3 Alternative Energy Stocks Riding the Next Wave of Clean Energy Growth

, Talen Energy Corporation

and Montauk Renewables

. 

About the Industry

The Zacks Alternative Energy - Other industry can be fundamentally segregated into two sets of companies. While one group is involved in the generation and distribution of alternative energy and electricity from sources like wind, natural gas, biofuel, hydro and geothermal, the other is engaged in the development, design and installation of renewable projects involving these alternative energy sources. The industry includes a handful of stocks that offer fuel cell energy solutions, which have gained popularity as affordable, clean energy options lately. According to the International Energy Agency, global energy investments are projected to reach $3.4 trillion in 2026. Such investments provide strong growth opportunities for industry participants.

3 Trends Shaping the Future of the Alternative Energy Industry

Wind Power Market Poised for Sustained Growth: The global wind power industry continues to gain momentum, supported by favorable government policies promoting renewable energy, growing emphasis on decarbonization and energy security, and the increasing cost competitiveness of wind generation. Ongoing technological advancements, particularly the deployment of larger, more efficient turbines, are enabling wind farms to produce more electricity from existing sites while lowering generation costs and improving project economics. These trends are expected to support long-term industry expansion. According to Grand View Research, the global wind power market was valued at $111.2 billion in 2025 and is projected to reach $173.9 billion by 2033, at a 5.7% CAGR from 2026 to 2033.

EV Market Surge to Accelerate Clean Energy Adoption: Electric vehicle (EV) companies and charging networks are increasingly using renewable energy sources like solar and wind to power vehicles, reducing fossil fuel usage and emissions. EV adoption is being supported by governments, especially the U.S. government, via subsidies, tax credits, grants and non-cash incentives. Another key driver is the steady decline in battery costs, which lowers the overall price of EVs and makes them more competitive with gasoline-powered cars. These factors have contributed to strong global sales growth. According to a Benchmark Mineral Intelligence report, nearly 2 million electric vehicles were sold globally in June 2026, bringing year-to-date 2026 EV sales to 9.6 million. In June 2026, EV sales increased 7% year over year and 11% sequentially. Per a report by Grand View Research, the global EV market size is projected to grow from $2.4 trillion in 2026 to $12.6 trillion by 2033, at a CAGR of 26.7% from 2026 to 2033. This strong growth outlook benefits clean energy companies, particularly those that operate large EV charging networks in the United States, as rising EV adoption directly increases demand for charging infrastructure and its related services.

Tariffs and Policy Changes Increase Cost Pressures: Rising costs remain a key challenge for the wind industry, with higher steel prices and elevated import tariffs increasing the expense of manufacturing and installing wind turbines. According to Wood Mackenzie, tariff uncertainty — particularly regarding imported turbine components and other critical materials — is making project costs harder to forecast, disrupting supply chains, and contributing to delays in project execution. Adding to these headwinds, the One Big Beautiful Bill Act (OBBBA) significantly scaled back clean energy incentives by phasing out key tax credits, including the advanced manufacturing production tax credit for wind components sold after Dec. 31, 2027. The loss of these incentives is expected to have a greater impact on project economics than tariffs alone, as the expiration of tax credits will substantially increase the cost of developing and manufacturing renewable energy projects, potentially slowing investment across the sector.

Zacks Industry Rank Reflects Gloomy Outlook

The Zacks Alternative Energy industry is housed within the broader Zacks Oils-Energy sector. It carries a Zacks Industry Rank #148, which places it in the bottom 40% of more than 247 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Ranks of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

The industry’s position in the bottom 50% of the Zacks-ranked industries is due to a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts have lost confidence in this group’s earnings growth potential over the past few months. The industry’s bottom-line estimate for the current fiscal year has moved down 17.8% to $2.45 since May 31.

Before we present a few alternative energy stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation.

Industry Lags S&P 500 & Sector

The Zacks Alternative Energy- Other Industry has underperformed the Zacks S&P 500 and its sector over the past year. The stocks in this industry have collectively surged 3.8% in the past year compared with the Zacks Oil-Energy sector’s 25.9% growth. The Zacks S&P 500 composite has gained 18.6% in the same time frame.

One-Year Price Performance

Industry's Current Valuation

On the basis of the trailing 12-month EV/EBITDA ratio, which is commonly used for valuing alternative energy stocks, the industry is currently trading at 21.35X compared with the S&P 500’s 18.24X and the sector’s 6.74X.

Over the past five years, the industry has traded as high as 24.82X, as low as 9.80X and at the median of 14.70X. 

EV-EBITDA Ratio (TTM)

3 Alternative Energy Stocks to Buy

Bloom Energy: Based in San Jose, CA, the company generates and distributes renewable energy. On July 28, 2026, Bloom Energy announced its second-quarter results. The company reported revenues of $1.07 billion, up 165.5% year over year. Product revenues of $935.4 million increased 215.4% year over year. Gross margin of 33.4% increased 668 basis points from 26.7% in the year-ago quarter. Bloom Energy expects its strong momentum to continue throughout 2026, raising its full-year guidance. The company now projects revenues in the range of $3.9 billion to $4.2 billion, representing approximately 100% year-over-year growth at the midpoint of the guidance.

The Zacks Consensus Estimate for Bloom Energy’s 2026 sales implies an improvement of 83.9% year over year. The Zacks Consensus Estimate for 2026 earnings suggests an improvement of 176.3% year over year. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. 

Price & Consensus: BE

Talen Energy: Based in Houston, TX, the company owns and operates power infrastructure, principally in the United States. The company produces and sells electricity, capacity and ancillary services primarily into wholesale power markets. On June 15, 2026, Talen Energy announced that it had completed the acquisition of the Lawrenceburg Power Plant in Indiana and the Waterford Energy Center and Darby Generating Station in Ohio from Energy Capital Partners. These natural gas-fired power plants add approximately 2.6 GW of efficient baseload generation capacity to Talen Energy's portfolio, significantly expanding its footprint in the western PJM market — the largest wholesale electricity market in the United States.

The Zacks Consensus Estimate for the company’s 2026 sales implies an improvement of 68.3% year over year. The estimate for 2026 earnings implies 260.5% growth year over year. The company currently carries a Zacks Rank #2 (Buy).

Price & Consensus: TLN

Montauk Renewables: Based in Pittsburgh, PA, the company is a fully integrated renewable energy company. MNTK specializes in the management, recovery and conversion of biogas into renewable energy. The company reported 9% year-over-year revenue growth in the first quarter of 2026, driven by solid demand for renewable natural gas, while Adjusted EBITDA increased 22.8% year over year, reflecting improved profitability. Montauk commissioned its Montauk Ag Renewables project in North Carolina, with production expected to ramp up through 2026 as additional feedstock is collected, creating a new source of revenues. The company secured a five-year gas rights extension at its Raeger facility through 2031, ensuring a stable biogas supply for continued operations.

The Zacks Consensus Estimate for Montauk Renewables’ 2026 sales implies an improvement of 24.1% year over year. The consensus estimate for 2026 earnings suggests an improvement of 900% year over year. The company currently carries a Zacks Rank #2.

Price & Consensus: MNTK

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This article originally published on Zacks Investment Research (zacks.com).

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