I’ve added two companies from the renewable energy sector to my watchlist: Vestas Wind Systems and NextEra Energy. Let’s take a look:
Vestas Wind Systems
Vestas Wind Systems (OTC: VWSYF) installed its first wind turbine in 1979. Since then, Vestas has played an active role in the wind energy industry. The industry pioneer is a market leader in high-tech solutions for wind energy firms.
The company develops, produces, markets, sells, and maintains wind turbines. These products convert wind energy into electricity.
Despite COVID, the business remains solid. For the second straight year, Vestas increased sales by 20% to $17.9 billion. Profits rose by 10%. With the world turning to renewable energy, Vestas can profit from a big push to the wind sector.
Total wind capacity will likely grow by 8% each year through 2030. By 2050, wind could meet up to 56% of the world’s energy needs. That’s a big jump from 2019, when the capacity level was 9%.
Vestas will dramatically increase investments in offshore wind by 2025. By then, sales in this segment will likely exceed $4 billion. In the long term, the company sees onshore wind energy ahead and forecasts stronger growth for it.
Due to the COVID-19 crisis, orders fell by 8% last year. However, that figure topped annual sales expectations. Both divisions achieved growth. Sales of wind turbines increased by 24%, while services jumped by 10%.
Vestas is also very entrenched in the U.S. markets, where its sales increased by 50% year-over-year. Now, with the favorable policies of President Biden, I expect even more growth.
NextEra Energy: Southern Energy Provider
Next up is NextEra Energy (NYSE: NEE), a company I added to my watch list on Tuesday. The company generates, transmits, distributes, and sells electricity to retail and wholesale customers. Its primary customer base is in North America.
This is another clean energy play. NextEra generates electricity from wind, solar, nuclear, and fossil fuels like natural gas. It also focuses on renewable energy generation, power transmission facilities, and battery storage.
NextEra managed fiscal 2020 well, despite the pandemic and a busy hurricane season. Adjusted earnings increased by 10.5%. The company is particularly active in the southern U.S. It offers local power producers and providers the expansion of their power lines in project companies.
Its subsidiaries, Florida Power & Light and Gulf Power, have managed the last year well. Both continue to deliver great value to their customers. The region’s residential electric bills are the lowest in the United States compared to the top 20 utilities.
A Solid Renewable Energy Play
NextEra Energy is highly stable. It will continue to invest in new energy production capacities. Currently, renewable energy plants with 15,000 megawatts are under construction.
It is the largest construction project NextEra Energy has ever had. Generation is essential, but the power also has to get to the customer.
NextEra Energy recently expanded its portfolio in this area. It purchased GridLiance from Blackstone for $660 million. Currently, GridLiance has power lines totaling 700 miles in its portfolio.
The board has announced strong growth for 2021 and 2022. Adjusted earnings will likely increase by at least 6% to 8% annually.