Climate change has been one of the most talked-about topics this year, as natural disasters have increased in almost every part of the world. 2020 is likely to be the warmest year on record, according to the World Economic Forum, which collected data from multiple sources including NASA. From Australia to California, bushfires have been rampant globally, causing a grave threat to the ecosystem.
The Amazon rainforest, which roughly produces 6% of the global oxygen supply, has also reported massive wildfires this year. Not to mention the frequent floods across coastal states in the United States. Recent reports state that 1 in 6 Americans are concerned about climate change in light of the recent developments.
Realizing the grave threat of climate change to civilization, leaders of various countries have come together to take the necessary steps to curb global warming. If Joe Biden becomes the next US president, it should lead the country into taking more action as well. The former vice-president has outlined a $2 trillion investment project to make the United States a green economy by eliminating carbon emissions by 2050.
Companies such as Plug Power, Inc. (PLUG), Enphase Energy, Inc. (ENPH), and First Solar, Inc. (FSLR), operating in the alternative energy industry, are well-positioned as the whole world is gradually shifting to adopt cleaner energy, both willingly and based on administrative orders.
Plug Power, Inc. (PLUG)
PLUG is a leading provider of hydrogen fuel cell turnkey solutions having applications in logistics and supply chain, electric vehicles, stationary power markets, etc. It is an original equipment manufacturer (OEM) dealing with proton exchange membrane (PEM) and fuel cell technologies.
PLUG recently announced the development of three GenDrive fuel cell products for European industrial and material handling vehicles. PLUG partnered with Apex Clean Energy in September to develop a green hydrogen network across the United States using wind power. This partnership is in tune with PLUG’s goal to decarbonize and use 50% green hydrogen across major industries in the country by 2024. It also partnered with Brookfield Renewable Partners to acquire 100% of Brookfield’s renewable energy supplies.
PLUG announced a Memorandum of Understanding (MoU) for demonstrating Plug Power’s ProGen Fuel Cell engine in class 6 and class 8 vehicles which are expected to hit the market by early 2021. PLUG developed a 1kW Progen Fuel Cell system for drone and robotics applications as well. The company has standing agreements with Universal Hydrogen and EnergyOR to develop hydrogen-powered commercial aircraft, automated guided vehicles, and unmanned aerial vehicles.
PLUG’s second quarter (ended June 2020) revenues increased 18.3% year-over-year to $68.07 million. Adjusted EBITDA increased 112.6% from the same period last year to $1.22 million. It delivered record gross billings of $72.40 million over this period.
The consensus EPS estimate for the third quarter ended in September 2020 indicates a 22.2% improvement from the year-ago value. The consensus revenue estimate of $110.04 million for the about-to-be-reported quarter indicates 80.4% growth from the same period last year.
PLUG has gained more than 650% since hitting its 52-week low of $2.53 in March. The stock hit its 52-week high of $19.02 in October.
Under POWR Ratings, PLUG has been accorded a “B” rating for Industry Rank. In the 58-stock Industrial- Equipment sector, it is ranked #27.
Enphase Energy, Inc. (ENPH)
ENPH designs, manufactures, and sells home energy solutions such as microinverter systems to the photovoltaic industry globally. It is a leading supplier of microinverters, with a global market presence. Its semiconductor-based microinverter converts individual solar molecule energy and combines it with its patented networking and software technology for energy monitoring and control services. The company also provides AC battery storage systems, Envoy communications gateway, and Enlighten cloud-based monitoring services.
ENPH started supplying Enphase IQ 7A microinverters to Australian and European markets from August 31st. It partnered with G-Store in Australia for the smooth delivery and installation of Enphase inverters across the country. In the European markets, ENPH partnered with three companies — Carbomat group, Libra Energy, and Solarclarity based in Belgium and Netherlands — for distribution and installation of Enphase IQ 7 across the two countries.
