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2 Brilliant Energy Stocks to Buy Now and Hold for the Long Term | The Motley Fool

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  Published in Stocks and Investing on Thursday, September 25th 2025 at 10:33 GMT by The Motley Fool
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The Two Energy Plays the Motley Fool recommends for 2025: A Deep Dive

In a world still grappling with the twin challenges of climate change and energy insecurity, investors are increasingly looking to the renewable‑energy sector for both growth and resilience. The Motley Fool’s latest pick‑up article – “2 Brilliant Energy Stocks to Buy Now and Hold for the Long Term” – distills a decade of analysis into two names that the site believes embody the promise of the transition to a cleaner power mix while delivering solid fundamentals and attractive valuations. The article focuses on NextEra Energy (NEE) and Enphase Energy (ENPH), two companies that occupy complementary niches within the broader energy ecosystem.

1. NextEra Energy (NEE): The Powerhouse of Renewables

Why the name is a “brilliant” pick

• Scale and Scope: NextEra is the world’s largest generator of wind and solar electricity, with a portfolio that stretches across the United States and, more recently, in Australia and Canada. Its combined wind and solar output surpassed 20 GW as of the end of 2024, a number that continues to climb as the company adds projects in the Midwest and the Southwest.
• Stable Cash Flow and Dividend: NextEra’s regulated utilities arm – Florida Power & Light – delivers a predictable stream of cash, allowing the company to maintain a 3.0 % dividend yield that has grown consistently over the past five years. The “mix” of regulated utility cash and renewable project cash flow gives the company a solid runway to fund further expansion.
• Policy‑Friendly: The company’s projects are largely situated in states with generous tax incentives and renewable portfolio standards (RPS). Moreover, NextEra has positioned itself as a partner to utilities looking to meet state‑mandated renewable targets, which creates a “lock‑in” revenue base.

Key metrics that the Fool team highlighted

• Free Cash Flow Yield: Around 7.5 % – comfortably above the average for energy utilities, signaling ample capacity to invest or return capital to shareholders.
• PEG Ratio: 1.2 – reflecting modest growth expectations in the short‑term while still remaining undervalued relative to peers.
• Debt Profile: $14 B in long‑term debt, with a debt‑to‑EBITDA of 1.4x, a manageable leverage level given the company’s cash‑rich profile.

Potential Risks

• Commodity Exposure: NextEra’s project pipeline depends heavily on wind and solar resources; shifts in weather patterns or supply chain disruptions (especially in turbine or solar panel production) could affect output.
• Regulatory Shifts: While the company benefits from current policies, a rollback of state incentives could erode profitability for its regulated utilities segment.

2. Enphase Energy (ENPH): The Tiny Giant of Solar Inverter Technology

Why Enphase is a “brilliant” buy

• Niche Market Dominance: Enphase’s micro‑inverter technology has become the de‑facto standard for residential solar installations in the U.S. The firm’s “SolarEdge”‑style solution allows each panel to operate independently, maximizing power harvest even in partial shade – a differentiator that has translated into a 60 % market share in residential inverters.
• High Margins and Rapid Growth: The company has maintained a 24 % gross margin over the last three years, a testament to its premium product positioning. Moreover, its revenue growth rate has averaged 23 % CAGR from 2021 to 2024.
• Expansion Beyond Residential: Enphase is aggressively entering the commercial and utility‑scale markets with its “Enphase Energy Storage” platform, a strategy that should broaden its revenue streams beyond the residential segment.

Valuation Snapshot

• Price‑to‑Sales (P/S): 7.8x – lower than the sector average of 12x, indicating a more modest price premium for growth.
• Price‑to‑Book (P/B): 3.6x – reflecting a balance between future upside potential and current earnings.
• Dividend: The company does not currently pay a dividend, but its high cash generation and low debt profile provide ample scope for future shareholder returns.

Risks to Watch

• Competitive Pressure: Companies such as SMA Solar Technology and ABB are developing their own inverters and energy storage solutions, potentially eroding Enphase’s market share.
• Supply Chain and Raw Material Costs: The semiconductor and silicon supply chain has seen volatile pricing, which could squeeze margins if costs rise faster than sales prices.

3. How the Two Stocks Complement Each Other

The Fool article underscores that these two picks are not meant to compete; rather, they represent different stages of the renewable energy ecosystem:

• NEE delivers large‑scale utility‑grade generation and a stable dividend base. It is positioned to capture the bulk of the policy‑driven renewable demand, benefiting from its scale and existing regulatory foothold.
• ENPH taps the residential and emerging commercial markets, delivering higher growth rates but with higher risk due to product competition and raw‑material volatility.

For investors seeking a blend of stability and growth, adding both stocks to a portfolio could provide a balanced exposure to the clean‑energy transition: NEE for the “big‑player” revenue base and ENPH for the “fast‑growing niche” upside.

4. Bottom‑Line Takeaways

• NEE offers a solid dividend, manageable debt, and a large, diversified renewable portfolio. It is a classic “value‑plus‑growth” play for investors who want a steady income stream alongside the potential for capital appreciation as the renewable mandate tightens.
• ENPH provides a high‑margin, rapidly expanding revenue engine. Though it is more volatile, its product moat and strategic expansion into storage make it a compelling growth pick for those willing to ride the waves of solar adoption.

The Motley Fool’s recommendation is not a “get rich quick” tip but a carefully reasoned endorsement of two companies that are positioned to benefit from long‑term structural trends. As the world’s energy mix evolves, both NextEra Energy and Enphase Energy appear well‑equipped to ride the wave—and the article encourages investors to consider a “buy now, hold for the long haul” strategy for these two “brilliant” energy names.