Even with the coronavirus pandemic, 2020 was still a strong year for renewable energy. In the first quarter of 2020, renewable energy increased 1.5% from the same quarter a year ago. The rise was thanks in part to a 3% bump in renewable electricity generation and more wind availability in the U.S. and Europe.
The growing demand was evident in the Invesco Solar ETF‘s (TAN) parabolic rise, which tracks renewable energy stocks. From December 31, 2019 to December 30, 2020, TAN surged a stunning 234%.
And it doesn’t look like the renewable energy sector will be slowing down anytime soon.
By 2027, the renewable energy market is estimated to be worth $2.9 billion, an 8.53% compound annual growth rate, according to Market Research Future. The reality is there’s been a big push for clean energy in recent years. 80% of the world’s biggest economies have pledged to be net zero by 2050. 284 multinational companies also pledged to be 100% clean energy.
This includes Amazon (AMZN), whose goal is to run on “100% renewable energy” by 2025. Recently, company management announced that it is buying 380 megawatts (MW) of wind energy from wind farm Hollandse Kust Noord. The plant is set to be operational by 2023, and it’s estimated to generate 3.3 TWh (terawatt hours) each year.
Goldman Sachs (GS) has gone so far as to state that “Renewable power will become the largest area of spending in the energy industry in 2021 … we see a total investment opportunity of up to $16 trillion by 2030.”
Here in the U.S., the renewable energy sector is set to benefit from the Biden administration’s clean energy initiative, as it is wants to invest nearly $2 trillion in clean energy. So, there’s a lot of funds coming this industry’s way.
A Growing Solar Inverter Market
Personally, I’m most interested in the solar inverter market, which is forecasted to rise 15.45% at a compound annual growth rate, according to Market Research Future.
Solar homes are now mandated in California for new home construction, and electricity is typically sold back to the electricity grid at very low rates. But with the California electricity grid no longer reliable during fire season, more businesses and homeowners are looking to store their electricity in backup systems. These backup systems are also vital for electric vehicles in California and in other major solar markets.
These shifts in the solar energy industry bode particularly well for Enphase Energy, Inc. (ENPH), which is also TAN’s biggest holding. This fundamentally superior company was founded back in March 2006, but Enphase Energy made a name for itself in June 2008 when it developed the first microinverter system.
Simply put, microinverters sit underneath solar panels and convert all the sunshine to actual electricity for homes and businesses. So, they’re vital to the solar energy industry. And by September 2011, Enphase Energy had shipped one million microinverters. Today, Enphase Energy operates in 21 countries around the world, has more than 300 issued patents and has shipped more than 23 million microinverters globally.
The stock has been on fire over the past year, soaring 562% between December 31, 2019 and December 30, 2020 – more than doubling TAN’s performance!
And it tacked on even more gains following its blowout earnings report on Tuesday.
During its fourth quarter, revenue jumped 26.1% year-over-year to $264.84 million, up from $210.03 million in the same quarter a year ago. Earnings increased 28.2% year-over-year to $0.51 per share, which compares to $0.39 per share in the fourth quarter of 2019. The consensus estimate called for earnings of $0.40 per share on $254.8 million in revenue, so ENPH posted a 27.5% earnings surprise and a 3.9% revenue surprise.
For full-year 2020, Enphase Energy achieved earnings of $1.37 per share and revenue of $774.43 million, or 44.2% annual earnings growth and 24% annual revenue growth. These results also topped analysts’ estimates for earnings of $1.27 per share and revenue of $764.46 million.
Looking forward to the first quarter in fiscal year 2021, Enphase Energy expects revenue between $280 million and $300 million. That’s up from revenue of $205.54 million in the first quarter of 2020 and nicely higher than analysts’ current estimates for first-quarter revenue of $259.84 million.
The stock rallied 14% to a new 52-week high of $229.03 yesterday, and I don’t expect its momentum to slow down anytime soon given the incredible growth expected in the sector.
Thanks to my Project Mastermind system, my Accelerated Profits subscribers have been able to enjoy ENPH’s ride higher, as it flagged this stock back in March 2020. The reality is that this system finds fundamentally superior stocks, i.e., stocks with increasing sales and earnings growth and positive guidance, and my Accelerated Profits subscribers reap the rewards.
Of course, ENPH isn’t the only stock my Project Mastermind system has found. In fact, just this past Tuesday, I released a Buy Alert for two brand-new recommendations based on my Project Mastermind system’s findings. Both stocks recently reported triple-digit earnings grow for the most-recent quarter and posted double-digit earnings surprises. Even better: Both companies also have triple-digit forecasted earnings growth.
These stocks have trekking nicely higher in recent weeks, but it’s not too late to jump in. Both names are still under my buy limit prices, so now is the time to join Accelerated Profits before these stocks really take off.
Note: The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
Amazon (AMZN), Enphase Energy (ENPH)