The clean energy industry has been rallying since Joe Biden’s Presidential win last November. This can be seen in Invesco WilderHill Clean Energy ETF’s (PBW) 83.2% returns over the past three months. Scheduled to begin January 20, the Biden Administration’s ambitious plans regarding the clean energy sector are expected to mark the true onset of the clean energy revolution in the U.S.
According to the U.S. Energy Information Administration (EIA), the share of power generation from renewable sources should increase by nearly 300 basis points over the next two years. With a $2 trillion Green New Deal in the offing, the clean energy industry is anticipating robust capital inflows from the government and private sector. This, along with a gradual switch to sustainable energy for household consumption, should bolster the growth of the sector.
Bloom Energy Corporation (BE)
BE’s mission is to make clean, reliable, and affordable energy for the whole world. The company designs, manufactures, and sells solid-oxide fuel cell systems for on-site power generation. It offers Bloom Energy Server, which is a solid oxide fuel cell technology energy server that acts as a distributed power generator, which produces electricity at the customer site. BE’s customer base includes 25 of the Fortune 100 companies.
The company’s top line has increased 6.6% sequentially to $200.3 million for the third quarter ended September 30, 2020 due primarily to a one-time $14.2 million deferred revenue recognition. On a non-GAAP basis, its gross profit has increased 92.2% sequentially to $59.6 million, yielding a gross margin of 29.7%. BE achieved total acceptances of 314 systems, which represents a sequential increase of 2.6%.
Analysts expect BE’s revenue to increase more than 32% for the quarter ending March 31, 2021, and 23.1% in 2021. The company’s EPS is expected to increase 100% for the quarter ended December 30, 2020, 91.1% in 2021, and at a rate of 25% per annum over the next five years. The stock has gained 24.4% so far this year. It is currently trading 4.6% below its 52-week high of $37.39, which it hit on January 8.
Officials at the Port Authority of New York and New Jersey said on December 15that a collaboration with BE would result in energy efficiency enhancement at the World Trade Center. Through the partnership, the Port Authority is expected to procure electricity under a financing agreement through the Bloom Energy Servers. On December 14, BE and El Camino Health announced the launch of the University of Illinois’ innovative Shield T3 COVID testing system.
How does BE stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
B for Peer Grade
A for Industry Rank
A for Overall POWR Rating
The stock is also ranked #17 of 87 stocks in the Industrial – Equipment industry.
SunPower Corporation (SPWR)
Founded in 1985, SPWR delivers solar solutions worldwide. It operates primarily through two segments — SunPower Energy Services and SunPower Technologies segments. With offices in North America, Europe, Australia, Africa and Asia, the company designs all-in-one residential and commercial solutions backed by personal customer service and the industry’s most comprehensive warranty.
For the third quarter ended September 27, 2020, SPWR’s revenue has climbed 26.3% sequentially to $274.80 million. Revenue from Solar power systems, components, and other segments, which accounted for 97.4% of total revenue increased 26% sequentially to $267.6 million. In the Residential and Light Commercial (RLC) segment, the company added 10,000 customers. Its net income has increased 130.3% sequentially to $44.60 million over this period.
Analysts expect SPWR’s revenue to increase 23.2% in 2021. The company’s EPS is expected to increase 144.4% for the quarter ending March 31, 2021, and 184.2% in fiscal 2021. SPWR has an impressive earnings surprise history; it beat consensus EPS estimates in each of the trailing four quarters.
SPWR has changed its operational focus in recent months following the spin-off of Maxeon Solar Technologies in August. SPWR is now focused on innovative solar and battery storage system sales and services for customers in the U. S, and Canada, as well as developing downstream energy services products. International panel manufacturing and associated sales are now run by Maxeon.
SPWR announced on September 22 that it has secured financing commitments from Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI) and other capital providers for its residential solar lease program and its new solar plus storage program, SunPower Equinox system with SunVault storage. Over the past year, the stock has rallied 290.7% to close yesterday’s trading session at $30.24.