ENPH entered into a strategic partnership with Maxeon Solar technologies in July to develop seventh-generation factory-integrated Enphase IQ microinverters. These products are expected to be launched by the fourth quarter for residential customers worldwide. Earlier this year, the company announced its expansion plan to Poland through a partnership with solar distributor SmartX Sp. z.o.o. It also partnered with SunCool Energy for the distribution of Enphase Storage systems in south Florida.
On September 14th, ENPH announced the construction of a building-integrated photovoltaic commercial solar project in Minneapolis. This high profiled building is built to rely completely on solar energy, with an array of 112 solar modules and ENPH micro inverters.
On October 12th, ENPH announced a partnership with Natura Living for the development of commercial solar projects for PepsiCo Thailand. Under this agreement, Natura Living installed a 60kW solar array with Enphase IQ 7 inverters in the PepsiCo building in Thailand.
ENPH’s revenue increased 42.2% sequentially to $178.50 million in the third quarter ended September 2020. Operating income rose 53.5% year-over-year to $51.76 million. Net income increased 26.6% to $39.36 million, while EPS grew 24% to $0.31. The company reported a record non-GAAP gross margin of 41% for this period.
The consensus EPS estimate of $0.41 for the fourth quarter ending December 2020 indicates a 5.1% improvement year-over-year. Moreover, ENPH beat the street EPS estimates in each of the trailing four quarters, which is impressive. Analysts expect the company’s revenue for the ongoing quarter to increase 15.9% from the prior-year quarter to $243.34 million.
ENPH gained more than 255% to hit its 52-week high of $118.94 in October since hitting its year-to-date low of $21.49 in March.
ENPH’s strong fundamentals are reflected in its POWR Ratings. It is rated “Buy” with an “A” for Trade Grade and Peer Grade. In the 16-stock Solar industry, ENPH is ranked #3.
First Solar, Inc. (FSLR)
FSLR operates in two major segments — Modules and Systems — to provide photovoltaic solar energy solutions internationally. The Modules segment develops cadmium telluride solar modules to convert sunlight into electricity, while the Systems segment provides various power plant solutions.
On August 6th, FSLR announced its commitment to power 100% of its global photovoltaic solar manufacturing operations renewable energy by 2028. It plans to transition its facilities located in the United States to carbon-free electricity by 2026. It launched the first known 141 MW utility-scale solar facility providing ancillary grid services commercially in Chile.
FSLR’s photovoltaic solar modules have been used to power the largest urban solar photovoltaic power plant in Europe, Labarde Solar Power plant. FSLR has also powered six recent projects being developed by Vista Corporation.
On July 23rd, FSLR entered into an agreement with Renewable Power Group of Goldman Sachs Asset Management to power the American Kings Solar project with FSLR’s series 6 photovoltaic modules. FSLR also sold its North American Operations and Maintenance Business to NovaSource Power Services. The company is currently offering senior notes to raise approximately $596.85 million in net proceeds.
FSLR’s net sales grew 69.6% year-over-year to $927.57 million in the third quarter ended September 2020. Gross profit rose 111.8% from the year-ago value to $293.02 million, while net income increased 406.3% from the same period last year to $155.04 million. EPS rose 403.4% from the prior-year quarter to $1.46.
The consensus EPS estimate of $2.48 for the current year indicates a 93.2% rise year-over-year. Analysts expect FSLR’s revenue to rise by 11.5% next year.
FSLR has gained more than 205% since hitting its 52-week low of $28.47 in March. The stock hit its 52-week high of $87.44 in October.
FSLR is rated “Strong Buy” in our POWR Ratings system, consistent with its impressive performance in the third quarter. It holds an “A” for Trade Grade, Buy & Hold grade, and Peer Grade. FSLR is currently ranked #1 in the Solar industry.
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PLUG shares were trading at $14.74 per share on Wednesday afternoon, down $0.04 (-0.27%). Year-to-date, PLUG has gained 366.46%, versus a 3.44% 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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