3 Undervalued Renewable Energy Stocks to Buy in July 2024

Undervalued renewable energy stocks are in the spotlight as the global energy mix shifts. The renewable energy industry is forecast to grow by 16.8% annually through 2031, illustrating its systematic potential.

Despite the industry’s resilient growth momentum, many renewable energy stocks remain undervalued. As such, I decided to embark on a journey to find three best-in-class renewable energy stocks to invest in. Methodologically, my selection process focused on fundamentals, valuation multiples, and event-driven pivot points. I also leveraged technical analysis to ensure a complete fit.

Renewable energy stocks may not be for everyone. However, I believe they contribute to a well-rounded investment portfolio. If you agree with me, here are three undervalued renewable energy stocks to consider.

Sun Run (RUN)

Sun Run (NASDAQ:START) is a top pick at Soros Fund Management, which recently bought 2.08 million shares of RUN. While this is an isolated incident, George Soros’ interest is significant given his firm’s reputation and large following.

In addition, Sunrun’s fundamentals appear to be reaching an inflection point. For example, the company announced in June that it had secured the largest-ever solar securitization, $886.3 million in financing, illustrating investor confidence in its prospects. Additionally, Sunrun experienced solid fundamental momentum, reporting 15% customer growth in the first quarter, communicating the company’s scalability.

The concern about Sunrun is that it is operating at a net loss. However, the blitzscaling is probably more important than profitability for now. That is why I believe RUN stock is a buy, especially given the financial market-driven momentum, which includes a price-to-book ratio of 0.54x and a price target of $18 per share from Goldman Sachs (NYSE:GS).

Canadian Solar Energy (CSIQ)

Canadian Solar (NASDAQ:CSIQ) stock is a classic event-driven opportunity. In May, the company revealed that its subsidiary, Recurrent Energy, had secured a $1.4 billion loan to support its expansion venture, which includes building several new solar plants in Europe. Additionally, Canadian Solar announced last month that it had opened a new solar module assembly plant in Texas, which will allow it to produce 20,000 high-power models per day.

CSIQ stock is down nearly 10% over the past month, suggesting investors haven’t yet priced in the aforementioned variables. Still, a rejuvenated systematic support will lend Canadian Solar a helping hand as recent events weigh on the stock.

Unlike Sunrun, Canadian Solar is profitable and operates with a net profit margin of 2.8%, which I consider favorable. In addition, CSIQ’s share price multiples signal deep value. For example, CSIQ shares have a price-to-sales ratio of just 0.15x and a price-to-book ratio of 0.41x.

Northland Power (NPIFF)

Northland Power (OTCMKTS:NPIFF) is a departure from the solar pure play stocks mentioned earlier in the article. Instead, the company is gaining access to the renewable energy industry by getting involved in infrastructure. The company’s target markets include wind power, solar power, and natural gas. Additionally, Northland Power is geographically diversified, operating in regions such as North America, South America, and Europe.

I’m a big believer in NPIFF stock for a few reasons. First, the company and its investors got a nice surprise earlier this year when BMO Capital reiterated its “outperform” outlook for NPIFF stock. Then, Northland Power posted a promising first-quarter earnings report, revealing C$754.92 million in revenue, up 21.4% year over year.

In addition, Northland Power has presented some enticing market indicators. For example, the stock has formed a momentum trend, trading above its 10-, 50-, 100- and 200-day moving averages. What’s more, NPIFF’s price-to-sales ratio of 2.54x has a five-year discount of about 33%, indicating that NPIFF stock has relative value in store.

I’m not saying Northland Power stock is a guaranteed winner, folks. But don’t be surprised if it skyrockets next year!

As of the date of publication, Steve Booyens did not have (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are the author’s own, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication of this article, the editor in charge did not hold (directly or indirectly) any interests in the securities referred to in this article.