We recently published a list of 10 Best Alternative Fuel Stocks To Buy According to Hedge Funds. In this article, we are going to look at where Sunrun Inc. (NASDAQ:RUN) stands against other best alternative fuel stocks to buy according to hedge funds.
The alternative fuel and renewable energy industry is currently one of the fastest-growing sectors globally. Examples of alternatives include wind, solar, nuclear, hydropower, and biofuel energy. According to the Business Research Company, the global alternative fuel or renewable energy market was valued at $1.10 trillion in 2024 and is projected to reach $1.55 trillion by 2028, growing at a CAGR of 8.8%. Growing environmental concerns and stringent environmental regulations in many developed countries have significantly boosted the renewable energy sector, leading to an increase in installed capacity for renewable sources. The increasing power demand and energy consumption are also key drivers of the growing demand in the alternative or renewable fuels industry.
According to the International Energy Agency (IEA), global energy demand is expected to increase by 3.4% annually by 2026, with 85% of this additional demand coming from China and India. India’s electricity demand alone is predicted to grow by over 6% annually until 2026, driven by economic growth and rising air conditioning use. Southeast Asia is also expected to see a 5% annual increase in electricity demand through 2026. In the United States, a moderate rise in electricity demand is anticipated in the coming years, primarily driven by data centers. The electricity consumption by data centers, artificial intelligence, and cryptocurrency could potentially double to 1,000 TWh by 2026. The IEA forecasts that the surge in electricity generation from low-emission sources will meet global demand growth over the next three years, with renewable energy expected to surpass coal as the leading energy source by early 2025.
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Uncertainty in U.S. Alternative Energy Market
On November 11, Reuters reported that hedge funds rapidly increased their investments in bank stocks, marking the fastest pace in three years, while simultaneously reducing their holdings in renewable energy companies, according to a note from Goldman Sachs. This shift in investment strategy came in response to Donald Trump’s win in the U.S. presidential election. Financial stocks, including banks, have become the most favored and most net-purchased sector on Goldman’s prime brokerage trading desk.
Additionally, hedge funds placed long bets on consumer finance, capital markets, and financial services companies, with a focus on US stocks and equities in developing Asia and Europe, where they exited short positions and added long ones. In contrast, utility companies, especially independent power, and renewable electricity producers faced heavy selling, with hedge funds taking two short positions for every long position in U.S. utility companies.
Despite short-term challenges, the rapid growth and increasing investment in alternative fuel and renewable energy reflects a global shift towards sustainable and environmentally friendly energy solutions. As renewable technologies continue to advance and become more cost-effective, they are increasingly becoming the preferred choice for new energy projects worldwide.
Our Methodology
To compile our list of the 10 best alternative fuel stocks to buy according to hedge funds, we used Clean Energy ETFs plus online rankings to compile an initial list of 25 alternative fuel stocks. We then used Insider Monkey’s Hedge Fund database to rank 10 stocks according to the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here)
Sunrun Inc. (NASDAQ:RUN)
Number of Hedge Fund Holders: 43
Sunrun Inc. (NASDAQ:RUN) is a prominent company in the residential solar energy market that provides solar installations, battery storage, and energy services. The company is known for its customized solar solutions tailored to homeowners on flexible financing options, including leasing and purchase agreements. Sunrun Inc. (NASDAQ:RUN) is the first and only solar and storage company that has 1 million customers.
Sunrun Inc. (NASDAQ:RUN) is evolving into a multi-product company, offering a suite of clean energy solutions to both new and existing customers. The company is actively testing and scaling new products and services, such as additional storage offerings to its existing customer base. With nearly 87% of its one million customers not yet equipped with the company’s storage systems, Sunrun Inc. (NASDAQ:RUN) is focusing on upselling and cross-selling. The company is leveraging its user-friendly app as a key channel for engaging customers and facilitating these sales, allowing for quick and cost-effective fulfillment. Additionally, the company is actively exploring international markets and leveraging its expertise in grid services to create new revenue streams.
Sunrun Inc. (NASDAQ:RUN) is also expanding its reach through strategic partnerships and new market opportunities, particularly in the new homes sector. The company is working with nine of the top ten new home builders in California and over half of the top twenty home builders in the US. These partnerships enable the company to offer immediate value to new home buyers, including energy savings, resiliency, and backup power, without increasing the cost of purchasing a home.
Overall, RUN ranks 5th on our list of one of the best alternative fuel stocks to buy according to hedge funds. While we acknowledge the potential of RUN to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than RUN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.