3 Top Energy Stocks: Reliable, Speculative, and a Turnaround

In this clip from "The High Energy Show" on Motley Fool Live, recorded on Feb. 8, Motley Fool contributor Jason Hall shares picks for a balanced basket of stocks in the energy industry and why now might be the best time to buy.

Travis Hoium: Jason, why don't you start us out here and give us some ideas of where you're looking, where you're excited, what stocks would you be putting in a renewable energy basket?

Jason Hall: I've got a pretty good basket of stocks here. Let's say you're looking for income or dividend growth. For dividend growth with these companies, even if it's like high-yield dividend stock, this isn't just for orphans and widows. This is a stock that can beat the market for the long-term. I'm a big fan of Atlantica Sustainable Infrastructure (AY 0.65%) The ticker is AY. It's one of the smaller independent energy companies, mostly wind and solar, some transmission, and also some clean natural gas, some of the newer, efficient natural gas. Also, water desalination is a little side business. I also like Enviva (EVA 6.98%). I think Enviva is really interesting. The yield, it might be over 7% right now, but this is a biomass company. They have massive scale. They have really good strategic locations in the Southeast, access to ports to be able to get that product into Europe where there's massive demand for it right now. I think the economics at scale work really well. If you're looking for the best growth, I'm a big fan of Stem (STEM 4.52%). We just talked about, I think First Solar (FSLR 0.71%), if you look in the solar manufacturing space. Their balance sheet has been the best in the industry for a very long time. They have great product. They've added a lot of scale. They've really focused on what they're good at and stayed with it and continue to have a great economic model. I think now is a good time to buy. On the speculative side, I think Shoals (SHLS 1.69%) is really interesting. This is a company that makes the parts. This is like all of the electrical components that connect to these big utility scale things. They sell a premium product, but they sell a premium product that doesn't require anything as much skilled labor to install. They custom-build these for utility-scale projects and they beat a lot of the low-cost companies out there because they save money for the developers on the labor side that more than cover the costs for the product itself. So Shoals is really interesting to me. Here's the last one. I think TPI Composites (TPIC -4.48%) is an interesting turnaround right now. The bottom line is that the management almost bankrupted the company. The CFO resigned. Who was ultimately culpable? We don't know. The CEO is still around, but basically they got bailed-out by Oaktree Capital (OAK) for $400 million at 11% interest rate, right?

Hoium: That's rough.

Hall: That means they were in a lot of trouble. In this market, they should be paying less than half that. The stock's down like 85%. I think it's still a really important business. If they can turn it around, if they can get free and clear of this interest expense, which we're paying for right now in shares, they're paying it in shares. Shareholders are really bearing the brunt of that loss return. I'm a big fan though. I really am. Of the business management, they're going to have to earn my trust.