3 Renewable Fuel Stocks With Big Potential
The world is accelerating its transition to renewable energy, driven by strong government support, rising job creation, and a shared commitment to safeguarding the environment. As a result, the clean energy sector is experiencing remarkable growth.
Amid this backdrop, investors could scoop up shares of fundamentally stable renewable fuel stocks, Vistra Corp. (VST), Duke Energy Corporation (DUK), and American Electric Power Company, Inc. (AEP), which are well positioned to capitalize on the growth prospects of the clean energy industry.
The U.S. renewable energy sector ended 2024 on a strong note, with over 73 GW of large-scale solar, wind, and battery storage capacity under construction by late November, driven by efforts to secure Inflation Reduction Act tax credits ahead of potential policy changes. This represents significant growth compared to less than 60 GW under construction a year earlier. Lesley Hunter, senior vice president of policy and engagement at the American Council on Renewable Energy also mentioned, “In 2025, clean energy will continue to play an important role in bolstering local economies, especially as more clean energy manufacturing plants come online.”
Amid the array of renewable fuel options, solar power consistently stands out as the preferred choice. With record-setting utility-scale installations in the third quarter, growing domestic manufacturing capacity, and its dominant share in new electricity generation, solar energy continues to anchor the expansion of the clean energy sector.
Recently, a report by the Solar Energy Industries Association has showcased the impressive growth the sector has presented in the past year’s third quarter. The quarter set up a record 8.6 GW of installed capacity, a 21% increase from the previous year. Domestic module manufacturing surged, reaching nearly 40 GW of capacity, a fivefold increase since mid-2022, with the first U.S. cell manufacturing facility opening since 2019.
Now, considering these positive trends, let us dive deep into the fundamentals of three Utilities – Domestic stocks, starting with #3.
Stock #3: Vistra Corp. (VST)
VST is an integrated retail electricity and power generation company that retails electricity and natural gas to residential, commercial, and industrial customers. It has six segments: Retail; Texas; East; West; Sunset; and Asset Closure.
On December 17, 2024, VST announced the connection of two new utility-scale solar projects in Illinois to the grid. The company aims to run the plant through 2027. Expanding solar projects across different states could enhance the company’s market reach and contribute towards production of zero-carbon electricity annually over the next 20 years.
For the fiscal 2024 third quarter that ended September 30, 2024, VST’s operating revenues increased 53.9% year-over-year to $6.29 billion. Its operating income rose 210.3% from the year-ago value to $2.59 billion. Additionally, net income attributable to VST grew 276.1% from the prior year’s quarter to $1.89 billion.
Analysts expect VST’s revenue and EPS for the fiscal 2025 first-quarter ending in March to increase 38.9% and 187.4% year-over-year to $4.24 billion and $0.70, respectively.
Shares of VST have surged a whopping 125.7% over the past six months and 281.4% over the past year to close the last trading session at $166.90.
VST’s POWR Ratings reflect its solid fundamentals. VST has a B grade for Growth and Momentum. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.
Within the Utilities – Domestic industry, VST is ranked #31 out of 58 stocks. To access VST’s Value, Quality, Stability, and Sentiment ratings, click here.
Stock #2: Duke Energy Corporation (DUK)
DUK is an energy company that generates electricity through coal, hydroelectric, natural gas, oil, solar, and wind sources and transmits, distributes, and sells to Carolinas, Florida, and the Midwest. The company has two segments: Electric Utilities and Infrastructure (EU&I) and Gas Utilities and Infrastructure (GU&I).
On February 5, DUK announced free home and business energy assessments, money-saving rebate programs for its customers in Florida. The assessments which are aimed towards saving money for the customers and continuing to reduce their electric bills for years to come, could also aid in the company’s user retention and growth.
On January 29, DUK announced reaching its goal of providing nearly 750 megawatts of solar generation in Florida from 2022 to 2024 through all 10 of its now functional Clean Energy Connection solar energy sites. With the increasing popularity of renewable fuel, this move could enhance the company’s presence in the solar energy market.
For the fiscal 2024 third quarter that ended September 30, 2024, DUK’s total operating revenues increased 2% year-over-year to $8.15 billion. Its operating income rose 1.6% from the year-ago value to $2.14 billion. Moreover, the company’s adjusted earnings and adjusted EPS amounted to $1.24 billion and $1.62, respectively.
Street expects DUK’s revenue and EPS for the fiscal 2024 fourth quarter that ended December 2024 to increase 6.1% and 9.2% year-over-year to $7.65 billion and $1.65, respectively.
Shares of DUK have surged 12.5% over the past nine months and 20.4% over the past year to close the last trading session at $114.99.
DUK has a B grade for Stability and Momentum. DUK is ranked #24 in the same industry.
In addition to the POWR Rating highlighted above, you can check DUK’s ratings for Sentiment, Quality, Growth, and Value here.
Stock #1: American Electric Power Company, Inc. (AEP)
AEP is an electric public utility holding company. It is involved in the generation, transmission, and distribution of electricity for sale to retail and wholesale customers. The company has four segments: Vertically Integrated Utilities; Transmission and Distribution Utilities; AEP Transmission Holdco; and Generation & Marketing.
On January 9, AEP announced a definitive agreement for a strategic partnership between KKR and PSP Investments to acquire a 19.9% equity interest in the company’s Ohio and Indiana & Michigan Transmission Companies for a transaction cost of $2.82 billion.
This transaction could allow AEP to efficiently finance a growing segment of its business in the Midwest and enhance its ability to serve growing customer demand and provide reliable service.
For the fiscal 2024 third quarter that ended September 30, 2024, AEP’s revenues increased 1.9% year-over-year to $5.42 billion. Also, its non-GAAP operating earnings and non-GAAP EPS grew 6.7% and 4.5% from the prior year’s quarter to $985.40 million and $1.85, respectively.
The consensus revenue and EPS estimates of $20.27 billion and $5.60 for the fiscal year that ended in December 2024 reflect a year-over-year rise of 5.2% and 6.7%, respectively. Moreover, the company has surpassed the consensus EPS estimates in three of the four trailing quarters, which is impressive.
AEP’s shares have surged 10.6% over the past nine months and 28.6% over the past year, ending the last trading session at $99.42.
AEP’s fundamentals are mirrored in its POWR Ratings. AEP has a B grade for Growth, Momentum, and Stability.
Within the same industry, AEP is ranked #7 out of 58 stocks.
Click here to access AEP’s Value, Quality, and Sentiment ratings.
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DUK shares rose $0.59 (+0.51%) in premarket trading Monday. Year-to-date, DUK has gained 6.73%, versus a 2.51% rise in the benchmark S&P 500 index during the same period.
About the Author: Aritra_Gangopadhyay
Aritra is a financial journalist dedicated to breaking down complex financial topics into simple, actionable insights. Holding a Master’s degree in Economics, he uses his analytical expertise to help investors uncover unique opportunities for long-term success. More…