The global economy is shifting towards renewable energy sources. As a result, green energy companies are getting popular in the world of investing. Since the U.S. elections, renewable company stocks have skyrocketed in terms of company growth and stock price. Amongst them, wind energy stocks have created quite a reputation.

Investors are shifting interest towards a handful of energy stocks. As per my research, the characteristics which make renewable energy stock worth investing are:

• Strong Balance Sheet
• Energy Focused Growth

According to the above key attributes, I have found two stocks that look like they could be a fine addition to my own portfolio.

NextEra Energy 

NextEra Energy (NYSE:NEE) is a Florida based company with a market capitalisation of more than $143 Billion. A Fortune 200 company, NextEra has a humungous electric generating capacity of more than 21,000 megawatts. The company generates electricity using wind, solar and natural gas.

NextEra is one of those stable wind energy stock which have been generating a steady flow of income. As a result, the renewable energy company can and continues to pay regular dividends. In addition, the firm is boosting the stakeholder’s confidence by reinvesting the money through expansion.

The highlights of its first-quarter report are:

• Adjusted earnings grew by 13% year-to-year
• Adjusted EPS increased by $0.08

NextEra owns both the key attributes highlighted above. In fact, its balance sheet reflects that the company has the financial ability to invest billions of dollars in development projects. On the other hand, the stock price of NextEra has been highly volatile, which can shake investors confidence. 

TPI Composites

TPI Composites (NASDAQ:TPIC) is a complete wind energy solution business that started 50 years ago. Today it has a market capitalisation of over $1.5 Billion. It is the leading manufacturer of wind turbine blades and provides composite solutions for its transportation. The firm accounts for more than 32% of all wind blades currently being supplied globally, not including China.

This wind energy stock company has a prudent approach towards managing operations, in my opinion. Its manufacturing facilities are strategically located near its core customer operations. And the long-term supply agreements offer attractive discounts for high volume orders. These measures enable the company to have a reliable and steady stream of revenue. Moreover, TPIC can manage the problematic logistics seemingly well and in a cost-effective manner.

But it’s worth noting that TPI Composites has not been able to generate profits. Consequently, it’s been losing money for the past few years. What’s more, due to the capital intensive nature of the business, the management team have borrowed a sizeable amount of cash, pushing the debt-to-equity ratio to relatively high levels. And that’s despite the recent decline in loan obligations. Needless to say, a high debt level introduces insolvency risks for shareholders.

However, overall this debt looks manageable. And so, the business has maintained a healthy balance sheet in my eyes, even with the increased spending in developing new manufacturing facilities. In the last 5 years, revenue has almost doubled, taking capital expenditures with it. It seems to me that TPI is trying to establish itself as the market leader in the growing renewable energy sector. Whether it will succeed has yet to be seen. But it seems to be on the right track, in my opinion.

Wind Energy Stocks: The bottom line

Focused growth and a strong balance sheet give green energy-producing companies the power to perform better and generate higher returns. At least that’s what I’ve seen so far. Hence, these wind energy stocks have a great future outlook in my eyes. So I would consider adding them to my portfolio as a long term investment.