Renewable energy overtook Big Oil in 2013

Two of Dow Jones Industrial Averagethe company’s largest components became in 2013 the two biggest laggards in history to date. ExxonMobil AND Chevron are dominant players in the oil market and have long been great investments, but this year they have been eclipsed by smaller renewable energy companies that are starting to gain share in the energy industry.

ExxonMobil and Chevron’s recent earnings highlight the challenges they face. Yesterday, ExxonMobil reported that third-quarter revenue fell 2.4% and net income fell 21.6%, mainly due to lower refining profits. A similar trend occurred today with Chevron, which reported revenues rose just 0.8% to $58.5 billion and net income fell 5.8% to $4.95 billion, or $2.57 per action. As a result, Chevron is the worst performer on the Dow Jones Industrial Average today, down 1.9%. It is clear that this year the results of both companies were poor.

In contrast, both First Solar AND Solar power they have recorded profits in the last two days that have exceeded everyone’s expectations. First Solar earned $1.94 per share, missing estimates of $1.18, and SunPower’s profit of $0.44 was well ahead of Wall Street estimates of $0.29.

As renewable energy companies have grown and improved earnings, their stocks have performed significantly better than big oil, as you can see below.

FSLR total return price data by YCharts.

Longer term, trends will continue to favor renewable energy over big oil. Solar projects in Chile, Hawaii, Germany and other countries are competitive with grids without subsidies, and costs are only falling. New markets such as Saudi Arabia, Africa and China are just scratching the surface of their potential.

On the other hand, finding oil is becoming increasingly difficult, forcing explorers to search for very deep deposits and shale deposits around the world. This increases the cost of oil, and as demand for gasoline falls in the US and Europe, there is less appetite to pass on these costs to higher gas prices. Not only are big oil revenues not growing, they are also putting pressure on profits.

Big oil won’t disappear overnight, but it may be time to consider a small exposure of your portfolio to renewable energy. Energy trends are certainly tipping in our favor.

It’s time to adapt to a new energy paradigm
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The article Renewable Energy Outperforms Big Oil in 2013 originally appeared on Fool.com.

Fool, co-creator Travis Hoium manages an account that owns SunPower stock and personally holds the stock, and has the following options: long January 2015, long January 2015 calls, long January 2015, $7 call on SunPower, long January 2015, $15, connections at SunPower, long January 2015, $25. calls SunPower and in January 2015 for $40 calls SunPower. The Speckled Fool recommends Chevron. Try any of our Foolish newsletter services free for 30 days. We may not all be fools of the same opinion, but we all believe that considering a variety of insights makes us better investors. The Motley Fool has a disclosure policy.