NextEra Energy – One To Watch Closely – NextEra Energy, Inc. (NYSE:NEE)

NextEra Energy, Inc. (NEE) is a leading nuclear energy company with revenues of $16.2 billion. A Fortune 200 company, NextEra Energy has often been recognized for its efforts in sustainability, corporate responsibility, ethics, compliance, and diversity. Its stock price has climbed by 100% over the last five years.


Investment Thesis

NEE has demonstrated solid fundamentals over the last few years. Strong margins, favorable industry trends, and consistent performance in the light of recent turmoil in the oil markets show that NEE can be considered a growth stock with large potential.

Global Outlook

The renewable energy industry has been growing consistently in the last decade over fears of global climate change and rapid technological advancements. Firms such as NextEra Energy have benefited greatly from the increased subsidization and support provided by the U.S. government. Since 2000, renewable energy has grown from 9.4% to 16.9% of total energy generation in the U.S. This is an increase of 80% over a period of 16 years. Evidently, the industry outlook is very positive for firms such as NEE.

A significant drop in oil prices in late 2015 and early 2016 was deemed a major setback for the clean energy industry. Furthermore, large stockpiles of crude in the U.S., coupled with growing production in the Middle East, have suppressed the price of oil up until now. OPEC has also struggled to curtail supply. OPEC oil production grew to 32.6 million bpd, up 323,000 bpd since May of this year, further holding down the price.

Source: Macro Trends

Despite the drop in oil prices, NextEra Energy has maintained profit margins and shown slight increases in net income, as shown in the graph below.

Source: Graphiq

A steady increase in gross margins indicates that profitability is more and more secure every year. The company is able to produce efficiently and boasts a strong management. NEE also demonstrated good performance in the first quarter of FY 2017…

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