Green energy solutions are witnessing rapid growth amid consumer interest and government initiatives. Against this backdrop, strong fundamentals of green energy stocks Canadian Solar (CSIQ), Westlake Chemical Partners (WLKP), and Genie Energy (GNE) should make them wise portfolio additions. Read on….
Amid growing climate change concerns, several countries have taken steps to transition to a clean energy-driven future. Robust demand and the record-breaking raft of clean energy incentives in the Inflation Reduction Act (IRA) are anticipated to accelerate green energy growth.
Given this backdrop, let us explore some green energy stocks, Canadian Solar Inc. (CSIQ), Westlake Chemical Partners LP (WLKP), and Genie Energy Ltd. (GNE), which might save investors’ trading track record, for the reasons mentioned in the article.
The Biden administration plans to eliminate fossil fuels as a form of energy generation in the United States by 2035. The White House set a target of 80% renewable energy generation by 2030 and 100% carbon-free electricity five years later.
Renewables have become cost-competitive with major fossil fuels and cost-effective in many cases. Moreover, with hefty incentives and subsidy packages, the government is further sweetening the deal by dropping costs. America’s renewable energy was given a green signal with the Inflation Reduction Act that granted $369 billion for green energy.
Post-IRA, projections for solar development are significantly higher. EIA stated in a report, “Across all cases, compared with 2022, solar generating capacity grows by about 325% to 1019% by 2050, and wind generating capacity grows by about 138% to 235%. We see growth in installed battery capacity in all cases to support this growth in renewables.”
The global renewable energy market size is projected to reach $1.15 trillion by 2027, at a CAGR of 9.1% between 2021 to 2027.
Against this backdrop, fundamentally strong green energy stocks CSIQ, WLKP, and GNE might be solid buys now.
Canadian Solar Inc. (CSIQ)
CSIQ, based in West Guelph, Canada, designs, develops, manufactures, and sells solar ingots, wafers, cells, modules, and other solar power products. The company operates through two segments: Module and System Solutions (MSS); and Energy.
Recently, CSIQ announced CSI Solar Co., Ltd.’s 2024 capacity expansion plans. It intends to add 30 GW of ingot, 15 GW of wafer, 10 GW of cell, and 25 GW of module capacity. As per Dr. Shawn Qu, CSIQ’s Chairman and CEO, the additions would be in the latest N-type technology, which would enable the company to meet strong market demand better and accelerate growth.
He added, “By increasing the level of vertical integration, we continue to improve our control over technology, raw material sources and costs. These business plans will help us further strengthen our long-term leadership position not just across our end markets but also throughout our supply chain positioning.”
In terms of the trailing-12-month ROCE, CSIQ’s 12.82 % is 383.7% higher than the 2.65% industry average. Likewise, its trailing-12-month ROTA and ROTC of 2.66% and 4.75% are 295.5% and 130.5% higher than the industry averages of 0.67% and 2.06%, respectively.
For the fiscal fourth quarter that ended December 31, 2022, CSIQ’s net revenues stood at $1.97 billion, representing an increase of 29% year-over-year. Its gross profit increased 15.7% year-over-year to $348.63 million. Also, its income from operations for the same quarter increased 101.4% from the year-ago quarter to $135.76 million.
For the fiscal fourth quarter that ended December 31, 2022, net income attributable to CSIQ and earnings per share came in at $77.83 million and $1.11, up 199.8% and 184.6% year-over-year, respectively.
Analysts expect CSIQ’s EPS to increase 16% year-over-year to $1.24 for the fiscal second quarter ending June 2023. The company’s revenue for the same quarter is expected to increase marginally year-over-year to $2.32 billion. The company surpassed the consensus EPS estimates in each of the trailing four quarters, which is impressive.
The stock has gained 14% over the past year and 22.3% over the past six months to close its last trading session at $38.85.
CSIQ’s POWR Ratings reflect its promising outlook. It has an overall B rating representing Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
CSIQ has an A grade for Value and a B for Growth. It is ranked first among 17 stocks in the Solar industry.
Beyond what we have mentioned above, one can also see the additional POWR Ratings for CSIQ (Momentum, Stability, Sentiment, and Quality) here.
