3 “Purchase-Rated” Cleantech Shares for November


The cleantech industry includes solar and wind energy, biomass energy and hydropower. According to NASA, the planet’s average surface temperature has increased by about 2.05 degrees Fahrenheit since the late 19th century. The world is more concerned about climate change than ever and is hoping for a sustainable future powered by renewable energy. The optimism of investors with regard to the outlook for the industry is clearly evident in the return of the Invesco Cleantech ETF (PZD) of 27.5% since the beginning of the year compared to the S&P 500’s plus of 8.6%.

Internationally, concerns about climate change have led countries to approve some kind of climate agreement. China has pledged to achieve net zero emissions by 2060, and the European Green Deal aims to transform the 27-country bloc into a low-carbon economy. In the United States, President-elect Joe Biden announced a $ 2 trillion plan in August to increase the use of clean energy. His plan aims to ensure that the United States achieves a 100% clean energy economy and net zero emissions by 2050.

The new presidential regime is expected to boost cleantech stocks. Enphase Energy, Inc. (ENPH), First Solar, Inc. (FSLR) and Renewable Energy Group, Inc. (REGI) will benefit directly from this trend.

Enphase Energy, Inc. (ENPH)

With over 30 million inverters in more than 21 countries, ENPH is the world’s leading supplier of solar microinverters. The California-based company offers semiconductor-based micro-converters, AC battery storage systems, a communications gateway for ambassadors and a cloud-based monitoring service, among other things. Interestingly, the company offers online and in-person training resources for solar and storage installers through Enphase University.

In its recently released quarterly financial results (for the third quarter ended September 2020), ENPH’s net sales increased sequentially 42.19% to $ 178.5 million. The gross profit margin rose to 41% for the quarter. The company’s earnings per share rose sequentially 76.5% to $ 0.30, beating consensus estimate by 25%. ENPH’s earnings surprise history is impressive, with the company beating EPS consensus estimates for each of the past four quarters.

Analysts expect ENPH’s revenue to grow 21.5% for the quarter ending December 2020 and 61.7% next year. The company’s EPS is projected to grow 34.7% annually this year, 44.5% next year, and 36.6% annually over the next five years. Year-to-date, ENPH is up 368.9% to close yesterday’s session at $ 122.53. Over the past six months, ENPH is up 132.6%.

Last month, ENPH announced that the company, together with SunCool Energy, has begun offering the Enphase Encharge storage system to customers in South Florida. Natura Living, one of the leading residential and commercial solar installers in Thailand, has also partnered with the company to provide its micro-inverter 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 the overall POWR rating

The stock is also number 1 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. The Arizona-based company operates in two segments – components and systems. With a strong balance sheet, the company invests heavily in research and development (R&D).

FSLR net sales increased 69.6% year over year to $ 928 million for the third quarter through September 2020. The company began commercial production of 455 watt modules. Gross profit rose to 31.6% for the quarter. The company’s earnings per share increased 400% year over year to $ 1.45. FSLR’s earnings surprise history looks impressive as the company missed the consensus estimate in just one of the past four quarters.

Analysts expect FSLR’s sales to grow 6.6% over the next year. The company’s EPS is projected to grow 150.7% annually this year and 26% annually over the next five years. The share has gained 57.7% since the beginning of the year. It is currently trading 10.9% below its 52-week high of $ 97.93, which it hit on October 28th.

FSLR joined RE100 and pledged to have 100% of its global PV solar production with renewable energy by 2028 and to convert its facilities in the US to carbon-free electricity by 2026. Vistra Corp (VST) selected FSLR’s PV solar modules for six of its solar energy projects across Texas, where FSLR will provide 869 megawatts of DC power from its Series 6 modules. JP Energie Environnement also uses the 6 series solar modules for the operation of the 59 megawatt solar power plant DC Labarde in Europe.

The FSLR’s POWR ratings reflect this promising outlook. It has an overall rating of “Buy” with an “A” for Trade Grade and Peer Grade and a “B” for Buy & Hold Grade. It ranks second in the solar industry.

Renewable Energy Group, Inc. (REGI)

REGI is the largest biodiesel producer in the US by volume and has been operating for more than two decades. The company operates in two segments: diesel and biomass-based services. The company seeks to transition to a sustainable future to ensure that renewable resources are converted into high quality, cleaner fuels. The company owns and operates a network of 13 biorefineries in the US and Europe.

REGI gross income for the third quarter ended September increased 222.5% to $ 77.65 million. The company reduced more than a million tons of carbon from its 137 million gallons of biofuels produced in the quarter. Earnings per share rose 3,250% to $ 0.67. Analysts expect REGI’s revenue and EPS to grow 8.8% and 64.9%, respectively, over the next year. In fact, REGI’s earnings surprise history looks impressive as the company missed the consensus estimate in only one of the past four quarters.

Last month the company announced plans to expand the capacity of its Geismar, Louisiana biorefinery, adding 90 million gallons to its capacity. A few months ago, the company designed a single wind turbine that will power the company’s biorefinery in Albert Lea, Minnesota.

It’s no surprise that REGI is rated “Buy” on our POWR rating system. It also has an “A” for Trade Grade and Peer Grade and a “B” for Buy & Hold Grade. In the 60-share sector Energy – Services, it ranks second.

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ENPH shares were trading at $ 127.19 per share on Monday morning, up $ 4.66 (+ 3.80%). Since the beginning of the year, ENPH has gained 386.76%, while the benchmark index S&P 500 gained 13.16% over the same period.

About the author: Manisha Chatterjee

Manisha has had a keen interest in the stock market since she was a teenager. She studied economics in college and has a passion for writing which led to her career as a research analyst. More…

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