Tesla, Inc. (TSLA) has become synonymous with the clean energy industry following its astounding growth and inclusion to the S&P 500 index this year. While TSLA is viewed as a red-hot stock with 598.9% year-to-date gains despite the recent recalls of its Model X vehicles, the company’s sky-high valuation is a concern for many analysts and investors. Also, the company’s business model focuses solely on electric vehicles, which restricts its growth opportunities compared to its peers that operate in other segments of sustainable energy also.
As most major economies are at the initial stages of shifting to renewable energy sources, with ambitious plans to eliminate carbon emission over the next couple of decades, the clean energy industry as a whole has substantial growth potential. The industry saw huge growth this year alone, despite pandemic-driven economic disruptions. This is evidenced by the NASDAQ Clean Edge Green Energy Index’s 475.9% increase year-to-date.
Investing in some lesser known clean energy stocks, such as Hannon Armstrong Sustainable Infrastructure Capital,Inc. (HASI), EnerSys (ENS), and Sunnova Energy International, Inc. (NOVA) could be more rewarding than TSLA at the prevailing prices.
Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI)
HASI REIT provides financing support to green energy infrastructure companies through equity and debt. It invests in Energy Efficiency and Renewable Efficiency projects to reduce energy usage and building costs by exploiting clean energy sources such as solar or wind power.
In September, HASI joined a Carbon Accounting Financials (CAF) partnership with 70 organizations. The group is working to establish a first-of- its-kind common carbon accounting framework.
HASI has also extended financial support to SunPower’s (SPWR) residential solar lease program.The company has also built a long-standing partnership with a leading solar energy company, SPWR, over the past couple of years, establishing itself as a major clean energy REIT.
HASI’s revenue increased 25.1% year-over-year to $48.59 million in the third quarter ended September 2020. Net income increased 132.7% from the year-ago value to $21.18 million, while EPS rose 115.4% from the prior-year quarter to $0.28. The REIT announced a quarterly dividend of $0.34, payable next month.
The consensus EPS estimate of $1.52 for the current year indicates an 8.6% improvement year-over-year. HASI has an impressive earnings surprise history as well; e company beat the street EPS estimates in each of the trailing four quarters. A consensus revenue estimate of $93.77 million for this year indicates a 21.2% rise from the year-ago value.
HASI has gained more than 260% since hitting its 52-week low of $15.01 in March. The stock hit its 52-week high of $56.87 on November 27th.
How does HASI stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Peer Grade
A for Overall POWR Rating.
You can’t ask for better. It is currently ranked #2 out of 51 stocks in the REITs – Diversified industry.
ENS manufacturers industrial batteries and related equipment as well as providing after sale customer services internationally. The company categorizes its products into Reserve Power and Motive Power, both of which have widespread applications in the electrical heavy equipment industry.
ENS entered into a funding agreement with alpha-Encorp for a three-month exploratory project to determine the applications of lithium ion batteries in aeronautics. If successful, ENS would be part of a major breakthrough in the field of astronomy, with possible collaboration with international space programs across the world.
ENS has a stake in the 5G race. In July, it partnered with Corning Incorporated to install fiber connectivity and electric power in small-cell wireless sites.
ENS’ net sales from the specialty segment increased 23.85 year-over-year to $103.80 million in the fiscal second quarter ended September 2020. Operating earnings from this sector increased 13.8% year-over-year to $11.50 million, while operating earnings from the energy systems sector rose 12.4% from the prior-year quarter to $22.80 million. The company announced a quarterly dividend of $0.175, payable on December 31st.
The consensus EPS estimate of $1.19 in the current quarter ending December 2020 indicates a 14.4% improvement year-over-year. Analysts expect ENS’ revenue to rise 2.4% in the next quarter (ending March 2021) and 6.4% next year.
ENS gained more than 140% to hit its 52-week high of $84.55 in November since hitting its 52-week low of $35.21 in March.
It’s no surprise that ENS is rated “Strong Buy” in our POWR Ratings system. It has an “A” for Trade Grade and Buy & Hold Grade, and a “B” for Peer Grade and Industry Rank. In the 59-stock Industrial – Equipment industry, ENS is ranked #12.
Sunnova Energy International, Inc. (NOVA)
NOVA delivers residential solar and energy storage services and maintenance support for solar equipment across the United States. The company offers design and installation services, energy resiliency and reliability support and operations and maintenance support to its customers.
NOVA participated in the ISO New England Forward Capacity Auction to showcase its residential solar portfolio in the UK market. Though primarily operating in the United States, this participation allows NOVA to expand into one of the largest and fastest growing European solar markets from 2021.
Earlier, in October, NOVA expanded its Sunnova SunSafe battery storage services and add-on battery service to 19 states in the US..
NOVA recently announced a combined primary and secondary public offering of 7 million shares, which is expected to raise approximately $123.90 million. The company also offered a stock option for 525,000 additional shares to underwriters. If exercised, this would increase the net proceeds of the offering to $142.60 million.
NOVA’s revenue increased 37.2% year-over-year to $50.20 million in the third quarter ended September 2020. Adjusted EBITDA rose 59.7% from the prior year quarter to $25.40 million, while adjusted operating cash flow grew 175% from the same period last year to $1.80 million over this period.
NOVA’s EPS is expected to rise 24.1% in the current year, and 72.1% next year. The consensus revenues estimates indicate an improvement of 26% in the current year, and 34% next year.
NOVA has gained more than 555% since hitting its 52-week low of $6.12 in mid-March. The stock hit its 52-week high of $46 on November 30th.
NOVA is rated “Buy” in our POWR Ratings system, with an “A” for Trade Grade and for Peer Grade, and a “B” for Buy & Hold Grade. It is currently ranked #5 out of 60 stocks in the Energy- Services industry.
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HASI shares were trading at $54.72 per share on Wednesday afternoon, up $0.50 (+0.92%). Year-to-date, HASI has gained 76.43%, versus a 15.59% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...
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