The Cleantech industry includes, but is not limited to, solar and wind energy, biomass energy and hydropower. According to NASA, the planetâ€™s average surface temperature has risen about 2.05 degrees Fahrenheit since the late 19th century. The world is more worried than ever about climate change and is pinning its hope on a sustainable future driven by renewable energy. Investor optimism over the prospects of the industry is clearly evident from the Invesco Cleantech ETFâ€™s (PZD) 27.5% year-to-date return, versus the S&P 500â€™s 8.6% gain.
Internationally, the concern over climate change has led countries to endorsing some sort of climate deal, with China pledging to reach net zero emissions by 2060, and the European Green Deal aiming to transform the 27-country bloc to a low-carbon economy. In the United States, president-elect Joe Biden had announced a $2 trillion plan in August to increase the use of clean energy. His plan is aimed at ensuring that the United States achieves a 100% clean energy economy and reaches net-zero emissions by 2050.
The new Presidential regime is expected to provide a boost to cleantech stocks. Enphase Energy, Inc. (ENPH), First Solar, Inc. (FSLR), and Renewable Energy Group, Inc. (REGI) stands to directly benefit from this trend.
Enphase Energy, Inc. (ENPH)
With over 30 million inverters shipped and operating in more than 21 countries, ENPH is the worldâ€™s leading supplier of solar microinverters. The California-based company provides semiconductor-based microinverter, AC battery storage systems, envoy communications gateway, and enlighten cloud-based monitoring service among others. Interestingly, through the Enphase University, the company offers online and in-person training resources for solar and storage installers.
In its recently reported quarterly financial results (for the third quarter ending September 2020), ENPHâ€™s net revenues increased 42.19% sequentially to $178.5 million. Gross profit margin increased to 41% for the quarter. The companyâ€™s EPS increased 76.5% sequentially to $0.30, surpassing the consensus estimate by 25%. Also, ENPHâ€™s earnings surprise history looks impressive with the company beating consensus EPS estimates in each of the trailing four quarters.
Analysts expect ENPHâ€™s revenue to increase 21.5% for the quarter ending December 2020 and 61.7% next year. The companyâ€™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. On a year-to-date basis, ENPH has rallied 368.9% to close yesterdayâ€™s session at $122.53. Over the past six months, ENPH soared 132.6%.
Last month, ENPH announced that together with SunCool Energy, the company has started offering the Enphase Encharge storage system to customers in South Florida. Natura Living, one of Thailandâ€™s leading residential and commercial solar installers, also joined forces with the company to provide its microinverter-based systems for the commercial solar installation projects for PepsiCo (PEP) Thailand.
How does ENPH stack up for the POWR Ratings?
B for Trade Grade
B for Peer Grade
B for Overall POWR Rating
The stock is also ranked #1 out of 16 stocks in the Solar industry.
First Solar, Inc. (FSLR)
Founded in 1999, FSLR is a leading global provider of photovoltaic (PV) solar energy solutions. Based in Arizona, the company operates through two segments â€“ components and systems. Having a strong balance sheet, the company invests heavily in Research and Development (R&D).
FSLRâ€™s net sales for the third quarter that ended September 2020 increased 69.6% year-over-year to $928 million. The company started its commercial production of 455-watt modules. Gross profit increased to 31.6% for the quarter. The companyâ€™s EPS increased 400% year-over-year to $1.45. FSLRâ€™s earnings surprise history looks impressive with the company missing the consensus estimate in just one of the trailing four quarters.
Analysts expect FSLRâ€™s revenue to increase 6.6% next year. The companyâ€™s EPS is expected to increase 150.7% this year and at a rate of 26% per annum over the next five years. The stock has gained 57.7% year-to-date. It is currently trading 10.9% below its 52-week high of $97.93 which it hit on October 28th.
FSLR joined RE100 and committed to power 100% of its global PV solar manufacturing operations with renewable energy by 2028 and transition its facilities in the United States to carbon-free electricity by 2026. Vistra Corp (VST) selected FSLRâ€™s PV solar modules to power six of its solar energy projects across Texas where FSLR will supply 869 megawatts DC of its Series 6 modules. JP Energie Environnement is also using the Series 6 PV solar modules to power the 59-megawatt DC Labarde solar power plant in Europe.
FSLRâ€™s POWR Ratings reflect this promising outlook. It has an overall rating of â€śBuyâ€ť with an â€śAâ€ť for Trade Grade and Peer Grade and a â€śBâ€ť for Buy & Hold Grade. In the Solar industry, it is ranked #2.
Renewable Energy Group, Inc. (REGI)
The largest biodiesel producer by volume in the United States, REGI has been operating for more than two decades. It operates through two segments â€” Biomass-Based Diesel and Services. The company aims to make the transition to a sustainable future ensuring transforming the renewable resources into high quality and cleaner fuels. The company owns and operates a network of 13 biorefineries in the United States and Europe.
REGIâ€™s gross profit for the third quarter that ended September increased 222.5% to $77.65 million. The company reduced more than one million metric tons of carbon from its 137 million gallons of biofuels produced in the quarter. EPS increased 3,250% to $0.67. Analysts expect REGIâ€™s revenue and EPS to increase 8.8% and 64.9% next year, respectively. In fact, REGIâ€™s earnings surprise history looks impressive with the company missing the consensus estimate in just one of the trailing four quarters.
Last month, the company announced its plans to undertake a capacity expansion of its Geismar, Louisiana biorefinery, increasing the capacity by 90 million gallons. A couple of months back, the company designed a single wind turbine that will provide power to the companyâ€™s bio refinery in Albert Lea, Minnesota.
Itâ€™s no surprise that REGI is rated â€śBuyâ€ť in our POWR Ratings system. It also has an â€śAâ€ť for Trade Grade and Peer Grade, and â€śBâ€ť for Buy & Hold Grade. In the 60 stock Energy â€“ Services industry, it is ranked #2.
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ENPH shares were trading at $127.19 per share on Monday morning, up $4.66 (+3.80%). Year-to-date, ENPH has gained 386.76%, versus a 13.16% rise in the benchmark S&P 500 index during the same period.