3 Alternative Energy Stocks to Buy Amid Rising Cost of Installation

Industry Overview - The Zacks Alternative Energy industry is divided into two main groups: one focuses on the generation and distribution of alternative energy, while the other is involved in the development and installation of renewable projects [2] - The industry includes companies offering fuel cell energy solutions, which have gained traction as affordable clean energy options [2] - Global spending on clean energy technologies is projected to reach $2 trillion in 2024, indicating significant growth opportunities in the clean energy sector [2] Key Trends - Wind energy is a major growth driver, with wind turbines accounting for approximately 10.2% of total U.S. utility-scale electricity generation in 2023, and a projected 5% year-over-year increase in 2024 [3][4] - The U.S. electric vehicle (EV) market is expected to grow at a CAGR of 6.6% from 2024 to 2029, supported by favorable government policies and declining battery prices, which enhances the prospects for clean energy stocks [4] Challenges - Rising costs of renewable installations, particularly due to increased prices of steel and other essential minerals, have posed challenges for clean energy installers [5] - The U.S.-China relationship may impact the green energy supply chain, as China accounts for up to 90% of refining capacity for rare earth elements critical to green energy products [6] Market Performance - The Alternative Energy Industry has outperformed its sector over the past year, with a collective stock surge of 24.2%, compared to a 2.6% decline in the Oils-Energy Sector [8] - The industry is currently trading at a trailing 12-month EV/EBITDA ratio of 9.06, significantly lower than the S&P 500's 18.90 [9] Company Highlights - Talen Energy Corporation (TLN): Announced an increase in its share repurchase program to $1.25 billion, with a projected 2025 sales estimate of $2.29 billion, reflecting a 16.3% improvement year-over-year [11] - FuelCell Energy (FCEL): Reported a 22% year-over-year increase in generation revenues, with a backlog of $1.20 billion, and a projected 2025 sales estimate of $2.29 billion, indicating an 84.5% improvement [12] - TXNM Energy: Achieved a 2.3% year-over-year increase in operating revenues and a 14.5% surge in operating income [13]