As investors await the outcome of U.S. Senate runoff elections in Georgia between Democrat challengers Jon Ossoff and Raphael Warnock and Republican Senators David Perdue and Kelly Loeffler, there is a lot at stake in the market. If the Democrats win both seats and the Democratic Party assumes control of the U.S. House and Senate, clean energy companies could benefit from a big tailwind. This outcome is critical for the advancement of Biden’s plans, which include an ambitious infrastructure revamp, including boosting alternative energy sources and usage.
The widespread adoption of clean energy as part of building a sustainable economy have been a critical part of the President-elect’s manifesto. In July, he announced a $2 trillion accelerated investment plan for modern, sustainable infrastructure and an equitable clean energy future. Biden is also expected to have the U.S. rejoin the Paris Climate Agreement, which has a goal of global net zero carbon emissions by 2050.
A unified government would empower Biden to execute his plans, and companies dabbling in the clean energy space will receive a major boost. Among other companies, we think NextEra Energy, Inc. (NEE), First Solar, Inc. (FSLR), and Renewable Energy Group, Inc. (REGI) would likely see immense growth in their business.
NextEra Energy, Inc. (NEE)
NEE and its subsidiaries are involved in the generation, transmission, and distribution of electric power in North America. The company deals in electricity generation through wind, solar, nuclear, coal, oil, and natural gas facilities. NEE also engages in energy-related commodity marketing and trading activities.
In December, NEE announced the acquisition of eIQ Mobility, an Oakland-based leading software provider of mobility planning solutions. This acquisition will enable NextEra Energy Resources’ customers to identify economic operational and sustainable pathways for fleet vehicle conversions. NEE has stated that eIQ Mobility’s expertise in the evaluation of alternatives to traditional fossil fuels in the transportation sector will provide NextEra Energy Resources with an edge.
During the third quarter ended September 30, 2020, NEE’s operating revenue declined 36.7% year-over-year to $1 billion. However, its EPS for the quarter climbed to $2.66 compared to $2.39 posted in the same period last year. The company’s subsidiaries, Florida Power & Light Company and Gulf Power Company, continued to demonstrate strength. NextEra Energy Resources added a record 15,000 megawatts to its renewables backlog during the third quarter.
The consensus revenue estimate for the fourth quarter ended December 31, 2020 is$5.6 billion, signifying a 20.9% year-over-year growth. EPS is expected to rise at the rate of 8.7% per annum over the next five years.
During the past year, NEE gained 23.5% to end yesterday’s session at $74.22. Over the past six months, the stock climbed 20.5%.
How does NEE stack up for the POWR Ratings?
A for Trade Grade
B for Buy & Hold Grade
A for Peer Grade
B for Industry Rank
B for Overall POWR Rating
The stock is also ranked #1 of 63 stocks in the Utilities – Domestic industry.
First Solar, Inc. (FSLR)
FSLR offers photovoltaic (PV) solar energy solutions in the United States as well as internationally. The company operates through Modules and Systems. The Modules segment deals with the designing and sales of cadmium telluride solar modules. The systems segment offers power plant solutions.
In October, FSLR announced that Vistra Corp. (VST) has selected its high-performance photovoltaic (PV) solar modules to power its six solar energy projects across Texas. Under the agreement, First Solar will supply 869 megawatts (MW) DC of Series 6 modules to power five utility-scale solar projects, developed by Vistra, ranging from 50 to 200MWAC.
FSLR’s revenue during the third quarter ended September 30, 2020 surged 69.6% year-over-year to $927.6 million. Its EPS for the quarter climbed to $1.45 from $0.29 posted in the prior year period. FSLR’s strong fleet-wide production achieved capacity utilization averaging more than 100% at all factories. The company ended the quarter with $1.7 billion in cash and marketable securities and closed the sales of its Ishikawa, Miyagi, and Anamizu projects in Japan.
Analysts expect revenue for the quarter ending March 31, 2021 to be $670.7 million, representing 26% year-over-year growth. Its EPS is likely to grow at the rate of 25.9% per annum over the next five years.
FSLRhas risen 77.6% in the past year to close at $101.24 in yesterday’s trading session. The stock has rallied 103% during the past six months.
FSLR’s strong fundamentals are reflected in its POWR Ratings. It has a “Buy” rating with an “A” for Trade Grade, and a “B” for Buy & Hold Grade, and Peer Grade. It is ranked #7 of 20 stocks in the Solar industry.
Renewable Energy Group, Inc. (REGI)
REGI offers lower carbon transportation fuels in the United States and other countries. The company leverages an integrated distribution, production, and logistics system to transform natural fats, oils, and greases into advanced biofuels. Biomass-Based Diesel, Services, and Corporate are the segments through with REGI operates.
In October, REGI announced its plans to undertake a capacity expansion of its Geismar, Louisiana biorefinery by 250 million gallons annually to 340 million gallons per year. The construction f should begin in mid to late 2021 with a target l completion date in late 2023.
During the third quarter ended September 30, 2020, REGI’s total revenue fell 1.4% to $576.1 million. The company’s EPS was $0.60 compared to a loss per share of $0.41 posted in the prior-year period. REGI produced 137 million gallons of fuel, while it sold 176 million gallons of fuel. The carbon reductions from the fuel that REGI produced during the quarter was more than one million metric tons.
The Street expects revenue for the quarter ending March 2021 to be $507.9 million, indicating 7% year-over-year growth. EPS for the quarter is likely to be $0.65.
REGI has surged 140,6% during the past year and ended yesterday’s trading session at $69.33. Over the past six months, the stock surged 192%.
It is no surprise that REGI has a “Buy” in our POWR Ratings systems with a grade of “A” in Trade Grade, and Peer Grade. It has a “B” in Buy & Hold Grade. In the 62-stock Energy – Services industry, REGI is ranked #5.
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NEE shares were trading at $74.53 per share on Tuesday afternoon, up $0.31 (+0.42%). Year-to-date, NEE has declined -3.40%, versus a -1.02% rise in the benchmark S&P 500 index during the same period.
About the Author: Namrata Sen Chanda
Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education. More...
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