If you are looking to capitalize on the current global secular trend of renewable energies, the United States is an excellent place to start. President Biden has already signed numerous bills that are pumping money into renewables and clean energy companies, in the hopes of rapidly scaling American energy infrastructure. NextEra Energy (NYSE:NEE) is one of the main beneficiaries as it is currently the largest electric utility holding company in North America by market cap. Learn more
NextEra was founded back in 1984, although the actual historical timeline is a bit more confusing. The company that started it all is actually the Florida Power and Light Company, which was founded in 1925, but eventually became the FPL Group in 1984. By 2010, the company officially changed its name to NextEra. The company followed the same path of so many energy sector rivals as the COVID-19 pandemic hit the stock hard, followed by a rapid rebound that culminated at its peak in late January of 2021 when President Biden took over office. Since then shares have traded mostly flat, but we could see another bullish uptrend after several more infrastructure bills look to be on the way. With a market cap of $145 billion USD, does NextEra have any chance to continue to grow?
NextEra Stock Analysis: Let’s not confuse NextEra with a plain old utilities company, even though a large portion of its portfolio is FPL or Florida Power and Light. NextEra is also one of the world’s largest wind energy generating companies with over 9,800 turbines operating in the U.S., which offers a net generating capacity of more than 14,100 megawatts of wind energy. It is also one of the largest solar power generators, with cutting edge on-site solar panel installation as well as subsequent solar energy power storage.
But it’s not just renewables that NextEra is involved in. The company is also an industry leader in natural gas plants as well as the severely underrated nuclear energy. While not as environmentally friendly as solar and wind, natural gas and nuclear actually provide cheaper overall customer costs than electricity, which is one reason for their continued popularity in the consumer market.
NextEra still works in the fossil fuel industry as well, operating 13 crude oil pipelines in eight different American states. As much as carbon neutrality and renewables are the future, even the most bullish clean energy person can agree we are still years away from lowering our reliance on crude oil and other fossil fuels.
While NextEra is undeniably one of the largest energy companies in the U.S. and Canada, the company has shied away from any form of international expansion. Opening the doors to the key markets of Europe and Asia could be the only avenue for sustainable growth, although thus far, it does not look like the company has much interest.
Final Verdict on NextEra: It’s hard not to recommend one of the world leaders in clean energy production and storage, at a time where the race to carbon neutrality is hotter than ever. NextEra should benefit from the bullishness of the Biden administration on clean energies, although investors seeking exponential gains may not find it with a company the size of NextEra. With a generous dividend yield that has grown at a CAGR of 9.6% every year, NextEra could be a blue-chip stock with a little more upside for a long-term diversified portfolio.