From the merits of the Green New Deal to the courage of Greta Thunberg and her speech before the United Nations, the subjects of renewable energy and climate change have frequently been front and center amid the headlines in 2019.
Similarly, it's been another big year for renewable energy stocks as individuals, corporations, and governments continue to eschew traditional fuel sources for green power options. Let's look at five of the biggest winners among stocks from the renewable energy sector over the past year.
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5. Brookfield Renewable Partners (up 81%)
Providing a diversified approach to investing in renewable energy, Brookfield Renewable Partners (BEP -2.76%) has a portfolio of assets covering the gamut of clean energy: hydropower, wind, solar, energy storage, and biomass. Early in 2019, shareholders celebrated the company's Q4 earnings release, which showed 14% growth in per-unit funds from operations (FFO) in 2018 compared with 2017. Subsequently, on the strength of the company's financial performance, management announced a 5% increase to the quarterly distribution. And Brookfield Renewable Partners' strong performance extended into the first quarter of 2019, when the company reported an 18% year-over-year increase in FFO.
While the company's investment-grade balance sheet may reassure some investors who are sensitive to risk, others may have been wary of the company, which had a FFO payout ratio of 90% on an annualized basis at the start of the year. Through 2019, however, the company has made progress in achieving its long-term target ratio of 70%. In the company's Q3 2019 results, it reported that its FFO payout ratio for the first nine months of 2019 was 87% -- a notable improvement over the 103% FFO payout ratio for the same period of 2018.
4. Plug Power (149%)
Bouncing back from a year in which they plunged 48%, shares of Plug Power (PLUG -1.85%) have risen significantly higher in 2019. In January, investors rejoiced following a company presentation that forecast the company would report gross billings (or revenue before removing provisions for common-stock warrants) of $235 million to $245 million in 2019 and achieve positive adjusted EBITDA in 2019.
Another source of excitement for investors came in the form of insider buying, suggesting management's faith in the company's future. In March, CEO Andy Marsh and board chairman George McNamee bought $30,000 and $234,000, respectively, in company stock.
Like the first half of 2019, the second half has had its interesting moments. In September, the company revealed an ambitious five-year plan, projecting revenue of $1 billion and adjusted EBITDA of $200 million. One of the best moments for shareholders, though, came in the form of news from Wall Street. Analysts from B. Riley FBR and Roth Capital both raised their price targets on the stock to $6 from $3.50 and $3, respectively.
3. SolarEdge Technologies (169%)
It didn't take long in 2019 before shares of SolarEdge Technologies (SEDG -1.45%) began to burn brighter in shareholders' eyes following the company's January announcement of its closing of a majority stake in S.M.R.E. Spa. The deal provides SolarEdge with greater opportunity to prosper from the growing adoption of electric vehicles.
Investors have also been enthused about the company's financial performance throughout the year. In Q1, SolarEdge set a company record for quarterly revenue, booking $271.9 million on the top line. Based on the company's Q1 achievement -- and those of the subsequent quarters -- management revealed during a presentation in November its expectation that revenue and operating profit will rise 52% and 49%, respectively, in 2019 compared with 2018.
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The interest in the stock from analysts represented another catalyst for investors. An analyst at Canaccord raised his price target to $68 from $62 in July, then to $78 in August, and ultimately to $88 in November, according to Thefly.com. In another bullish outlook, an analyst with Roth Capital raised his price target to $105 from $70 in August.
2. Ballard Power (190%)
Like its fuel-cell peer, Plug Power, Ballard Power Systems (BLDP -4.29%) also delighted shareholders in January. But unlike Plug Power, with its optimistic 2019 forecast, Ballard impressed investors with news that its partnership with Weichai Power was gaining traction, portending possible success in the Chinese fuel cell market.
Earlier in December, investors received further confirmation of the successfully burgeoning relationship. Ballard announced that it had received a $19.2 million purchase order from its joint venture with Weichai as part of a long-term membrane electrode assembly supply agreement. And it wasn't only China where the company found success; Ballard received a purchase order in May for 20 fuel cell modules to power electric buses in London, among other orders from the Netherlands and Germany to name a few.
Another factor that electrified investors in 2019 was the recognition of analysts' increasingly favorable opinion of the stock. For example, an analyst with Lake Street reiterated his buy rating in early November and raised his price target to $6 from $5, and Cormark Securities assigned a price target of 13 Canadian dollars ($9.93), noteworthy considering the stock was trading under CA$8 on the Toronto Stock Exchange at the time.
1. Enphase Energy (466%)
As the best-performing renewable energy stock of 2019, Enphase Energy (ENPH -2.12%) shocked investors and gained 466%. The introduction of a new generation of its IQ microinverters, the announcement of a strategic supply agreement with Sunrun, and the availability of pre-orders for North American customers of the Enphase's battery storage solution were some of the major developments that motivated investors. But the stock's performance is also largely attributable to the company's improved year-over-year financial performance.
Through the first nine months of the year, Enphase has achieved year-over-year growth in revenue and operating income of 96% and 495%, respectively. The cash flow statement is another bright spot as Enphase has generated $36.8 million in cash from operations -- a 158% increase over the same period last year.
Moreover, the company's financial health has improved over the year. Whereas Enphase began 2019 with net debt of $3.5 million, it ended Q3 with a net cash position of $99 million.
The powerful wrap-up
While it has undoubtedly been an exciting year for investors in these renewable energy companies, 2020 is right around the corner, and there's no guarantee that the first year of the new decade will be as fortuitous. In general, fuel cell companies seem the most likely to hit bumps in the road in 2020, while Brookfield Renewable Partners, SolarEdge, and Enphase appear poised to build on their recent successes.
