with 2023 revenue expected between $1.35 billion and $1.55 billion.

Why Invest in Alternative Energy Stocks?

Government support is accelerating the clean energy transition. The 2021 infrastructure bill allocated $65 billion toward clean energy transmission, while the Inflation Reduction Act earmarked $369 billion for clean energy and climate initiatives. State programs complement these with rebates, tax credits, and incentives.

Industry forecasts by Wood Mackenzie project $1.2 trillion in renewable investments by 2035, offering vast opportunities in renewable infrastructure and technology.

Risks to Consider in Alternative Energy Investments

Intermittency remains a challenge: solar and wind energy production varies seasonally and geographically, limiting reliability. Technological advancements may also disrupt current energy solutions.

Storage constraints pose risks as well. Though options like batteries and hydrogen exist, high costs and limited capacity currently hinder widespread adoption. However, ongoing innovation is expected to improve storage efficiency and affordability.

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