Clean technology or cleantech refers to the sector in which companies with technologies that strive for environmental sustainability can be found. Companies in the sector seek to reduce the harmful impact of conventional technologies or energy generation methods, such as coal and other fossil fuels.

Environmental concerns have led to the rise of cleantech. The Infrastructure Investment and Jobs Act, which was signed in November, has billions of dollars provisioned for alternative fuel transportation technologies and other projects. The Build Back Better bill proposal also has delivers significant clean alternative energy and transportation spending.

Furthermore, the global clean energy technologies market size is expected to grow at a 6.9% CAGR to $423.70 billion by 2026. Thus, we think Cleantech stocks Plug Power Inc. (PLUG), QuantumScape Corporation (QS), Renewable Energy Group, Inc. (REGI), and Canadian Solar Inc. (CSIQ) could be solid buys now, especially given Wall Street analysts’ expectations of potential gains.

Plug Power Inc. (PLUG)

PLUG is a hydrogen fuel cell turnkey solutions provider used for electric mobility and stationary power markets in North America and Europe. The Latham, N.Y.-based company’s offerings include GenDrive, a liquid hydrogen-fueled proton exchange membrane (PEM) fuel cell, GenFuel, a hydrogen fueling delivery, and dispensing system, and GenCare, an IoT-based maintenance and service program.

On December 14, PLUG announced that it has entered into a long-term supply and logistics agreement with Certarus (USA) Ltd., a compressed natural gas transporter, to  escalate the adoption of green hydrogen fuel. The deal is expected to leverage the companies’ collective expertise and scale PLUG’s delivery capacity.

On December 9, PLUG announced that it had completed the acquisition of Frames Group, a turnkey systems integration company. The acquisition is expected to expand the company’s presence across several nations.

For its fiscal third quarter, ended September 30, PLUG’s net revenue increased 34.4% year-over-year to $143.92 million. And for the nine months ended September 30, its net cash provided by financing activities rose 506.9% from the same period last year to $3.58 billion, while its cash, cash equivalent, and restricted cash balance came in at $3.85 billion, up 426.8% year-over-year,

The consensus EPS estimate for the current quarter (ending December 2021) indicates an improvement of 91.1% from the prior-year quarter. And the $158.17 million consensus revenue estimate for the current quarter reflects a 64.2% year-over-year increase.

The stock has gained 18.9% in price over the past year and 23.9% over the past three months to close yesterday’s trading session at $30.55.

Of the 17 Wall Street analysts rating PLUG, 13 have rated it Buy, while four have rated it Hold. The 12-month median price target of $48.29 indicates a 58.1% potential upside. The price targets range from a low of $35.00 to a high of $78.00.

QuantumScape Corporation (QS)

QS is a San Jose, Calif.-based development-stage company that develops and commercializes solid-state lithium-metal batteries for EVs and other applications.

On November 16, QS declared that it successfully met all milestones laid out at the beginning of this year, releasing  10-layer battery cell testing data. This reflects on the company’s ability to execute its objectives in  enhancing its technology and manufacturing.

Also in November, QS announced the establishment of QS campus after obtaining buildings in San Jose to commercialize its solid-state lithium-metal battery technology. The new space is dedicated to manufacturing and is expected to expand its footprint and better overall capacities.

QS’ net income and comprehensive income attributable to common stockholders came in at $15.35 million and $15.42 million, respectively, in its  fiscal third quarter ended September 30, up substantially from their negative year-ago values. The company’s cash, cash equivalents, and restricted cash balance improved by 2,693.8% from the prior-year quarter to $356.66 million.

Analysts expect QS’ EPS to increase 95.4% year-over-year in the current quarter (ending December 2021).

QS’ shares have gained 13.5% in price over the past three months to close yesterday’s trading session at $23.67. It has gained 1.3% intra-day.

The 12-month median price target of $35.50 indicates  50% potential upside. The price targets range from a low of $26.00 to a high of $40.00.

Renewable Energy Group, Inc. (REGI)

REGI is an international provider of low-carbon transportation fuels that operates through the broad segments of Biomass-Based Diesel; Services, and Corporate and Other. The Ames, Iowa-based company produces advanced biofuels made from natural fats, oils, and greases.

On November 10, REGI and tech-enabled energy delivery service, Booster, announced a partnership to provide mobile delivery services for renewable diesel, biodiesel, and blended fuels. The service has started in California and is expected to expand nationwide. The venture could prove to be profitable for the company.

In October, REGI held a groundbreaking ceremony to initiate the construction of its expansion project at REG Geismar. Regarding the expansion, REGI President & CEO Cynthia (CJ) Warner said, “This improvement and expansion project is a strategically advantaged growth project and will position REG to continue our leadership in the renewable fuels industry.” 

For its fiscal third quarter, ended September 30, REGI’s revenues increased 75.8% year-over-year to $1.01 billion. Its income from operations improved 116% from the prior-year quarter to $51.06 million. And its net income and net income per share, available to common stockholders, rose 89.6% and 62.7%, respectively, from the same period last year to $42.13 million and $0.83.

Street $0.78 EPS estimate  for the current quarter (ending December 2021) indicates a 105.3% year-over-year increase. The Street’s $816.09 million revenue estimate for the current quarter reflects a 51% rise from the prior-year quarter.

The stock has declined 1.9% in price intraday to close yesterday’s trading session at $43.51.

All four analysts rating REGI have rated it Buy. The 12-month median price target of $78.00 indicates a 79.3% potential upside. The price targets range from a low of $64.00 to a high of $95.00.

Canadian Solar Inc. (CSIQ)

CSIQ designs, develops, manufactures, and sells solar ingots, wafers, cells, and other solar power products and operates through Module and System Solutions (MSS) and Energy segments. The company is based in Guelph, Canada.

On December 14, CSIQ and Brazilian renewable energy company VTRM Energia Participações S.A. announced the sale of CSIQ’s 635 MWp Jaíba V solar project to VTRM. With this sale, CSIQ expects to monetize 1.6 GWp of utility-scale solar projects in Brazil and intends to execute the monetization of its remaining pipeline.

On December 13, CSIQ announced that its majority-owned subsidiary CSI Solar Co., Ltd. received approval for its  proposed IPO and listing in the Science and Technology Innovation Board (STAR Market) of the Shanghai Stock Exchange. The listing should provide CSIQ with another platform to raise growth capital and solidify its manufacturing business.

CSIQ’s net revenues increased 34.5% year-over-year to $1.23 billion in its fiscal third quarter, ended September 30. Its gross profit improved 28.1% from the same period last year to $228.63 million. Its non-GAAP net income attributable to CSIQ and non-GAAP income per share stood at $28.24 million and $0.42, respectively, up 211.8% and 180% from the prior-year quarter.

The consensus EPS estimate for the current quarter (ending December 2021) of $0.27 indicates an improvement of 145.5% from the prior-year quarter. And the $1.59 billion consensus revenue estimate for the current quarter reflects a 59.2% year-over-year increase. Furthermore, CSIQ has an impressive surprise earnings history; it has topped consensus EPS estimates in three of the trailing four quarters.

The stock has declined 6% in price intraday to close yesterday’s trading session at $30.98.

The 12-month median price target of $46.75 indicates a 50.9% potential upside. The price targets range from a low of $42.00 to a high of $51.00.

PLUG shares were trading at $29.33 per share on Wednesday afternoon, down $1.22 (-3.99%). Year-to-date, PLUG has declined -13.51%, versus a 24.71% rise in the benchmark S&P 500 index during the same period.

About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...

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