Westlake Chemical Partners LP (WLKP)
WKLP acquires, develops, and operates ethylene production facilities and related assets in the United States. The company’s ethylene production facilities primarily convert ethane into ethylene. It sells ethylene co-products, including propylene, crude butadiene, pyrolysis gasoline, and hydrogen, directly to third parties on a spot or contract basis.
On February 16, WLKP paid a quarterly dividend of $0.4714 per unit, marking the 34th consecutive quarterly distribution to its unitholders. Its annual dividend of $1.89 yields 8.73% on prevailing prices. The company’s dividend payouts have increased at a 4.9% CAGR over the past five years.
WLKP’s trailing-12-month EBIT margin and EBITDA margin of 21.82% and 29.42% are 73.2% and 54.7% higher than the industry averages of 12.60% and 19.03%, respectively. Likewise, the stock’s trailing-12-month levered FCF margin of 20.05% is 333.4% higher than the industry average of 4.63%.
During the fiscal fourth quarter that ended December 31, 2022, WLKP’s total net sales increased 11% year-over-year to $366.84 million. Net income attributable to WLKP partners and net income per limited partner unit attributable to WLKP partners amounted to $16.78 million and $0.48, respectively, for the same quarter.
Its total liabilities stood at $468.27 million for the period that ended December 31, 2022, compared to $508 million in the same period last year.
Analysts expect WLKP’s revenue to increase 1.6% year-over-year to $1.62 billion for the fiscal year ending December 2023. Its EPS for the same year is expected to come in at $1.81. The company surpassed the consensus revenue estimates in three of the trailing four quarters, which is impressive.
Over the past five days, the stock has gained 1.3% to close its last trading session at $21.50.
WLKP’s strong fundamentals are reflected in its POWR Ratings. The company has an overall A rating, which translates to a Strong Buy in our proprietary rating system.
The stock also has an A grade for Quality and a B for Value, Stability, and Sentiment. It is ranked first in the B-rated 9-stock MLPs – Other industry.
Click here to see additional POWR Ratings of Growth and Momentum for WLKP.
Genie Energy Ltd. (GNE)
GNE and its subsidiaries supply electricity and natural gas to residential and small business customers internationally. It has three operational segments: Genie Retail Energy (GRE); GRE International; and Genie Renewables.
On March 27, Genie Renewables announced that it had acquired site rights to a community solar generation site in Upstate New York. Once built out and brought online, the proposed project is expected to have an aggregate generating capacity of approximately 6.25 megawatts (MW).
Genie Renewables also announced that it received a favorable CESIR (Coordinated Electric System Interconnection Review) and estimate of interconnection cost from Con-Ed for its 3 MW proposed community solar project in Downstate New York. The company expects to receive its notice to proceed and begin construction in the coming months, subject to negotiating a land lease and obtaining local permits.
The company paid a dividend of $0.075 per share on March 1, 2023. Its current annual dividend of $0.30 yields 1.93% on prevailing prices. GNE’s four-year average dividend yield is 2.90%.
GNE’s trailing-12-month EBIT margin of 25.30% is 40.7% higher than the industry average of 17.98%. Likewise, the stock’s trailing-12-month net income margin of 27.83% is 158.8% higher than the industry average of 10.75%.
For the fiscal fourth quarter (ended December 31, 2022), GNE’s total revenue increased 17.6% year-over-year to $81.40 million. The company’s income from operations rose 167.2% year-over-year to $15.50 million, while its adjusted EBITDA increased 153.4% from the year-ago value to $18.50 million.
Also, its net income attributable to GNE common stockholders came in at $16.20 million, and its earnings per share attributable to GNE common shareholder stood at $0.61 for the fiscal fourth quarter that ended December 31, 2022.
The stock has gained 137.2% over the past year and 65.3% over the past six months to close the last trading session at $15.80.
GNE’s solid prospects are reflected in its POWR Ratings. The stock has an overall rating of B, translating to Buy in our proprietary rating system.
It has a B grade for Value and Momentum. Within the Utilities – Domestic industry, it is ranked second out of 64 stocks.
To see GNE’s ratings for Growth, Stability, Sentiment, and Quality, click here.
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CSIQ shares were unchanged in premarket trading Wednesday. Year-to-date, CSIQ has gained 25.73%, versus a 7.54% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi’s interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy.Having earned a master’s degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
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