Joe Biden’s win in the presidential election is bullish for alternative energy stocks. The Biden-Harris campaign has pledged to increase solar penetration, including 8 million household solar installations.
In late July, Biden announced a proposal to spend $2 trillion on clean energy and plans to add more than 500 million solar panels to America’s energy infrastructure in the next five years. The United States trade body Solar Energy Industries Association has recently released an action plan for the next Congress, setting out its support for legislation to expand the solar market. Another factor is that costs are plummeting, while energy storage costs are getting more reasonable.
Biden believes that his energy plan is a crucial framework for meeting climate challenges and sees the industry also as a source of growth and jobs. With federal government backing, solar energy stocks like Enphase Energy, Inc. (ENPH), First Solar, Inc. (FSLR), and Canadian Solar Inc. (CSIQ) should witness robust momentum in the upcoming months.
Enphase Energy, Inc. (ENPH)
ENPH designs, manufactures, and sells software-driven solar photovoltaic energy solutions globally. The company manufactures semiconductor-based microinverter that efficiently convert energy at an individual solar module level, as well as energy monitoring and control services.
On November 9th, ENPH announced that Cutler Bay Solar Solutions has installed 1.5 MWh of its storage systems in Florida homes. On October 20th, ENPH announced a similar strategic partnership with SunCool Energy to supply Enphase storage systems in South Florida. This will significantly increase the ENPH’s market reach along with its revenues.
ENPH’s revenue increased 42.2% sequentially to $178.50 million in the third quarter ended September 2020. Operating income grew 53.5% year-over-year to $51.76 million, while EPS rose 24% from the year-ago value to $0.31. Non-GAAP gross margin increased 104 basis points to 41% over this period.
The consensus EPS estimate of $0.42 for the fourth quarter ending December 2020 indicates a 7.7% improvement year-over-year. ENPH has an impressive earnings surprise history as well, as it beat the street EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $255.23 million for the fourth quarter indicates a 21.5% increase year-over-year. The stock has gained 360.9% year-to-date.
How does ENPH stack up for the POWR Ratings?
A for Trade Grade
A for Peer Grade
B for Buy & Hold Grade
B for Overall POWR Rating.
The stock is ranked #1 out of the 16 stocks in the Solar industry,
First Solar, Inc. (FSLR)
FSLR is a manufacturer and provider of photovoltaic solar panels and utility-scale PV power plants operating globally. The company functions in two segments – Modules and Systems. Under the Module segment, cadmium telluride solar modules are developed to convert sunlight into electricity, whereas, the Systems segment is responsible for providing power plant solutions.
On September 23rd, FSLR announced that JP Energie Environment selected its photovoltaic solar modules to power the Labrade solar power plant in Europe. Supplying over 400 projects in France alone, this would establish FSLR as a leading global provider of solar solutions.
FSLR has also recently entered into an agreement with Vistra Corp. under which it will supply its PV solar modules to power Vistra’s five solar projects across Texas. This makes FSLR stand out in the solar industry as a reliable PV manufacturer while significantly increasing its revenue.
FSLR’s third quarter ended September 2020 net sales rose 69.6% year-over-year to $927.57 million. Net income grew 406.3% from the prior-year quarter to $155.04 million, while gross profit grew 111.8% from the same period last year to $293.02 million. EPS increased 403.4% from the year-ago value to $1.46.
The consensus EPS estimate of $3.71 for the current year indicates a 150.7% improvement year-over-year. Moreover, FSLR beat the street EPS estimates in three out of the trailing four quarters, which is impressive. The consensus revenue estimate of $3.02 billion for the next year indicates a 6.6% growth from the same period last year. The stock has gained 50.5% year-to-date.
FSLR’s strong fundamentals are reflected in its POWR Ratings. It has a “Buy” rating with a “B” for Trade Grade and Buy & Hold Grade. It is ranked #2 in the same industry.
Canadian Solar Inc. (CSIQ)
CSIQ is a designer and manufacturer of solar power products, wafers, solar ingots, operating through two segments – Module and System Solutions, and Energy. The company serves distributors, project developers, and EPC companies internationally.
On October 27th, CSIQ announced the launch of its Series 7 new generation modules to support the seamless installation of solar plants. This will boost the demand for CSIQ’s products particularly in residential areas, due to its user-friendly nature.
CSIQ has recently agreed with Goldman Sachs Renewable Power to provide a 75 MW / 300 MWh battery storage solution to a solar plant in California. This large-scale supply will help the company become an established player in the solar industry.
CSIQ’s MSS Business segment revenue increased 2.4% sequentially to $706.15 million in the second quarter ended June 2020. Net income increased 11% year-over-year to $51.94 million. Total module shipments rose 31.2% sequentially to 2905 MW in the second quarter.
The consensus EPS estimate of $3.38 for the next year indicates a 20.3% improvement year-over-year. Moreover, CSIQ beat the street EPS estimates in three out of the trailing four quarters, which is impressive. The consensus revenue estimate of $4.77 billion for the next year indicates a 30.5% growth from the year-ago value. The stock has gained 77.9% year-to-date.
It’s no surprise that CSIQ is rated “Buy” in our POWR Ratings system. It has an “A” for Trade Grade and a “B” for Buy & Hold Grade and Peer Grade. Among the 16 stocks in the same industry, it is ranked #4.
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ENPH shares were trading at $117.21 per share on Thursday afternoon, down $3.22 (-2.67%). Year-to-date, ENPH has gained 348.56%, versus a 11.36% 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. More…
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