SPWR’s POWR Ratings reflect this promising outlook. It has an overall rating of “Buy” with an “A” for Trade Grade, and a “B” for Buy & Hold Grade. Among the 17 stocks in the Solar industry, it is ranked #9.
Renewable Energy Group, Inc. (REGI)
REGI provides lower-carbon transportation fuels in the U.S. and internationally. The company operates an integrated production, distribution, and logistics system to convert natural fats, oils, and greases into advanced biofuels. Its products are alternatives to petroleum diesel and produce significantly lower carbon emissions. REGI operates primarily through two segments — Biomass-Based Diesel and Services.
REGI’s total revenue for the third quarter ended September 30, 2020 has increased 5.5% sequentially to $576.1 million. Its gross profit has increased 222.5% year-over-year to $77.7 million. REGI sold 176 million gallons of fuel in the third quarter and produced an aggregate 137 million gallons of biodiesel and renewable diesel. The company reported net income of $26.80 million, yielding EPS of $0.60. This compares to net losses reported in the third quarter of 2019.
Analysts expect REGI’s revenue to increase 7.7% for the quarter ending March 2021 and 10% in 2021. The company’s EPS is expected to increase 66.7% in 2021. In fact, REGI’s earnings surprise history looks impressive, with the company beating the consensus estimates in three of the trailing four quarters. The stock has gained 240.9% over the past year, to close yesterday’s trading session at $86.18.
On December 9, the City of Ames announced that it is adding seven new all-purpose dump trucks to its fleet that have the Optimus Technologies advanced fuel system integrated into new vehicle specifications. The Optimus system enables engines to operate year-round on 100% biodiesel (B100) produced by REGI.
REGI announced on October 6 that it plans to undertake a capacity expansion of its Geismar, Louisiana biorefinery to 340 million gallons per year. The expansion is expected to be completed by late 2023.
It is no surprise that REGI is rated “Buy” in our POWR Ratings system. It also has an “A” for Trade Grade, and Peer Grade, and a “B” for Buy & Hold Grade. In the 54 stock Energy – Services industry, it is ranked #11.
Livent Corporation (LTHM)
A lithium technology company, LTHM has been in business for more than six decades. The company manufactures and sells performance lithium-based batteries, specialty polymer, and chemical synthesis applications in North America, Latin America, Europe, the Middle East, Africa, and Asia-Pacific. Its primary products include battery-grade lithium hydroxide, butyllithium and high purity lithium metal. LTHM’s lithium compounds are used in the production of lightweight materials for aerospace applications and non-rechargeable batteries, among other uses.
LTHM’s revenue has climbed 11.9% sequentially to $72.6 million in the third quarter ended September 30, 2020. The revenue increase was driven primarily by an increase in lithium hydroxide volumes. Because global supply chains of lithium were disrupted by the COVID-19 pandemic, LTHM witnessed a steep decline in business However, this is expected to improve in the upcoming months.
Analysts expect LTHM’s revenue to increase 26% for the quarter ending March 2021 and 20.5% in 2021. The company’s EPS is expected to increase 1,800% in 2021, and at a rate of 6.4% per annum over the next five years.
LTHM announced on November 23 that it has been awarded the 2020 Gold status for sustainability performance by the global CSR ratings agency, EcoVadis, placing the company in the top three percent of all companies that were evaluated in its industry group. The company has extended its multi-year lithium hydroxide supply agreement with Tesla, Inc. (TSLA) through 2021, with a commitment for higher volumes than in 2020. The stock has gained 178.3% over the past year and is currently trading 5% below its 52-week high of $22.55.
LTHM’s strong fundamentals are reflected in its POWR Ratings. It has a “Strong Buy” rating with an “A” in Trade Grade, Buy & Hold Grade, and Industry Rank, and a “B” for Peer Grade. Within the Industrial – Metals industry, it is ranked #13 out of 40 stocks.
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BE shares were trading at $38.06 per share on Wednesday afternoon, up $2.40 (+6.73%). Year-to-date, BE has gained 32.80%, versus a 1.83% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...
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