Solar is the cheapest source of electricity in history as per the World Energy Outlook report published by the International Energy Agency. However, storing solar energy is still relatively expensive. As technological advancements are gradually making storage cheaper, the demand for solar electricity is increasing. While industry leaders seem to be getting all the attention in the solar industry, many companies are yet to be noticed by investors despite fast emerging as economically-competitive and more accessible solar power suppliers in the market.
Sunnova Energy International Inc. (NOVA), Azure Power Global Limited (AZRE), and ReneSola Ltd. (SOL) have been unnoticed for a long time, but they are well-positioned to deliver strong returns. As the competition in the residential solar space is likely to grow in the coming years, investing in these relatively less-focused companies can be significantly rewarding.
Sunnova Energy International Inc. (NOVA)
NOVA is a leading solar energy company providing residential solar and energy storage services in the United States. The company serves approximately 80,000 customers and operates a fleet of residential solar energy systems with a generation capacity of approximately 572 megawatts.
On October 14th, NOVA announced that it will be expanding its solar plus battery storage service offerings in Pennsylvania, Rhode Island, and Connecticut to provide customers with greater access to clean and reliable energy. This allows NOVA to expand its operations around the country.
The company recently entered into a strategic partnership with GAF Energy to provide homeowners with a solar roofing system. This will enhance NOVA’s reach in the new home and re-roof markets.
NOVA’s revenue increased 37% year-over-year to $50.18 million in the third quarter ended September 2020. Adjusted EBITDA increased 59.7% from the year-ago value to $25.40 over this period.
The consensus EPS estimate for the current year indicates a 36.5% improvement year-over-year. The consensus revenue estimate of $166.08 million indicates a 26.2% increase from the same period last year. The stock has gained 256.5% year-to-date.
How does NOVA 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. The stock is also ranked #1 out of 60 stocks in the Energy – Services industry.
Azure Power Global Limited (AZRE)
AZRE is a solar energy company involved in the development, construction, ownership, operation, maintenance, and management of solar power plants in India. The company provides solar energy based on long-term contracts to the Indian government and private energy distribution companies and commercial customers.
AZRE’s revenue increased 23% year-over-year to $47.60 million in the fiscal second quarter ended September 2020. Adjusted EBITDA increased 11% from the prior-year quarter to $31.50 million. Non-GAAP cash flow from the operating assets rose 50% from the year-ago value to $14.50 million.
The consensus EPS estimate of $0.01 for the next quarter ending March 2021 indicates a 110% improvement from the year-ago value. The consensus revenue estimate of $67.41 million for the next quarter indicates a 38.4% growth from the same period last year. The stock has gained 164.3% year-to-date.
AZRE’s promising outlook is reflected in its POWR Ratings. It is rated “Strong Buy” with an “A” for Trade Grade and Buy & Hold Grade, and a “B” for Peer Grade. It is ranked #5 out of 19 stocks in the Solar industry.
ReneSola Ltd. (SOL)
SOL develops, sells and operates solar power projects through three segments – Solar Power Project Development, EPC Services, and Electricity Generation Revenue. The company is also involved in the procurement and construction business of solar modules, balance-of-system components, etc.
On November 24th, SOL announced the sale of a 4.3-MW community solar portfolio to Atmosclear Investments, a European renewable energy company. The company entered into a partnership agreement with Innova to co-develop utility-scale projects in the United Kingdom. The expansion of SOL’s project portfolio internationally will improve its profitability through the generation of cash flow and further strengthen its balance sheet.
On November 18th, SOL announced the acquisition of selected assets from Nova Development Management, for approximately $3.8 million. This acquisition will strengthen SOL’s position in the U.S. market.
SOL’s revenue increased 93% year-over-year to $26.20 million in the second quarter ended in June 2020. Gross profit rose 429% sequentially to $7.40 million, while adjusted EBITDA increased 744% sequentially to $7.60 million in the second quarter.
The consensus EPS estimate of $0.02 for the next quarter ending December 2020 indicates a 108.7% improvement from the year-ago value. The consensus revenue estimate of $33.31 million for the next quarter indicates a 25.6% growth from the same period last year. The stock has gained 258.3% year-to-date.
SOL’s strong fundamentals are reflected in its POWR Ratings. It has a “Strong Buy” rating with an “A” for Trade Grade, Buy & Hold Grade, and Peer Grade. It is ranked #6 out of 19 stocks in the same industry.
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NOVA shares were trading at $43.46 per share on Friday morning, up $0.90 (+2.11%). Year-to-date, NOVA has gained 289.43%, versus a 14.70% rise in the benchmark S&P 500 index during the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization. More...
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