2 ASX Renewable Energy Stocks With Massive Upside

The global energy landscape is shifting faster than ever. From battery storage systems to solar and wind farms, the transition toward renewables is not just reshaping the grid—it’s transforming investment opportunities. For investors hunting for ASX-listed companies poised to benefit from this megatrend, Southern Cross Electrical Engineering Ltd (ASX: SXE) and Origin Energy Ltd (ASX: ORG) stand out.

Both companies operate at different ends of the energy spectrum—SXE is a nimble contractor driving Australia’s electrification build-out, while Origin is a large-scale energy player pivoting toward clean power and sustainability. Together, they represent two compelling angles on the renewable transition story—with massive upside potential if current trends continue.

1. Southern Cross Electrical Engineering Ltd (ASX: SXE)

Building the Wires, Systems, and Infrastructure Behind the Energy Revolution

When people think of renewable energy, they often picture solar panels and wind turbines. But behind the scenes, there’s another crucial component — the electrical and infrastructure backbone that makes everything work. This is where Southern Cross Electrical Engineering (SXE) comes in.

SXE is a diversified electrical, communications, and maintenance contractor servicing some of the biggest infrastructure, commercial, and industrial projects across Australia. Its core business is powering the electrification wave — from battery storage and renewable energy projects to data centres, airports, and hospitals.

Strong Financial Momentum

For the year ended 30 June 2025, SXE reported:

1. Revenue: $801.5 million — up a massive 45.2% year-on-year.
2. Net Profit After Tax (NPAT): $31.7 million — an impressive 44.5% increase.
3. Free Cash Flow: $59.8 million — nearly double the previous year’s ~$33.9 million.
4. Order Book: ~$685 million — slightly down from last year but still robust.

This growth reflects the company’s strong execution in major infrastructure and energy-related projects. Some of the standout contributions came from the Collie Battery Energy Storage System in Western Australia — a 500MW/2000MWh project that will play a key role in stabilizing renewable power on the grid.

SXE has also diversified its portfolio with the acquisition of Force Fire, a fire-safety business that adds stable, recurring maintenance revenue — helping balance its more cyclical project-based income.

Why Analysts See Massive Upside

The investment case for SXE is rooted in two powerful tailwinds: electrification and infrastructure expansion. As governments and corporations race to decarbonize, demand for high-quality electrical contractors continues to climb.

Here’s why analysts are optimistic:

1. SXE is directly aligned with national priorities like renewable integration, grid modernization, and digital infrastructure (including data centres).
2. The company’s balance sheet looks healthier than ever, with low debt and strong cash generation.
3. Ongoing diversification—both geographically and across services—positions it for steady, sustainable growth.

Simply put, SXE doesn’t need to bet on one big project to win. It’s plugged into multiple growth engines—energy, infrastructure, and technology—all expanding simultaneously.

Risks to Watch

Of course, it’s not all smooth sailing. SXE’s project-based model exposes it to execution risks such as cost overruns, workforce shortages, or project delays. The company’s order book has also slightly dipped, meaning management will need to maintain its strong tendering success rate.

Moreover, if infrastructure investment slows due to economic tightening or government budget constraints, SXE’s growth could moderate.

Still, given its recent financial performance and strategic positioning, SXE remains one of the more compelling small-to-mid cap renewable infrastructure plays on the ASX.

2. Origin Energy Ltd (ASX: ORG)

From Traditional Utility to Energy Transition Powerhouse

At the other end of the scale sits Origin Energy, one of Australia’s largest integrated energy companies. Historically, Origin made its money from retail electricity and gas. But over the last few years, it’s been reshaping its identity — moving aggressively into renewables, battery storage, hydrogen, and digital energy services.

In many ways, Origin embodies the energy transition itself: leveraging legacy cash flow to fund the future.

Financial Highlights

For the financial year ended 30 June 2025, Origin reported:

1. Statutory Profit: $1,481 million, up from $1,397 million a year ago.
2. Underlying Profit: $1,490 million, an increase of about $307 million year-on-year.
3. Underlying EBITDA: $3,411 million for FY25.
4. Final Dividend: $0.30 per share (fully franked), bringing the full-year dividend to $0.60, up from $0.55 in FY24.

For FY26, Origin’s management expects Energy Markets underlying EBITDA in the range of $1.4–$1.7 billion, underscoring a stable earnings outlook despite a shifting energy mix.

Why the Upside Story Holds Weight

Origin’s upside potential lies in its ability to balance the old and new worlds of energy. Here’s what analysts like about the stock:

1. Cash Flow Strength: Origin’s legacy operations continue to throw off strong cash, funding its renewables expansion and supporting healthy dividends (yielding roughly 4.7%).
2. Scale and Flexibility: As one of Australia’s largest energy players, Origin can allocate capital strategically — whether expanding renewables, investing in batteries, or partnering in hydrogen projects.
3. LNG Exposure: Its stake in the APLNG joint venture provides stable cash returns and optionality to monetise assets if needed.
4. Positive Market Re-rating: Analysts increasingly view Origin as a transition leader, not just a legacy utility — a shift that could unlock valuation upside as the market recognizes its progress.

Risks and Challenges

Transitioning a company of Origin’s size is no small feat. Regulatory risks, fluctuating commodity prices, and capital-intensive project pipelines can all weigh on returns. For instance, production at APLNG is expected to moderate slightly to 635–680 PJ in FY26, pushing Origin to boost capital expenditure to maintain output and growth.

Additionally, while profit rose, competition in the retail electricity space and evolving regulatory frameworks remain ongoing challenges.

Nevertheless, with strong financials, disciplined capital management, and growing renewables exposure, Origin remains a cornerstone of Australia’s energy transition story.

The Bottom Line — Two Different Paths, One Bright Future

Both Southern Cross Electrical Engineering (SXE) and Origin Energy (ORG) are navigating the energy revolution in their own ways — one as a fast-moving contractor powering infrastructure, the other as a heavyweight transforming into a green energy leader.

Here’s the quick take:

1. SXE offers growth exposure to Australia’s booming electrification and infrastructure sectors — a smaller company flying somewhat under the radar, with strong earnings momentum.
2. ORG provides a balanced mix of income and transformation, combining steady dividends with long-term clean energy growth potential.

For investors seeking to capitalize on Australia’s energy transition, these two stocks represent distinct yet complementary plays: SXE for high-growth electrification exposure, and ORG for large-scale stability and transition upside.

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