2 Cleantech Stocks to BUY, 2 to AVOID

2 Cleantech Stocks to BUY, 2 to AVOID

Posted On November 30, 2020 2:38 pm

With the growing concern about climate change, governments across the globe have been taking measures to replace the traditional energy sources with green and sustainable sources. In the United States, president-elect Joe Biden’s plans related to the clean energy industry is raising optimism over the growth prospects of cleantech companies. As a result, the stock markets are significantly rewarding cleantech stocks lately.

However, a cleantech tag doesn’t ensure solid performance for a stock. The cleantech space is becoming overcrowded with many new entrants and many companies are yet to be in a position to benefit from the trend. So, investors should be judicious while picking stocks for riding the cleantech boom.

Tesla, Inc. (TSLA) and NextEra Energy, Inc. (NEE) reported strong third quarter results. With the growing market for Electric Vehicles (EVs) and increasing demand for solar energy and wind energy, these two stocks are well-positioned to continue to see gains based on their expansion and strong revenue performance.

On the other hand, Workhorse Group, Inc. (WKHS) and Sunworks Inc. (SUNW) have been struggling to compete with their peers because of their weak revenues and earnings performance.

2 Stocks to Buy:

Tesla, Inc. (TSLA)

Based in Palo Alto, California, TSLA is a pioneer in the EV market. The company designs, develops, manufactures, and sells EVs, electric vehicle powertrain components, and stationary energy storage systems in the United States, China, Norway, and internationally. TSLA operates in two segments Automotive, and Energy Generation and Storage.

TSLA’s total revenue increased 39.2% year-over-year to $8.8 billion for the third quarter ended September 2020 primarily driven by the growth in automotive. The automotive revenues increased 42.2% year-over-year to $7.6 billion. The company’s operating income increased 210% year-over-year to a record level of $809 million, resulting in a 9.2% operating margin. The energy storage business also reached record deployments of 759 MWh in the third quarter.

The consensus EPS estimate of $3.90 for the next year indicates a 72.6% improvement year-over-year. Moreover, TSLA beat the street EPS estimates in each of the trailing four quarters, which is impressive. The consensus revenue estimate of $44.95 billion for the next year indicates 45.5% growth from the same period last year.

TSLA announced a new style of battery cell during its battery day held in September which would allow it to produce cells that are more energy-dense, safer and reduce costs. The company announced this month that it planned to start making EV chargers in China in 2021. TSLA is also expected to explore a new hatchback model in Europe. The stock has gained more than 586% year-to-date and reached its 52-week high of $574 on November 25th.

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 can’t ask for better. The stock is also ranked #1 out of 34 stocks in the Auto & Vehicle Manufacturers industry.

NextEra Energy, Inc. (NEE)

The world’s largest producer of wind and solar energy, NEE was founded in 1984. The company generates, transmits, and distributes electric energy in the United States and Canada. NEE operates through its subsidiaries NextEra Energy Resources, Florida Power & Light Company (FPL), NextEra Energy Services, and NextEra Energy Transmission.

NEE delivered strong results for the third quarter ended September 2020. Adjusted EPS increased 11.3% year-over-year to $2.66. On an adjusted basis…

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