Following a record-setting performance in 2020, most stocks in the clean-energy sector are expected to soar again this year as governments worldwide take steps to transition their economies to a sustainable energy base. While the clean-energy sector involves primarily solar and wind energy, there other energy types to be embraced, such as biomass, geothermal, and hydropower. Even lithium mining companies will play an important role in a sustainable-energy future because lithium is used in the production of batteries for electric vehicles (EVs).
The capacity of renewable energy is set to expand 50% between 2019 and 2024, led primarily by solar energy. In fact, the price of solar energy has fallen by 89% in the past 10 years. Also, EVs are expected to become much more common in the near future and, in many ways, 2021 is expected to be a spectacular year for the EVs.
This, along with President-elect Joe Biden’s ambitious plans regarding the reduction of global warming, has helped cleantech stocks like Tesla, Inc. (TSLA), Sociedad Quimica y Minera S.A. (SQM), Ballard Power Systems, Inc. (BLDP), and Canadian Solar Inc. (CSIQ) hit their all-time highs. Because these stocks are well positioned to ride the clean energy wave, we think it wise to keep a close eye on them for appropriate buying opportunities.
Tesla, Inc. (TSLA)
The EV manufacturer TSLA needs no introduction. The company operates primarily through two segments — automotive, and energy generation and storage. TSLA Co-founder and CEO of TSLA Elon Musk became the world’s richest man on Thursday on the Bloomberg Billionaires Index, a ranking of the world’s 500 wealthiest people. surpassing Jeff Bezos, the founder of Amazon.com, Inc. (AMZN). TSLA stock surged 7.9% yesterday, hitting its all-time high of $816.99, based on hopes around a “blue” U.S. Senate.
TSLA delivered 180,570 vehicles in the fourth quarter (ended December 31, 2020). For the third quarter, ended September 30, 2020, TSLA’s total revenue increased 39.2% year-over-year to $8.8 billion. The energy storage business saw record deployments of 759 MWh in the third quarter. Non-GAAP net income has increased 155.6% year-over-year to $874 million, yielding EPS of $0.76, representing a 105.4% year-over-year increase.
Analysts expect TSLA’s revenue to increase 37.6% for the quarter ended December 31, 2020, 61.6% for the quarter ending March 2021, and 46.7% in 2021. The company’s EPS is expected to increase 124.4% for the quarter ended December 31, 2020, 69.5% in 2021, and at a rate of 396.7% per annum over the next five years. TSLA has an impressive earnings surprise history with the company beating consensus EPS estimates in each of the trailing four quarters.
Elon Musk, who is quite active on Twitter (TWTR) tweeted in December that those who had purchased the company’s EVs by December 31, 2020 would get three months of the company’s Full Self-Driving mode free of charge. TSLA was included in the S&P 500 on December 21. The company also recently signed a new long-term agreement with Panasonic Corporation for battery cells made in Japan that spans October 1, 2020 -March 31, 2022.
How does TSLA 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 cannot ask for better. The stock is also ranked #1 of 49 stocks in the Auto & Vehicle Manufacturers industry.
Sociedad Quimica y Minera S.A. (SQM)
Based in Santiago, Chile, SQM is a producer of potassium nitrate and iodine. The company produces specialty plant nutrients, iodine derivatives, lithium and its derivatives, potassium chloride, potassium sulfate, and certain industrial chemicals. It mainly operates through six segments —specialty plant nutrients, industrial chemicals, iodine and derivatives, lithium and derivatives, potassium, and other products and services.
The company’s lithium and derivatives business line saw sales volume increase nearly 56% year-over-year to 17,700 metric tons in the third quarter (ended September 30, 2020) . Gross profit for this segment accounted for nearly 16% of the company’s consolidated gross profit for the nine months ended September 30, 2020. Specialty plant nutrition revenues increased 4.5% year-over-year to $174.8 million in the third quarter, and industrial chemicals revenues increased 98.8% year-over-year to $33.8 million.
Analysts expect SQM’s revenue to increase 18% in 2021. The company’s EPS is expected to increase 44.7% in 2021, and at a rate of 16.7% per annum over the next five years. The stock has gained 212.6% since hitting its 52-week low of $15.20 in mid-March. It is currently trading just 1.7% below its 52-week high of $60.50, which it hit yesterday.
On December 23, SQM announced that its board has approved to increase SQM’s capital by up to $1.1 billion through the issuance of up to 22.4 million Series B shares of common stock. On December 22, it announced that it had signed a long-term agreement with LG Energy Solution (LGES) to supply lithium products to LGES. These moves followed the company’s announcement of its sustainable development plan in October.
