Three clean energy stocks to avoid for now
2024 is not a good year for clean energy stocks. Investors hoping for a quick transition to green energy have been disappointed. High interest rates are motivating investors to seek better returns in other segments. As a result, clean energy is losing its appeal.
Despite a promising future in clean energy, investors want quick profits. But these are not available in 2024. Clean energy companies perform poorly, leading investors to turn away from them.
One of the main reasons for this trend is declining consumer demand. For example, a solar system is a significant investment for most households. Installation can cost up to $27,000 before subsidies, meaning most solar installations require a loan. However, high interest rates make investing in solar systems too costly for many people.
As people wait for interest rates to drop, many solar stocks are suffering. Until rates fall, clean energy will continue to decline. Regardless of the end of Federal Reserve rate hikes, this trend will continue into 2025 and beyond, analysts say. Which 3 stocks do they think are currently the worst?
Plug Power $PLUG-5.8%
Plug Power Inc.
PLUGPlug Power is looking to advance hydrogen fuel cell technology. Since its inception, it has developed many commercial products such as the GenSure and GenDrive hydrogen batteries. Despite its many successes, Plug Power continues to report losses that have increased almost every quarter for the past three years.
The main reason for the increasing losses is that hydrogen cars are not yet competitive. For example, hydrogen production is only 75% efficient. Another 10% is lost during transport. Under optimal conditions, the efficiency of generating electricity from hydrogen in a car is only 60%. The process is therefore less efficient compared to other sources of clean energy.
Hydrogen energy cannot compete in the market without large subsidies, which governments around the world have not yet provided. Most of these are directed towards solar and wind power. Plug Power's stock is down 45% in 2024.
Sunnova Energy $NOVA-6.0%
Sunnova Energy…
NOVASunnova Energy focuses on commercial and home solar installations and allows its customers to use solar power to charge electric vehicles. NOVA stock has seen significant upside after the lockdown in 2022 and early 2023. However, by the end of 2023, the company's net income was down 158% compared to the previous year.
The company faces long-term negative cash flow and declining demand for new systems due to high interest rates. The stock has lost 51% of its value. Given the financial situation and interest rates, it is wise to consider selling these shares by 2025.
JinkoSolar $JKS-1.8%
JinkoSolar manufactures solar modules, solar cells, silicon wafers and ingots and sells its products worldwide. The company has seen a dramatic decline in profitability. For example, in its most recent quarterly results, gross profit fell 35% year-over-year. Operating loss was 1.5%, compared to 5.2% in the same period in 2023.
The first signs of trouble emerged in the fourth quarter of 2023, when JinkoSolar missed earnings estimates, causing turmoil among investors. JKS shares fell by 40% in 2024. The company is facing declining financial performance and high interest rates, which means the future of JKS shares is not promising.
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