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3 "Buy Rated" Cleantech Stocks (Not Named NIO)

Although shares of NIO (NIO) are holding steady near their all-time highs, its rivals such as Plug Power (PLUG), Ormat Technologies (ORA) and Sunnova Energy International (NOVA) are gearing up to challenge the Chinese EV maker based on their solid financials. We believe these stocks may be well positioned to outperform super-expensive NIO in the upcoming months.

Chinese electric vehicle manufacturer NIO Limited (NIO) has been thriving with China fast approaching the leadership position in the global EV space as  the largest market for EVs. While NIO is flying high with 1058.2% year-to-date gains, the company’s struggle to generate profits amid internal issues such as production delays is raising concerns regarding the overvaluation of the stock. Moreover, NIO operates solely operates in the EV market, which limits its growth prospects relative to its peers that are also engaged in other segments of clean energy.

As substantial capital investments are expected to flow into the industry over in the next decade, cleantech stocks have grabbed significant investor attention this year, as reflected by iShares S&P Global Clean Energy Index ETF’s (ICLN) 102% increase year-to-date. The industry is expected to witness unprecedented growth, propelled by the looming threat of climate change and falling operational costs.

Given NIO’s inflated valuation, we think the stock could be due for a pullback because the company’s financials do not yet justify their valuation. Hence, Plug Power, Inc. (PLUG), Ormat Technologies, Inc. (ORA) and Sunnova Energy International Inc. (NOVA) could be more profitable investments going into 2021.

Plug Power, Inc. (PLUG)

PLUG is a leading provider of hydrogen fuel cell turnkey solutions and fuel processing technologies for the electric mobility and stationary power markets in North America and Europe. The company provides its services to manufacturing businesses and through retail chains, dealers, and direct sales force.

On November 30th, PLUG announced the collaboration with Gaussin to bring a commercial suite of ProGen-powered Gaussin transportation vehicles to market in 2021. This product development will accelerate its PEM electrolyzer business in the US and European markets.

PLUG recently raised approximately $1 billion to execute its green hydrogen strategy and as well as other strategic growth initiatives. Also, the company entered a strategic partnership with Brookfield Energy and Apex Clean Energy to source renewable electricity and build liquid green hydrogen plants. This will help PLUG achieve its long-term sustainable energy goal.

PLUG’s revenue has increased 79.9% year-over-year to $106.99 million in the third quarter ended September 2020. Gross billings rose 73.4% sequentially to $125.60 million.

The consensus EPS estimate for the current year indicates a 13.9% improvement from the year-ago value. The consensus revenue estimate of $324.08 million for the current year indicates a 36.9% growth from the same period last year. The stock has gained 809.5% year-to-date.

How does PLUG stack up for the POWR Ratings?

A for Trade Grade

A for Buy & Hold Grade

B for Industry Rank

A for Overall POWR Rating.

The stock is also ranked #6 out of 59 stocks in the Industrial – Equipment industry.

Ormat Technologies, Inc. (ORA)

ORA provides geothermal and recovered energy power through three segments: Electricity, Product, and Energy Storage and Management Services. The company serves contractors, developers, owners, and operators of geothermal power plants, and owners and operators of interstate natural gas pipelines.

On November 30th, ORA announced the successful completion of the public offering of 4.77 million shares that secured net proceeds of approximately $340 million. The company intends to use the net proceeds to fund for funding capital expenditures and acquisitions.

The company has recently signed two Resource Adequacy Agreements to add 3.3 GW of incremental resource adequacy to the California grid by 2023. This project marks another expansion of ORA’s energy storage footprint in California, which is its primary growth market for energy storage.

ORA’s energy storage management services revenue has increased 62.5% year-over-year to $5.70 million in the third quarter ended September 2020. Operating income increased 33.5% from the year-ago value to $51.70 million, while adjusted EBITDA rose 25.3% from the prior-year quarter to $107.10 million.

The consensus EPS estimate of $1.69 for the next year indicates a 4.3% improvement from the year-ago value. Moreover, ORA has an impressive earnings surprise history, with the company beating consensus EPS estimates in three out of trailing four quarters. The consensus revenue estimate of $731.94 million for the next year indicates a 2.8% growth from the same period last year. The stock has gained 6.1% year-to-date.

ORA’s strong fundamentals are reflected in its POWR Ratings. It has a “Buy” rating with an “A” for Trade Grade and Industry Rank and a “B” for Buy & Hold Grade. It is ranked #28 out of 38 stocks in the Industrial - Manufacturing group.

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 operates a fleet of residential solar energy systems with a generation capacity of approximately 572 megawatts.

On December 4th, the company announced the closing of securitization transaction involving residential solar systems and a primary and secondary offering of shares. This should bolster NOVA’s cash flows and accelerate its growth.

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.

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.

The consensus EPS estimate for the current year indicates a 23.6% improvement year-over-year. The consensus revenue estimate of $165.77 million indicates a 26% increase from the same period last year. The stock has gained 254.4% year-to-date.

NOVA’s promising outlook is reflected in its POWR Ratings. It is rated “Buy” with an “A” for Trade Grade and Peer Grade, and a “B” for Buy & Hold Grade. It is ranked #7 out of 60 stocks in the Energy - Services industry.

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PLUG shares rose $0.10 (+0.37%) in after-hours trading Wednesday. Year-to-date, PLUG has gained 746.20%, versus a 15.61% 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.

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