SQM’s POWR Ratings reflect this promising outlook. It has an overall rating of “Strong Buy” with an “A” for Trade Grade, Buy & Hold Grade, and Peer Grade, and a “B” for Industry Rank. Among the 91 stocks in the Chemicals industry, it is ranked #7.
Ballard Power Systems, Inc. (BLDP)
Founded in 1979, BLDP is a Canada-based proton exchange membrane (PEM) fuel cell products designer. The company’s stated goal is to deliver fuel cell power for a sustainable planet. Its zero-emission PEM fuel cells enable the electrification of transportation and mobility, including buses, commercial trucks, trains, marine vessels, passenger cars and forklift trucks.
For the third quarter ended September 30, 2020, BLDP’s top line climbed 3.6% year-over-year to $25.6 million. It was driven primarily by higher shipments of heavy-duty motive and backup power products. The revenue generated from the power products platform increased 94% year-over-year to $15.3 million. Boosted by higher shipments of fuel cell products to China, including MEAs, China, the company’s heavy duty motive revenue increased 161% year-over-year to $12.9 million.
Analysts expect the company’s revenue to increase 21.5% for the quarter ending March 31, 2021, and 22.4% in 2021. BLDP’s EPS is expected to increase 50% for the quarter ending March 31, 2021, and 31.6% in 2021. Over the past year, the stock has rallied 245.2% to close yesterday’s trading session at $28.13, after hitting its all-time high of $28.23.
BLDP announced on December 17 that it has received an order for 10 fuel cell modules from Van Hool to power Van Hool A330 buses to be deployed in Emmen in the Netherlands. On December 13, the company announced that it has signed a collaboration agreement with Eltek Nordic, a power conversion company headquartered in Drammen, to provide reliable backup power solutions for telecom networks and other critical communication infrastructure. Eltek Nordic is expected to use BLDP’s FCgen-H2PM fuel cell backup power system.
It is no surprise that BLDP is rated “Strong Buy” in our POWR Ratings system. It also has an “A” for Trade Grade, Buy & Hold Grade, and Peer Grade, and a “B” for Industry Rank. In the 84-stock Industrial – Equipment industry, it is ranked #10.
Canadian Solar Inc. (CSIQ)
A solar power company, CSIQ is a provider of solar power products, services, and system solutions with operations in North America, South America, Europe, Africa, the Middle East, Australia, and Asia. The company operates mainly through two segments — module and system solutions (MSS)and energy. Its energy segment consists of solar power project development, engineering, procurement, and construction (EPC) services, and operation and maintenance (O&M) services.
CSIQ’s revenues have surged 20.3% year-over-year to $914.4 million for the third quarter ended September 30, 2020, driven by higher module shipments and project sales. Total module shipments increased 33% year-over-year to 3,169 MW. And its gross profit increased 21.2% sequentially to $178.4 million, yielding a gross margin of 19.5%. Its EPS of $0.15 surpassed the consensus estimate by 400%.
Analysts expect the company’s revenue to increase 8.5% for the quarter ended December 31, 2020, 18.1% for the quarter ending March 2021, and 43.6% in 2021. CSIQ’s EPS is expected to increase 19.8% in 2021, and at a rate of 20% per annum over the next five years. The company has an impressive earnings surprise history; it has beaten consensus EPS estimates in each of the trailing four quarters.
Yesterday, CSIQ announced that its wholly owned subsidiary, Recurrent Energy, had completed the sale of the 144 MWac Pflugerville Solar project to Duke Energy Renewables, which is a subsidiary of Duke Energy Corporation (DUK). In December, CSIQ announced the sale of the remaining 30% ownership of the Big Fish SPV S.r.l. and Iron SPV S.r.l. solar projects to Falck Renewables. It expects to recognize revenues from the sale in the fourth quarter of 2020, ended December 31.
The company announced on November 23, that it has recently signed a 12-year power purchase agreement (PPA) with BTG Pactual and that it was awarded two solar power projects in Brazil in a private auction by Furnas Centrais Elétricas for a total of 862 MWp. The stock has gained 154% over the past six months and closed yesterday’s trading session at $56.61, after hitting its all-time high of $59.19.
CSIQ’s strong fundamentals are reflected in its POWR Ratings, it has a “Strong Buy” rating with an “A” in Trade Grade and Buy & Hold Grade, and a “B” in Peer Grade. Within the Solar industry, it is ranked #5 of 21 stocks.
Want More Great Investing Ideas?
TSLA shares were trading at $862.67 per share on Friday morning, up $46.63 (+5.71%). Year-to-date, TSLA has gained 22.25%, versus a 1.83% 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...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|TSLA||Get Rating||Get Rating||Get Rating|
|SQM||Get Rating||Get Rating||Get Rating|
|BLDP||Get Rating||Get Rating||Get Rating|
|CSIQ||Get Rating||Get Rating||Get Rating|