3 Clean Energy Stocks to Sell in July Before They Crash and Burn

Energy stocks have long been a favorite of many investors. The energy sector encompasses various sub-industries and companies within them, such as natural gas, coal, oil, and alternative clean energy.

However, as our interconnected global society becomes more aware and educated about the environmental damage caused by climate change, consumer demand for clean energy has skyrocketed. To meet this growing demand, governments have begun supporting large clean energy subsidy projects, such as the Biden administration’s Inflation Reduction Act (IRA).

However, it has been almost two years since the IRA was enacted, and many renewable energy companies are ending the initial subsidies they were given. To make matters worse, the Federal Reserve has been aggressively raising interest rates, which discourages investment in large renewable energy projects.

So at this point, investors should be skeptical of clean energy stocks and start selling their positions if they have any. Below are three clean energy stocks to sell in July before they crash and burn.

Solar energy (NOVA)

Sunnova Energy (NYSE:NEW) is a Texas-based solar energy company that specializes in residential solar panels. The company operates in all 50 states and not only offers solar panel electricity generation, but its services also include providing customers with the ability to use solar energy to charge electric vehicles at home. The company has amassed more than 430,000 customers nationwide.

Sunnova Energy had a great year in 2022 after recovering from the Covid-19 pandemic, achieving triple-digit growth. However, since then, the Texas-based renewable energy company has been on a downward spiral. Last year, Sunnova Energy saw its net income grow by -158.57% year-over-year due to an extended period of negative cash flow, as well as a general decline in solar demand. Given the current macroeconomic conditions, as well as weak financial results, Sunnova Energy shows no signs of a quick recovery.

AES (AES)

AES (NYSE:AES) is an energy generation and utilities company with subsidiaries in Ohio and Indiana. The American energy giant has a much larger international reach, generating and distributing electricity in 15 countries. It is one of the largest energy companies in the world and is a Fortune 500 company.

In 2023, AES announced that it had successfully completed 3.5 gigawatts (GW) of renewable energy projects, doubling the company’s capacity compared to the previous year. Of that figure, 1.6 GW was solar, 1.3 GW was wind, and 0.6 GW was energy storage. While that may sound like good news for investors, the reality is that the completion of the project didn’t help financially. In fact, the company’s latest financial data reveals that AES saw a 5% drop in revenue compared to the previous quarter, while its debt increased by 20%. At the time of writing, the stock has lost 10% of its value since the beginning of the year. These financials don’t look promising at all, and investors should start selling positions in AES soon.

Enphase Energy (ENPH)

Enphase Energy (NASDAQ:ENPH) is a globally recognized solar energy company. It is known for its microinterrupter-based solar and battery technology, as it is the largest supplier in the world. From less than $10 per share five years ago to almost $350 per share in 2022, Enphase Energy has seen tremendous growth over the past few years. Especially in 2022, when the Biden administration passed the IRA, which focused on increasing government subsidies and tax breaks to encourage the development of more renewable energy sources such as solar projects in the country, the excitement increased exponentially.

Unfortunately, many of those headwinds have dissipated as the Fed aggressively raises interest rates, subsidies start to dry up, and macroeconomic conditions have left our country in a state of economic uncertainty. Enphase Energy shares have a price-to-earnings ratio of over 40, and analysts are predicting a decline in revenues of nearly 35%. With too much uncertainty and a high price, now is a good time to sell Enphase Energy.

As of the date of publication, Andy Kim did not have (either 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 InvestorPlace.com Publication 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.