Cleantech stocks, which used to occupy an exceedingly small position in investors’ portfolios a few years ago, are gradually becoming the most popular bets thanks to the global clean energy revolution that has gained pace this year. As the cost of storing renewable energy has fallen significantly, the cleantech space is expected to witness significant demand in the coming years. By 2040, solar energy is expected to be 5 times cheaper than fossil fuel electricity.

Rising concerns globally about climate change have led governments to implement initiatives to replace traditional energy with sustainable clean energy. China, for instance, has pledged to go carbon neutral by 2060. While according to the European Green Deal, the European Union aims to be carbon neutral by 2050.

U.S. President-elect Joe Biden is expected to re-join the Paris Climate Accord next year. Moreover, a$900 billion coronavirus relief package just approved by the U.S. Congress includes billions of dollars to promote clean energy and extends tax incentives for wind and solar energy.

Given this backdrop, while the majority of cleantech stocks have already attracted significant attention from investors, some promising stocks are still under the radar. Equinor ASA (EQNR), Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI), and DAQO New Energy Corp. (DQ) are three stocks that fit this description we think and are expected to gain significantly in 2021 and beyond.

Equinor ASA (EQNR)

Based in Stavanger, Norway, EQNR is an international energy company present in more than 30 countries worldwide. Among the world’s largest offshore operators, the company is engaged in the exploration, development and production of oil and gas, and wind and solar power. EQNR operates primarily through four segments — Development and Production Norway (DPN), Development and Production International (DPI), Marketing, Midstream and Processing (MMP) and Other.

For the third quarter ended September 30, 2020, the company delivered solid operational results with an underlying production growth of 9% year-over-year. Its total revenues and other income have increased more than 49% sequentially to $11.3 billion. Total entitlement liquids and gas production have increased 6.9% year-over-year to 1,865 mboe per day. And in the exploration and production Norway segment, average daily production of liquids and gas has increased 19% year-over-year to 1,273 mboe per day, driven primarily by a ramp-up of new fields.

The consensus EPS estimate of $1.11 for the quarter ending December 31, 2021 represents a 99.3% increase year-over-year. The consensus revenue estimate of $54.87 billion for the same quarter ending December 1, 2021 represents a 20.1% increase year-over-year. Over the past nine months, the stock has rallied 56.8% to close Thursday’s trading session at $16.29.

EQNR announced on December 16 that along with Royal Dutch Shell PLC (RDS.A) it will develop the next generation of Shell Inventory Optimizer, a solution that leverages advanced analytics on historical data to optimize operational spare-part inventory levels. The project is also supported by EQNR’s partner Microsoft Corporation (MSFT). The joint-venture company, NortH₂, is Europe’s biggest green hydrogen project.

In November, EQNR announced the completion of a deal to finance the Dogger Bank wind farm, which is expected to have a total capacity of 3.6 gigawatts (GW) upon completion. This project is touted as the largest offshore wind farm in the world.

How does EQNR stack up for the POWR Ratings?

B for Trade Grade

A for Peer Grade

B for Overall POWR Rating

The stock is also ranked #3 of 32 stocks in the Foreign Oil & Gas industry.

Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI)

HASI is the first United States’ public company dedicated   to investments in climate change solutions, providing capital to leading companies in energy efficiency, renewable energy, and other sustainable infrastructure markets. HASI focuses on providing preferred or senior level capital to sponsors and obligors for assets that generate long-term, recurring, and predictable cash flows. HASI not only invests in projects that deploy cleaner energy sources, such as solar and wind to generate power production, but also in other projects, such as water or communications infrastructure.

The company’s total revenue has climbed more than 25% year-over-year to $48.6 million for the third quarter ended September 30, 2020. This was driven primarily by a larger portfolio of higher yielding assets as well as a change in the mix of assets being securitized. Its net income has increased 131.9% year-over-year to $21.3 million. And its EPS of $0.36 surpassed the consensus estimate by 16.1%.

Analysts expect HASI’s revenue to increase 6.5% for the current quarter ending December 31, 2020, 17.5% this year, and 7.3% next year. The company’s EPS is expected to increase 7.9% this year, 4% next year, and at a rate of 5.4% per annum over the next five years. HASI has an impressive earnings surprise history, with the company beating consensus EPS estimates in each of the trailing four quarters.

On December 22, HASI announced a preferred equity investment in a roughly 1.6 GW onshore wind and utility-scale solar portfolio developed and managed by Clearway Energy, Inc. (CWEN). HASI announced on December 15 that it has exceeded $6 billion in energy efficiency investments from more than 600 individual transactions. Earlier in December, Power company ENGIE North America and HASI announced a partnership in which the firms will jointly invest in a portfolio of distributed generation solar and solar-plus-storage assets located across the United States.

The stock has gained 103.6% over the past year. It is currently trading just 1.5% below its 52-week high of $66.35.

HASI’s POWR Ratings reflect this promising outlook. It has an overall rating of “Strong Buy” with an “A” for Trade Grade, Buy & Hold Grade and Peer Grade. Among the 51 stocks in the REITs – Diversified industry, it’s ranked #2.

DAQO New Energy Corp. (DQ)

Based in Wanzhou, China, DQ is a leading manufacturer of high-purity polysilicon for the global solar photovoltaic (PV) industry. One of the world’s lowest cost producers of high-purity polysilicon, the company offers ready-to-use polysilicon, and packaged to meet crucible stacking, pulling, and solidification products. DQ operates through two segments — Polysilicon and Wafer. The company also provides wafer original equipment manufacturer (OEM) service to external customers.

DQ’s revenue has increased 49.6% year-over-year to $125.5 million for the third quarter ended September 30, 2020. Its gross profit has increased 150.4% year-over-year to $45.3 million, yielding a gross margin of 36%. Polysilicon production volume improved slightly from the second quarter to $18,406 MT. Net income attributable to shareholders increased 316.6% year-over-year to $20.8 million, yielding EPS of $0.27, which increased 285.7% year-over-year.

Analysts expect DQ’s revenue to increase 91% for the current quarter ending December 31, 2020, 42.4% for the quarter ending March 2021, and 24.5% next year. The company’s EPS is expected to increase 226.5% in the current quarter, 79.7% next year, and at a rate of 123.6% per annum over the next five years. DQ’s earnings surprise history looks impressive, with the company missing the consensus estimate in just one of the trailing four quarters.

On December 23, DQ announced that its subsidiary Xinjiang Daqo New Energy had signed long-term high-purity polysilicon supply agreements with a subsidiary of JA Solar and with another leading solar company. DQ announced on November 30, that it has signed a long-term high-purity polysilicon supply agreement with Trina Solar, which is a global leading solar PV system integrator. The company has also signed a long-term high-purity polysilicon supply agreement with Wuxi Shangji Automation. t. The stock has gained 430.3% over the past year to close Thursday’s trading session at $54.77.

It is no surprise that DQ is rated “Buy” in our POWR Ratings system. It also has an “A” for Trade Grade, and a “B” for Peer Grade, and Industry Rank. In the 87- stock Semiconductor & Wireless Chip industry, it is ranked #51.

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EQNR shares were trading at $16.40 per share on Monday morning, up $0.11 (+0.68%). Year-to-date, EQNR has declined -13.51%, versus a 17.71% 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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