Stocks to buy

Countries around the world are working rapidly to meet their net-zero climate goals, investing in solar and renewable energy. With governments going all in, it shouldn’t come as a surprise that the energy sector is booming. This means investors should be ready to bet on the new technology. In a few decades from now, we will see the impact of sustainable energy on our lives and business performance. It can bring down the cost of energy while building a cleaner and greener world. Smart investors should consider investing in sustainable energy stocks and make the most of their growth. 

We have already seen the rising demand for solar energy across Europe and the soaring utility costs mean that the demand is only going to grow. For energy companies, this is a million-dollar opportunity. They could also benefit from the Inflation Reduction Act, taking home big gains. The market is forward-looking and it has already factored in the ups and downs of the economy. With that in mind, here are the best sustainable energy stocks for sustainable profits. 

NextEra Energy (NEE)

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One reason I love NextEra Energy (NYSE:NEE) is its diversified business. It mixes two energy businesses into one: a clean energy company and a utility. This brings consistency and stability in revenue. Using the utility segment as a foundation to grow the business, NextEra is expanding clean energy operations. NEE stock is trading at $74 today and is up 4% in the past year. It is one of the best green energy stocks for profit.

Another reason to bet on this stock is the dividend. NextEra Energy has increased the dividend annually for three decades and this means it has enough liquidity to continue rewarding the shareholders. Its dividend has grown at a compound annual rate of about 10% in the last few years and if you are looking for a dividend stock NEE is one of the top energy stocks to own. It has a dividend yield of 2.52% and has recently announced a quarterly dividend of $0.74. The management aims to grow the dividend by 10% annually at least through 2024. It will also benefit from the Inflation Reduction Act since most of its projects are based in the U.S. The renewable energy division has gone from making losses to reporting a net profit in the recent quarter. 

The management aims to double the NextEra Energy Resources division by the end of 2026 and if it manages to achieve the same, we will see higher earnings and dividends. The company plans to add at least 33 to 42 gigawatts of renewables capacity between 2023 and 2026. This move will boost the company’s earnings while supporting dividend growth. NextEra is likely to live up to the projections and continue rewarding shareholders over the years. 

First Solar (FSLR)

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The largest developer of solar panels in the U.S., First Solar (NASDAQ:FSLR) primarily focuses on utility-scale panels. This is another company that is set to benefit from the Inflation Reduction Act due to its operations in the United States. The company recently announced that it will build a new solar panel manufacturing facility in the Southeast of the U.S. and will spend $1.1 billion on the factory. It also plans to spend another $185 million to upgrade and expand the current facilities in Ohio

Fundamentally, the company is in a strong position. Its net sales in the first quarter hit $548 million and the gross profit increased to 20% from 3% in the same quarter the previous year. With the country looking to achieve its climate change goals, we will see First Solar growing at a rapid pace. It recently acquired Evolar which is a manufacturer of perovskite solar cells. First Solar is set to benefit from this acquisition because the Sweden-based company, Evolar, develops the thin films that are used in solar panels, meaning this acquisition can speed up the development of the next-gen solar technology. If all goes as planned, this acquisition could define the future and make First Solar one of the biggest solar companies in the country.  

The government is taking all the necessary moves to protect the solar panel industry, and First Solar is set to benefit from the same. FSLR stock is trading at $195 today and is up 34% year to date. The stock started the year at $145 and has significantly grown since then. However, it is down 11% in the past month which means it could be a good opportunity to buy the energy stock at a discount. 

Enphase Energy (ENPH)

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Another sustainable profits energy stocks to add to your portfolio is Enphase Energy (NASDAQ:ENPH). The company specializes in solar micro-inverters, EV charging stations, and energy storage. In the recent quarter, it reported a sales growth of 64% year over year and expects sales in the range of $700 million to $750 million for the second quarter. Enphase stock is already priced at a premium and is trading at $179. However, with this stock, there is ample upside potential. It has dropped 46% in the past six months and its 52-week high is $339. The stock dropped after the firm warned about the slowing demand in the residential solar segment, but investors shouldn’t miss out on the EV charging market. This means the current range is a solid opportunity to buy this stock which has the potential to double in the coming months. 

The solar power evolution is at its prime and the world is going to need more microinverters that can create solar energy. Besides that, the company also has a presence in the EV industry as it produces Level 2/3 chargers for residential use. It will benefit the consumers who are switching to EVs and as the adoption of EVs continues to increase, we will see a rise in the demand for chargers. This is one energy stock with massive upside potential but investors will have to remain patient. However, Enphase stock will have a solid run and will pay off in the long term. 

On the date of publication, Vandita Jadeja 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.

Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis.