NextEra Energy (NYSE:NEE) is expected to generate significant returns over the long term because governments around the world are pushing for greater use of renewable energy to tackle the growing threat of climate change. However, is it worth buying the stock at its current valuation? Read on.Shares of the world’s largest utility company by market capitalization, NextEra Energy, Inc. (NEE), have gained 26.8% over the past year to close yesterday’s trading session at $78.32. They hit their $87.69 all-time high on January 25, due to keen investor interest in the renewable energy space--an interest, heightened by President Biden’s ambitious plans to address climate change.
With a 2.79% four-year average, NEE is also a solid dividend stock. The company paid a $0.39 quarterly dividend on March 15, 2021. Moreover, the company agreed to acquire four wind farms from Brookfield Renewable Partners L.P. (NYSE:BEP), which will be its biggest acquisition since 2019.
However, investors are now focused primarily on sectors such as finance and manufacturing that are positioned to perform well with an economic recovery. And NEE’s stock fell sharply following its mixed financial results in its fiscal year 2021 first quarter. It has declined by nearly 7% over the past three months. So, we think it’s wise to avoid the stock now because it looks overvalued at its current price level considering its limited growth potential in the near term.