In addition to solar and wind energy companies, the cleantech industry includes a wide range of companies that are into agriculture, transportation, and more. As increasing awareness about climate change is narrowing the gap between knowledge and response, the focus on cleantech stocks or “green technology” has been increasing. This is evident from the Invesco Cleantech ETF (PZD) 20.4% year-to-date return, versus the S&P 500’s 6.6% gain over the same period.
In the United States, there has been a significant change in the awareness about climate change over the past five years. Among the Global Warming’s Six Americas, the Alarmed segment has more than doubled in size (from 11% to 26%) over this period. Moreover, the alternative energy is gradually becoming cheaper with the advancement of storage technology. So, irrespective of the initiative of the next US president, the shift toward clean energy should accelerate over time.
While many companies are entering this about-to-boom industry, NIO Inc. (NIO), NextEra Energy, Inc. (NEE), Enphase Energy, Inc. (ENPH), and First Solar, Inc. (FSLR) are expected to perform pretty well based on their strategies and cutting-edge technologies.
NIO Inc. (NIO)
Often touted as the “Tesla of China,” China-based NIO is a young emerging player in the Electrical Vehicles (EV) market. Not only China, but also operating in Hong Kong, the United States, United Kingdom, and Germany, NIO sells EVs under the EP9, EVE, and ES8 brand names. It is also known for its Battery-as-a-Service (BaaS) solution. With the Chinese economy recovering much faster, and an increasing shift to EVs, the stock gained more than 838% year-to-date. It is currently trading 5.4% below its 52-week high.
NIO’s total revenues increased 146.5% year-over-year to $526.4 million for the second quarter that ended June 2020. Vehicles sales increased 146.5% year-over-year to $493.4 million. The company delivered 5,055 vehicles in October, increasing by 100.1% year-over-year. Analysts expect NIO’s revenue to increase 147% for the about-to-be-reported quarter and 79.3% next year. The company’s EPS is expected to increase 92.9% for the quarter that ended September 2020, 52% this year, and 33.3% next year. NIO’s earnings surprise history looks impressive with the company missing the consensus estimate in just one of the trailing four quarters.
NIO launched a new charging service plan in September named Power Up Plan at Auto China 2020. The company won the bid for the Chinese annual government procurement project in Beijing for 2020 to 2022. Owing to robust growth in vehicle deliveries, NIO is one of Wall Street’s favorite EV stocks.
How does NIO stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Peer Grade
A for Industry Rank
A for Overall POWR Rating
You can’t ask for better. The stock is also ranked #3 out of 115 stocks in the China industry.
NextEra Energy, Inc. (NEE)
Headquartered in Juno Beach, Florida, NEE is the world’s largest producer of wind and solar energy. Bringing in the dawn of a new era, the company has 45,500 Megawatts of net generating capacity. As a fortune 200 company, it operates through its subsidiaries NextEra Energy Resources, Florida Power & Light Company (FPL), NextEra Energy Services, and NextEra Energy Transmission.
NEE delivered strong results for the third quarter that ended September 2020. EPS increased 11% year-over-year to $2.66. Net income increased 10.8% year-over-year to $757 million. NextEra Energy Resources had a record quarter of origination of 2,200 MW including the world’s largest standalone battery storage project.
Analysts expect NEE’s revenue to increase 20.5% for the quarter ending December 2020 and 6.9% next year. The company’s EPS is expected to increase 9.6% this year, 9.2% next year, and at a rate of 8.5% per annum over the next five years. NEE’s earnings surprise history looks impressive with the company missing the consensus estimate in just one of the trailing four quarters.
On November 2nd, NEE announced a $1.3 billion deal selling a 90% interest in a 1,000 MW portfolio of long-term contracted renewables assets and a 100% interest in a 100-MW solar-plus-storage project. It is being acquired by its affiliate NextEra Energy Partners, LP (NEP) and a consortium of private infrastructure investors led by KKR. A couple of months back, the company also acquired GridLiance Holdco, LP and GridLiance GP, LLC, which are affiliates of Blackstone, for roughly $660 million. The stock has gained 25.6% year-to-date. It is currently trading 5% below its 52-week high.
