Annual Global Renewable Energy Investment Could Reach $2.9 Trillion in the Next 5 Years. Here's 1 Top Renewable Energy Stock to Buy.
The money is being lined up. As for which companies will get the lion's share of it, look for the names that solve the biggest problems the best way possible.
By James Brumley
In their infancy, renewable energy sources like solar and wind power faced plenty of skepticism. Now they're the inevitable future. BloombergNEF, in fact, predicts the planet's annual investment in the transition from the old energy paradigm to a more sustainable one will swell from last year's $2.3 trillion to $2.9 trillion by 2030.
The question for investors is, how does one best capitalize on the growth opportunity at hand? A company called Bloom Energy (BE 0.86%) is a pretty good bet.
Why Bloom Energy?
It's certainly not a household name like Tesla or utility outfit Constellation Energy, which has a massive nuclear power portfolio. Indeed, there's a good chance you've never even heard of the $100 billion company.
Don't let its lack of familiarity (or its lack of historical profitability) deter you, though. There's a reason its first-quarter top line grew 130% year over year, just as there's a reason analysts expect Bloom's revenue to improve 84% this year, dramatically widening per-share earnings in the process with more than a doubling of that bottom line expected for next year. That reason is, this company's figured out how to give its market exactly what it wants, how it wants it.
That market is the electricity every building needs to function, by the way, including artificial intelligence data centers. Bloom Energy makes and markets solid oxide fuel cells that chemically convert natural gas, hydrogen, or even biogas into electricity. It's cleaner than combustion, simple, reliable, and, now, affordable as well as practical. That's why the company sold $751 million worth of its so-called energy servers last quarter, to customers that include AI data center powerhouses Oracle and Equinix.
This is still just the beginning, though. Precedence Research predicts the worldwide fuel cell business is likely to grow at an average annualized pace of 25% through 2035. Bloom Energy is poised to win more than its fair share of this growth simply because its solid oxide fuel cells are able to utilize multiple sources of fuel, including artificially made biogas. In the company's own words, this flexibility makes its technology "future proof."
Just be patient
There is one arguable downside here. That's valuation. Plenty of investors have already discovered Bloom and connected the proverbial dots, subsequently pushing the stock more than 1,400% higher over the course of just the past 12 months. That's more than 20% above analysts' current consensus price target of $279.85. It wouldn't be wrong to wait and see if you can get in at a better price.
Just don't be too stingy if you're interested. These buyers are looking a little further down the road, recognizing that Precedence's incredibly bullish outlook for the fuel cell industry isn't unreasonable. Neither is BloombergNEF's outlook for the whole of the renewables business. Sometimes you have to pay a premium to participate. It's often worth it in the end for patient investors.