While renewable energy stocks haven’t always lived up to the hype, they have been rallying this year. This can be attributed to technological advancements and cost-cutting strategies adopted by the companies. These moves have led to a dramatic decline in the costs of storing and using renewable energy. The price of solar electricity has fallen 89% in 10 years. Moreover, according to a report by the International Energy Agency (IEA), wind and solar capacity is expected to double over the next five years globally and exceed that of both gas and coal.
To benefit from this trend, investors are seeking exposure to green energy stocks and giving priority to companies that are positioned to capitalize on the tailwind. This is evidenced by in iShares S&P Global Clean Energy Index Fund’s (ICLN) more than 97% year-to-date gain, as compared to the S&P 500’s 13.7% returns over the same period. The renewable energy space shows no signs of slowing and is expected to grow further under president-elect Joe Biden, based on his well-known advocacy of this industry.
With accelerating shift toward renewable energy globally, leading companies in this space, such as First Solar, Inc. (FSLR), Bloom Energy Corporation (BE), and Atlantica Sustainable Infrastructure plc (AY), are well positioned to gain going into 2021.
First Solar, Inc. (FSLR)
Operating for nearly two-decades now, FSLR is a leading global provider of photovoltaic (PV) solar energy solutions. The company operates through two segments — components and systems. The components segment is engaged in designing, manufacturing, and selling cadmium telluride (CdTe) solar modules. The systems segment is involved in the development, construction, operation, and maintenance of PV solar power systems.
FSLR’s net sales for the third quarter ended September 2020 increased 69.6% year-over-year to $927.6 million. In the module segment, the company has begun commercial production of 445-watt modules. Gross profit has increased 111.8% year-over-year to $290 million. Net income has increased 406.3% year-over-year to $155 million, while its EPS increased 400% year-over-year to $1.45.
Analysts expect FSLR’s revenue to increase 25.1% for the quarter ending March 2021 and 6.8% next year. The company’s EPS is expected to increase 150.7% this year and at a rate of 26% per annum over the next five years. FSLR’s earnings surprise history looks impressive with the company missing the consensus estimate in just one of the trailing four quarters.
Vistra Corp (VST) this year selected FSLR’s PV solar modules to power its six solar energy projects across Texas. And on October 14th, the Green Electronics Council (GEC) confirmed that FSLR’s Series 6 PV module is the world’s first PV product to be included in the launch of the EPEAT Photovoltaic and Inverters product category. The stock has gained 62.5% in the past 6 months to close yesterday’s trading session at $86.22.
How does FSLR stack up for the POWR Ratings?
A for Trade Grade
B for Buy & Hold Grade
A for Peer Grade
B for Overall POWR Rating
The stock is also ranked #3 of 19 stocks in the Solar industry.
Bloom Energy Corporation (BE)
Founded in 2001, BE designs, manufactures, and sells solid-oxide fuel cell (SOFC) systems. Based on its proprietary SOFC technology, company servers convert fuel into electricity through an electrochemical process without combustion at the highest efficiency of any power solution available today. BE mainly operates in the United States, Japan, China, India, and the Republic of Korea.
BE’s revenue increased 6.6% sequentially to $200.3 million for the third quarter ended September 2020. This can be attributed in-part to a one-time $14.2 million deferred revenue recognition. On a non-GAAP basis, gross profit increased 92.2% sequentially to $60 million, yielding a gross margin of 29.7%. The company achieved total acceptances of 314 systems, which indicates a sequential increase of 2.6%.
Analysts expect BE’s revenue to increase 33.2% for the quarter ending March 2021, and 26.8% next year. The company’s EPS is expected to increase 92.9% for the current quarter ending December, 96.9% next year, and at a rate of 25% per annum in the next five years. On a year-to-date basis, the stock rallied 234.8% to close yesterday’s trading session at $25.01.
In a deal with the Kraft Group, BE powered the Gillette Stadium in Foxborough, Massachusetts. With the help of microgrids, the company supplied electricity and prevented over 25 outages during Hurricane Isaias. Last month, BE won a competitive Request for Proposal (RFP) under the RE100 program to supply SOFCs powered by 100% hydrogen and electrolyzers to an industrial complex in Changwon, Korea.
BE’s POWR Ratings reflect its promising outlook. It has an overall rating of “Buy” with an “A” for Trade Grade, and a “B” for Industry Rank. Among the 59 stocks in the Industrial – Equipment industry, it is ranked #29.
Atlantica Sustainable Infrastructure plc (AY)
Atlantica Sustainable Infrastructure PLC, which was formerly known as Atlantica Yield plc, is an infrastructure company. Based in Brentford in e United Kingdom, the company owns and manages renewable energy, natural gas, transmission and transportation infrastructures and water assets. AY currently owns 25 assets, comprising 1,496 MW of aggregate renewable energy installed generation capacity, 343 MW of efficient natural gas-fired power generation capacity, 1,166 miles of electric transmission lines, and 10.5 Mft3 per day of water desalination assets.
For the quarter ended September 2020, AY’s revenue increased 3.3% year-over-year to $303 million. Its net profit increased 103.7% year-over-year to $89.4 million. EPS increased 104.7% year-over-year to $0.88. And for the nine-month period ended September 2020, revenue from the water segment increased 63.7% year-over-year to $30.2 million.
Analysts expect AY’s revenue to increase 18.2% for the current quarter ending December, 8.7% this year, and 7.8% next year. The company’s EPS is expected to increase 2,100% for the current quarter, 55.7% this year, and at a rate of 49.5% per annum in the next five years. The stock has gained 25.8% so far this year and is currently trading 12.5% below its 52-week high.
AY recently announced the acquisition of a district heating asset in Canada. And in August, the company completed the acquisition of an additional equity interest in Solana, in Arizona. The company refinanced its Helios assets with a €326 million bond. In August, AY successfully closed an issue of $115 million of unsecured Green Exchangeable Notes. Also, earlier this year, the company received the “Pump Industry Excellence Award for Innovation and Technology” from the Hydraulic Institute.
It is no surprise then that AY 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, and Industry Rank. In the 63-stock Utilities – Domestic industry, it is ranked #19.
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FSLR shares were trading at $87.26 per share on Thursday morning, up $1.04 (+1.21%). Year-to-date, FSLR has gained 55.93%, versus a 15.68% 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...
More Resources for the Stocks in this Article
| Ticker | POWR Rating | Industry Rank | Rank in Industry |
| FSLR | Get Rating | Get Rating | Get Rating |
| BE | Get Rating | Get Rating | Get Rating |
| AY | Get Rating | Get Rating | Get Rating |