NEE’s POWR Ratings reflect this promising outlook. It has an overall rating of “Strong Buy” with an “A” for Trade Grade, Buy & Hold Grade, Peer Grade, and a “B” for Industry Rank. Among the 62 stocks in the Utilities – Domestic industry, it’s ranked #1.
Enphase Energy, Inc. (ENPH)
Founded in 2006, ENPH is the world’s leading supplier of solar microinverters. The company provides semiconductor-based microinverter, AC battery storage systems, envoy communications gateway, and enlighten cloud-based monitoring service among others. From being a start-up to a global energy technology inventor, the company has over 300 issued patents and operates in more than 21 countries.
ENPH’s revenue increased 42.2% sequentially to $178.5 million for the third quarter that ended September 2020. Driven by an efficient cost management system, the gross margin increased to 41% in the quarter. EPS increased 76.5% sequentially to $0.30. Demand for microinverter products rebounded strongly in the third quarter and the company shipped roughly 478 megawatts DC, or 1,442,743 microinverters.
Analysts expect ENPH’s revenue to increase 21.5% for the quarter ending December 2020 and 61.7% next year. The company’s EPS is expected to increase 34.7% this year, 44.5% next year, and at a rate of 36.6% per annum over the next five years. The company’s EPS for the third quarter surpassed the consensus estimate by 25%. In fact, ENPH’s earnings surprise history looks impressive with the company beating consensus EPS estimates in each of the trailing four quarters.
ENPH launched the IQ 7A Microinverters for International Markets in August. Last month, Natura Living joined forces with the company for solar installation projects for PepsiCo Thailand. Natura Living has already installed a 60kW solar array using ENPH’s IQ 7+ microinverters on PepsiCo Thailand’s snack division building. Last month, SunCool Energy started offering the Enphase Encharge storage system in South Florida which powers the world’s first fully integrated, grid-agnostic micro inverter-based solar-plus-storage system. The stock has gained 300.9% year-to-date and is currently trading 12% below its 52-week high.
It’s no surprise that ENPH is rated “Buy” in our POWR Ratings system, with a grade of “B” in Trade Grade and Peer Grade. In the 16-stock Solar industry, it’s ranked #1.
First Solar, Inc. (FSLR)
The leading global provider of comprehensive photovoltaic (PV) solar energy solutions, FSLR has nearly two-decades of experience. Operating through two segments, components and systems, the company also develops, designs, constructs and sells PV solar power solutions. The company boasts one of the strongest balance sheets in the industry. The stock has gained 55.9% year-to-date. It is currently trading 22.8% below its 52-week high.
Driven by a growth in international project sales, FSLR’s net sales for the third quarter (ended September 2020) increased 225.6% sequentially to $928 million. Net income per share increased 446.2% year-over-year to $1.45. Each factory averaged over 100% capacity utilization in the third quarter.
Analysts expect FSLR’s revenue to increase 24.4% for the quarter ending March 2021 and 7.2% next year. The company’s EPS is expected to increase 148% 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.
On October 21st, Vistra Corp (VST) selected FSLR’s PV solar modules to power its six solar energy projects across Texas. The company’s Series 6 PV module became the world’s first PV product to be included in the launch of the EPEAT Photovoltaic and Inverters product category. In September, JP Energie Environnement (JPee) started using the advanced Series 6 PV solar modules to power the 59-megawatt (MW)DC Labarde solar power plant in Europe.
FSLR’s strong fundamentals are reflected in its POWR Ratings. It has a “Buy” rating with an “A” in Trade Grade and Peer Grade and a “B” for Buy & Hold Grade. Within the Solar industry, it’s ranked #2.
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NIO shares were trading at $38.90 per share on Thursday afternoon, up $1.19 (+3.16%). Year-to-date, NIO has gained 867.66%, versus a 10.05% 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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