You’ve Been Warned! 3 Renewable Energy Stocks to Buy Now or Regret Forever.

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We’ve all heard about the woes of renewable energy stocks these days. Macroeconomic uncertainty has discouraged consumers and companies from investing in clean energy technologies or infrastructure. In addition, high interest rates have severely damaged consumer demand for new electric vehicles, which are burdened by expensive car payments and auto insurance. When it comes to earnings, renewable energy companies tend to be capital-intensive (CAPEX) stocks. With such high interest rates, higher CAPEX can translate into greater pressure on net margins, which will largely deter investors interested in this space.

However, renewable energy technology isn’t going anywhere. Despite the current crisis, the sector will eventually bounce back from its current slump. Below are three renewable energy stocks worth buying before it’s too late.

BYD (BYDDY)

BYD (OTCMKTS:BYDDY) from a lithium-ion battery manufacturer to a world-class new energy vehicle (NEV) vendor. The NEV manufacturer was even able to beat long-time competitor Tesla (NASDAQ:TSLA) in sales in 2023. Despite concerns about a decline in EV sales, BYD largely maintained its strong growth trajectory. At the end of the first quarter of fiscal 2024 (ended March 31), BYD’s sales rose 46% year-over-year to 301,631 passenger vehicles, of which 300,114 were NEVs.

Intense competition in China’s electric vehicle market is putting pressure on the margins of BYD and other competitors, but the growth speaks for itself. In April, BYD’s electric vehicle sales increased 48.9% to 313,245 vehicles, while in May, electric vehicle sales also increased 38.1% to 331,817 electric vehicles. International opportunities, particularly in Latin America, the Middle East and Southeast Asia, await BYD and will certainly improve the automaker’s financial performance in the future.

Not to mention that BYD still has an attractive valuation compared to Tesla, for example. Notably, Chinese maker NEV’s forward-looking P/E multiple is approximately 19.9x forward earnings, making it an attractive investment opportunity for long-term investors.

First Solar (FSLR)

Manufacturer of solar panel modules First Solar (NYSE:FSLR) also deserves an honest look from investors. First Solar designs and manufactures photovoltaic (PV) solar cell modules that use thin-film semiconductor technology. “Thin film” refers to the thin layer of non-crystalline silicon that goes into the semiconductor part of solar panels. This process requires much less silicon, which lowers overall costs.

Like many U.S. solar panel manufacturers, First Solar has struggled to fend off Chinese competition that makes solar panels using similarly advanced technology but at lower production costs. That’s about to change. The Biden administration has announced a 50% tariff on solar module imports from China. The move is certainly welcome in the U.S. domestic solar sector.

First Solar shares are up 34.4% year to date, yet the company trades at 16.2x forward earnings, which is less expensive given the high-priced tech stock environment in the United States.

iShares Global Clean Energy ETF (ICLN)

Investors who want diversification in the sector but are still afraid to put a significant amount of money into one renewable energy company should consider exchange-traded funds (ETFs). The iShares Global Clean Energy ETF (NASDAQ:ICLN) can be a good investment. The $2 billion ETF is invested in 145 different stocks exposed to various aspects of the broader renewable energy sector. This includes solar energy, hydrogen energy, hydropower and wind energy.

ETF holdings include First Solar, Ormat Technologies (NYSE:ORA), significant geothermal energy business, and Connect the power (NASDAQ:PLUG), creator of hydrogen fuel cells with a proton exchange membrane.

The renewable energy sector has not performed well, as reflected in ICLN’s year-to-date performance. ICLN is down over 11% year-to-date. However, with inflation seemingly under control, renewable energy stocks could very well rebound by investing in ICLN after it has already lost its lucrative value.

As of the date of publication, Tyrik Torres 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.

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