Renewable energy stocks have struggled this year, after soaring in 2020. The WilderHill Clean Energy Index rose 203% in 2020, but is up about 4% in 2021. Now, analysts are getting more positive. Few think the big names in renewable energy are a screaming buy, but they see the possibility of renewed growth.
Credit Suisse analyst Michael Weinstein upgraded solar manufacturer First Solar to Neutral from Underperform after the stock tumbled from $100 to $72 in the past month. He sees the solar-panel market tightening in 2022 as China deploys panels to meet carbon targets. His price target: $70.
Weinstein also upgraded NextEra Energy, a utility focused on renewable energy, to Outperform. His $85 price target is 11% above the current $76. He also likes hydrogen fuel-cell company Bloom Energy, which has also retreated after a 2020 boom. He upgraded the stock to Outperform, with a $35 price target. It trades at $29.
As the market starts to favor value over growth stocks, J.P. Morgan’s Mark Strouse suggests investors look to renewable companies with high margins and free cash flow, including Array Technologies, Enphase Energy, Solaredge, and Shoals Technologies. He’s concerned, however, about hydrogen-focused stocks, such as FuelCell Energy, Plug Power, Bloom, and Nikola. “A pullback of this magnitude is likely to have a lasting impact on risk appetite,” he writes.
Raymond James’s Pavel Molchanov upgraded Enphase, which makes solar equipment called inverters. After rising 571% in 2020, Enphase has slid; it’s down more than 30% in the past month. Enphase is pricey, but not outrageously so, and he raised its rating to Market Perform.
Next Week
Monday 3/15
Advanced Micro Devices hosts a conference call in conjunction with the launch of its third-generation EPYC processors. Senior management, including CEO Lisa Su, will give presentations on the new chips. AMD shares doubled last year, making them the 10th best performers in the S&P 500.
The Federal Reserve Bank of New York releases its Empire State Manufacturing Survey for March. The consensus estimate is for a 16.5 reading, versus February’s 12.1. The index has had eight consecutive months of positive readings, indicating improving conditions in the region’s manufacturing sector.
Tuesday 3/16
CrowdStrike Holdings and Lennar report quarterly results.
The National Association of Home Builders releases its NAHB/ Wells Fargo Housing Market index for March. Economists forecast an 84 reading, even with February’s. The index is off its all-time high of 90, set last November, but home builders remain bullish on the housing market.
The Census Bureau reports retail-sales data for February. Expectations are for a 0.7% month-over-month decline, after a 5.3% jump in January. Excluding autos, spending is seen edging down 0.1%, compared with a 5.9% increase previously.
Wednesday 3/17
The Federal Open Market Committee announces its monetary-policy decision. The Federal Reserve has stressed that it will keep interest rates near zero through 2023, but might tweak its bond-buying program.
Cintas and Five Below report earnings.
The Census Bureau reports residential construction data for February. The consensus call is for a seasonally adjusted annual rate of 1.57 million housing starts, in line with the January figure. Housing starts remain just off their post-financial-crisis peak.
Thursday 3/18
Accenture, Dollar General, FedEx, and Nike hold conference calls to discuss quarterly results.
The Conference Board releases its Leading Economic index for February. Economists forecast a 0.4% monthly rise. The LEI has increased every month since last April, though the rate of growth has slowed since the third quarter of last year.
The Department of Labor reports jobless claims for the week ended on March 13. This past week’s total of 712,000claims was the second lowest since the beginning of the Covid-19 pandemic.
Friday 3/19
The Bank of Japan announces its monetary-policy decision after a two-day meeting. The central bank is widely expected to keep its key short-term interest rate unchanged, at a negative 0.1%. The BOJ also will review its policy tools during the meeting.
Write to Avi Salzman at [email protected]
