Wind energy is part of the fast-growing renewable energy industry, which is designed to produce energy with lower carbon emissions and less pollution. The Global Wind Energy Council notes that the global wind industry has increased dramatically in recent years. The industry has different facets, such as developing and managing wind farms, producing and distributing the electricity generated by wind power, and manufacturing, distributing, and maintaining machinery. The size of competitors ranges from small players to large, multinational companies that operate their wind energy business as a division or subsidiary.
The wind energy sector, represented by the First Trust Global Wind Energy ETF (FAN), underperformed the broader stock market over the past year. FAN provided a total return of -12.7% over the past 12 months, well below the Russell 1000’s total return of -7.1%. These market performance numbers and all statistics in the tables below are as of Aug. 6, 2022. The conversion rate from CAD to USD was 0.77 as of Aug. 8, 2022.
Inflation Reduction Act (IRA) Passage
The Inflation Reduction Act (IRA) of 2022, passed the Senate on Aug. 7, 2022. The legislation calls for a more-than-$300-billion investment in energy and climate reform. This would be the largest federal investment in clean energy in U.S. history. Measures in the bill would invest in renewable energy infrastructure, including additional wind turbines and the manufacture of solar panels. Individuals would receive tax credits on the purchase of electric vehicles and steps taken to make homes more energy efficient.
Here are the top three wind stocks with the best value, fastest growth, and best performance.
These are the wind stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
- Iberdrola SA: Iberdrola is a Spain-based multinational electric utility company. The company engages in the generation, distribution, and trading of electricity. It specializes in clean energy, including onshore and offshore wind, and solar energy.
- Northland Power Inc.: Northland Power is a Canada-based global power producer focused on the production of electricity from clean renewable resources. The company operates both onshore and offshore wind facilities, efficient natural gas facilities, and solar energy facilities. Northland Power is expected to release its report for Q2 2022 on Aug. 12.
- TransAlta Renewables Inc.: TransAlta Renewables is a Canada-based power generation company. The company owns and operates renewable power generation facilities, including wind, hydro, and gas. On Aug 4, TransAlta Renewables announced reported earnings for Q2 2022. The company amended and extended the power purchase agreements with New Brunswick Power at the Kent Hills wind facilities for an additional 10-year period through to December 2045.
These are the top wind energy stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
- NextEra Energy Inc.: NextEra Energy, Inc. is an electric power and energy infrastructure company. It operates through the following segments: FPL and NEER. The FPL segment engages primarily in the generation, transmission, distribution, and sale of electric energy in Florida. The NEER segment produces electricity from clean and renewable sources, including wind and solar. It provides full energy and capacity requirements services, engages in power and gas marketing and trading activities, participates in natural gas production and pipeline infrastructure development, and owns a retail electricity provider. On July 29, NextEra Energy announced quarterly dividend of $0.425 per share. The dividend is payable on Sept. 15, 2022, to shareholders of record on Aug. 30, 2022.
- Northland Power Inc.: See above for company description.
- Vestas Wind Systems A/S: Vestas Wind Systems is a Denmark-based wind energy company. It develops, manufactures, and installs wind turbines that produce electricity. The company also operates a service segment that provides service contracts, spare parts, and related activities. On May 2, the company reported Q1 2022 results. Net losses widened considerably YOY, even as revenue rose, fueled by higher wind turbine deliveries in Europe and the U.S. EPS was negative for the most recent quarter, making a growth figure impossible to calculate for the chart above.
- TransAlta Renewables Inc.: See above for company description.
These are the wind energy stocks that had the best returns or smallest declines in total return over the past 12 months out of the companies we looked at.
- Boralex Inc.: Boralex is a Canada-based electricity producer engaged in the development, construction, and operation of renewable energy power stations. The company operates wind, hydroelectric, thermal, and solar segments. Boralex released its Q2 2022 financial report on Aug. 3. The company saw an increase in cash flow of $20 million year-over-year (YOY).
- NextEra Energy Inc.: See above for company description.
- Northland Power Inc.: See above for company description.
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