GEV Stock may be one of my new favorite stocks.
Last month, I recommended buying shares of GE Vernova (NYSE: GEV). This, as a way to profit from the continued growth of the global renewable energy market.
While we’ve always known that this market is growing faster than any other energy market on the planet, a recent report from risk management firm DNV further confirmed our bullish thesis.
In its latest Energy Transition Outlook, DNV makes a compelling case for a renewable energy bull market. Here’s a short excerpt from that report …
In 2050, 82% of all electricity will come from renewable sources. Nuclear will constitute just 6% of electricity generation by 2050. That leaves just 12% of the world’s electricity coming from fossil sources by 2050. Although these changes will play out differently across the world’s regions. A snapshot of regional power mixes in 2040 illustrates this. By 2050, all regions are well above the 50% mark for solar and wind in their power mixes. Only North East Eurasia still heavily reliant on fossil-fired generation.
This remarkable expansion and decarbonization of power is driven both by policy and dramatic and ongoing reductions in the costs of wind and solar generation. The levelized cost of energy (LCOE) for solar generation will halve between now and 2050, making solar the cheapest source of electricity at some USD 21/MWh. The LCOEs for wind are expected to drop by 44% (onshore), 36% (offshore fixed), and 75% (offshore floating) by 2050.
And just a few weeks ago, we got a peek at the latest Energy Information Administration’s “Electric Power Monthly” report. It also painted a very bullish picture for renewables. Here are some highlights …
- The combination of utility-scale and small-scale solar increased by 25.4% in the first four months of 2024 compared to the first third of 2023.
- Small-scale solar grew by 19.3% while utility-scale solar thermal and photovoltaic expanded by 28.4%. This is substantially faster than any other energy source.
- Electrical generation by the mix of all renewables grew by 6.3% in the first third of 2024 compared to the same period a year earlier. They provided 26.2% of total generation.
- In April, electrical generation by renewables grew by 13.5% compared to April 2023 and reached 31% of the U.S. total. This is the first time that renewable energy sources ever provided more than 30% of the nation’s electrical generation in any month.
- The combination of just wind and solar accounted for almost a quarter (23.45%) of the nation’s electrical generation in April – another record.
- The combination of wind and solar nearly matched the electrical output of the nation’s nuclear reactors during the first third of 2024. And did, in fact, outproduce nuclear power by more than 30% in April. The mix of all renewables provided almost 40% more electricity than nuclear power during the first four months of 2024 and surpassed nuclear power by 72.1% in April.
Indeed, the stars continue to align for renewable energy bulls. Which is why, last month, I put out a buy on GEV stock.
GEV Stock Crushed It!
If you’re unfamiliar, GE Vernova is an energy equipment manufacturing and services company. It was formed from the merger and spin-off of GE’s energy businesses in 2024.
The company operates four segments …
- Power, which includes natural gas, hydropower, steam power and nuclear power.
- Wind, which includes offshore wind, onshore wind, and wind turbine blades.
- Electrification, which includes software, grid solutions, power conversion and solar and storage solutions.
- Accelerators, which includes financial services, research and consulting services.
Now GE Vernova isn’t a pure play renewable energy stock. But I like it because it generates enough revenue from its renewable energy offerings to make it a major player in the space while still having some vital diversification in the natural gas and nuclear markets.
Although the majority of new electricity demand will be met with renewables, nuclear and natural gas will continue to play a role. This should not be trivialized. Particularly in the case of GE Vernova, which still generates a significant chunk of its revenue from its natural gas and gas-related assets and services.
Now the company announced earnings last week, beating EPS estimates. The stock rallied, gaining more than 8% for the day. I definitely think it has more room to run, too. At current levels, the stock looks undervalued by about 12%.
You can check out the GEV stock Q2 earnings here.
