World Environment Day − established by the United Nations General Assembly in 1972 – is celebrated every year on Jun 5 to raise global awareness and take positive environmental action to protect nature and the planet Earth.
A heated earth is like a hot bed of coal and who can be blamed? From heating our homes to fueling our cars and getting the bread, the human race is increasingly adding to the carbon footprint. And in its wake comes deadly consequences – global warming, rising sea levels, floods and droughts, acute shortages of food and spread of diseases.
Countries worldwide are leaning in toward more awareness. And environmental considerations have become the driving force for the increasing use of alternate energy sources.
Global Renewable Drive
According to a report by the United Nations Environment Programme (UNEP), total worldwide investment in renewable energy rebounded strongly in 2014, reaching $270.2 billion, up almost 17% from the 2013 level. This was mainly triggered by major solar installations in China and Japan along with record investments in offshore wind projects in Europe, blowing away the challenge posed by sharply falling oil prices.
As per International Energy Agency, the share of renewables in total power generation is expected to rise to 33% in 2040 from 21% in 2012.
White House Turns a Deeper Shade of Green
The current U.S. administration’s efforts to restrict carbon emissions are a net positive for making the planet greener. "Clean energy" has long been the focus of the current administration. President Obama’s "Climate Change Action Plan" and the favorable green energy trends have already done a lot in pushing the sector northward. The budget proposal now seeks an approximate 7.2% rise in funding for a clean energy space.
The proposal asks Congress for a permanent extension of tax credits for the solar and wind industry. The fiscal 2016 budget request includes a $7.4 billion fund for clean energy technologies.
The common sense Clean Power Plan proposed by the U.S. Environmental Protection Agency, if implemented, would reduce carbon emission from power plants by 30% by 2030, compared to 2005 levels.
The Future Roadmap
Solar and wind are gradually transforming the way we produce and consume energy, driving the ongoing global energy transition. Market research firm IHS forecasts that global solar demand will rise 30% this year, doubling the growth of 2014. China will form a larger pie of the growth story with Japan retaining its position as the second largest solar market.
The U.S. will likely be in the third spot and the UK will draw up the fourth position. The latest report by the U.S. Energy Information Administration (“EIA”) shows that renewable energy will be the fastest growing power source through 2040.
The biggest detractors to the spread of alternative energy were the facts that the sun does not shine all the time nor does the wind blow always. And, of course, electricity is hard to store. U.S.-based Tesla Motors Inc.’s TSLA introduction of a new line of battery systems directed at homeowners, utilities and businesses will very soon put this notion to an end.
Even Apple AAPL is making a big move toward green energy. This tech giant in Feb 2015 has teamed up with the U.S. solar-panel manufacturer behemoth First Solar FSLR in what is touted as the largest commercial power agreement in the clean energy industry.
Our Picks
Unfortunately, solar energy stocks have taken a beating ever since oil prices began to tumble last June and the weakness has persisted this year as well. But over the long haul, there is no denying that green energy will be the only way out for a sustainable planet. On World Environment Day we bring into focus three stocks with a favorable green future.
JinkoSolar Holdings Co. JKS
This Zacks Ranked #3 China-based company specializes in low-cost production and supply of solar panels with operations spanning across Europe, North America and Asia. A vertically integrated firm with a global focus could be a great pick in the solar space. JinkoSolar is strategically poised to take advantage of China’s flourishing solar industry as well as other emerging solar nations.
Unlike its rivals, JinkoSolar has a more internationally diversified order book. Again, the benefit of having production outside China is that the company can dodge the anti-dumping tariffs levied by the U.S. and EU on Chinese manufacturers.
The company has an expected long-term earnings growth of 17.33% and its share price has soared 47.4% year to date.
Trina Solar Limited TSL
Another Zacks Ranked #3 (Hold) company, Trina Solar is an integrated solar-products manufacturer engaged in the design, development, manufacturing and sale of PV modules worldwide. It sells its products to power plant developers and operators, distributors, wholesalers, and PV system integrators. A rise in demand for solar panels has prompted many of these manufacturers to boost production.
The company started 2015 on a strong note with its first quarter gross margin expanding to 18% from 15.7% in the fourth quarter and sales increasing 25% year over year. Its long-term earnings growth is pegged at a healthy 16.16%.
Trina Solar’s share prices had jumped as much as 17% on the day of the earnings release on elevated volumes. Its solid beat also spread optimism into the broad industry, pushing other solar stocks higher as well. Year to date, Trina Solar’s share price has accelerated 32.5%.
NextEra Energy Inc. NEE
Apart from renewable stocks, this Zacks Ranked #3 (Hold) company is a premier U.S. utility service provider offering efficient power and energy services across various states. Its renewable expansion initiative has particularly been impressive, which will help the company meet regulatory mandates on carbon emission.
In Mar 2015, its Florida Power & Light Company filed a petition with the Florida Public Service Commission seeking approval for acquiring a 250-megawatt coal-fired facility, the Cedar Bay Generating Plant, in Jacksonville, only to phase it out of service. The decision was taken based on the fact that this facility emits a high amount of harmful carbon gases and generates electricity at a much steeper cost than its other facilities.
The company is also on track with its Port Everglades Clean Energy Center with expected commencement in mid-2016. This project is the third of three combined-cycle natural gas generation modernization projects. NextEra’s second combined-cycle natural gas project was the Riviera Beach Clean Energy Center, which started operations last year. In 2014, NextEra Energy invested around $3.1 billion in its FPL operations to support a series of large-scale modernization ventures.
The company has an expected long-term earnings growth rate of 6.22%.
Sum Up
ENDvironment it would be if we don’t start now. Let’s begin before it ends. And supporting green stocks is just another way of showing how responsible we are in nurturing seven billion dreams and saving the one planet we have.
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Click to get this free report NEXTERA ENERGY (NEE): Free Stock Analysis Report APPLE INC (AAPL): Free Stock Analysis Report TRINA SOLAR LTD (TSL): Free Stock Analysis Report FIRST SOLAR INC (FSLR): Free Stock Analysis Report JINKOSOLAR HLDG (JKS): Free Stock Analysis Report TESLA MOTORS (TSLA): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research