3 wind stocks to capture global growth
Friction between Russia and Ukraine has again brought the importance of renewable energy sources to the fore, as it has become clear how much Europe depends on Russia for the supply of fossil fuels.
In response, the European Union unveiled a new plan in early March to accelerate the deployment of renewables by 20% in the near term – a move according to BofA Securities strategists that improves the outlook for wind stocks and other investments in green energies.
And in the United States, the federal government recently raked in a record $4.37 billion from the sale of more than 488,000 acres in the Atlantic Ocean off the coasts of New York and New Jersey. The six offshore sites, when developed, are expected to generate approximately 7 gigawatts (GW) of clean energy.
But that may just be the beginning, given President Joe Biden’s plan to deploy 30 GW of offshore wind power in the United States by 2030. Additionally, the Energy Information Administration (EIA) s expects the share of solar and wind renewable energy sources to increase from 13% in 2021 to 17% in 2023.
Additionally, according to a report by the Special Initiative on Offshore Wind (SIOW) at the University of Delaware, private sector investment in U.S. offshore wind could reach $109 billion by the end of the year. decade.
With that in mind, here are three wind stocks that are well positioned to harness that growth. To narrow down our list, we turned to the TipRanks database to find names analysts are bullish on. The wind energy stocks featured here either have strong buy or buy ratings from the Wall Street pros, or are targeted for significant upside potential over the next 12 months. Let’s take a closer look.
Data is as of March 13.
Brookfield Renewable Partners
- Market value: $26.3 billion
- TipRanks Consensus Price Target: $36.36 (11.3% downside potential)
- TipRanks Consensus Rating: strong buy
Brookfield Renewable Partners (BEP, $41.01) operates a purely publicly traded renewable energy platform. It is a flagship renewable energy company of alternative asset management firm Brookfield Asset Management (BAM). The company’s portfolio includes hydroelectric, wind, solar and storage facilities in North America, South America, Europe and Asia. BEP’s extensive asset portfolio has approximately 21,000 megawatts (MW) of installed capacity and a development pipeline of 62,000 MW.
The company generated its highest-ever normalized funds from operations (FFO) — a key measure of the Partnership’s operating performance — of $1.45 per share in 2021, with total funds from operations of $934 million, up 10% year over year. (Annual). BEP defines FFO as adjusted EBITDA (earnings before interest, tax, depreciation and amortization) before the effects of certain non-recurring cash and non-cash items.
While BEP derives most of its cash flow from its hydroelectric assets, its wind and solar assets are also growing rapidly. This is indicated by the fact that the company’s wind assets generated FFO of $396 million in 2021, up 67% year-over-year and representing 42.4% of BEP’s total FFO. .
In addition, in 2021, the company further diversified its activities, finalizing the acquisition of more than 300 MW of wind power in Asia.
Credit Suisse analyst Andrew M. Kuske thinks BEP is one of the top wind stocks, calling it “the best long-term renewable energy developer, an active recycler of capital and a savvy buyer of distressed assets.” “.
Additionally, “an acceleration of the development pipeline is essential to help drive underlying value creation and decarbonization transactions may provide an additional benefit that does not fit our base case,” the analyst adds.
Along with an outperform (buy) rating on the BEP, Kuske has a price target of $46, indicating an implied upside of 12.2% from current levels.
And while most Wall Street analysts’ price targets have yet to catch up to the stock’s nearly 15% year-to-date rise, they are generally bullish. Of the 12 analysts covering, nine have issued buy calls on BEP over the past three months. Find out which other analysts are part of the BEP Buy camp on TipRanks.
- Market value: $101.4 billion
- TipRanks Consensus Price Target: $112.44 (21.8% upside potential)
- TipRanks Consensus Rating: Moderate purchase
industrial conglomerate General Electric (GE, $92.28) is going through something of a transformation. Last November, the company announced a plan to split into three quality public companies, comprising its aerospace, healthcare and energy businesses.
While the healthcare segment is expected to be spun off in early 2023, its energy division – which includes its renewable energy, power and digital businesses – will be spun off in early 2024. Following this spinoff, GE will be purely a aviation-centric company.
In its recent investor update, GE said it expects supply chain issues, labor availability and inflation to persist in the first half of the fiscal year. 2022, even if demand remains strong in all its activities. As a result, the company expects these challenges to put pressure on its earnings and free cash flow in the first half of 2022.
As for wind power stocks, GE’s renewables business includes offshore wind — which is still pre-revenue but growing — and onshore wind (the largest division of the three). The company expects its renewables business to deliver “single-digit” revenue growth this year, with improved profitability.
So what is GE’s outlook for its business in renewables, and more specifically wind power?
“[W]When you look at the medium to long term, we continue to believe strongly in the onshore wind demand environment, and we believe we are well positioned to play an important role in the future,” said CEO Larry Culp in the fourth-quarter earnings call.
Although RBC Capital analyst Deane Dray (outperformer) cut his growth and margin estimates for GE following the company’s investor update, the analyst remains positive on the stock. Indeed, Dray sees a potential upside in the GE breakup story, “due to a faster-than-originally anticipated timing of transactions and prospects for asset sales/divestitures that may free up value”.
The analyst’s price target of $113 (down from $108 previously) values the company based on the sum of the coins and could see GE offering a 22.5% return from its current price.
A solid 10 of 14 analysts covering GE rated the stock as a buy, compared to just four holding ratings and no sells. See the full analyst forecast for GE stocks on TipRanks.
- Market value: $525.0 million
- TipRanks Consensus Price Target: $19.14 (35.6% upside potential)
- TipRanks Consensus Rating: Hold
TPI composites (TPIC, $14.12) is an Arizona-based manufacturer of composite wind blades for the wind energy market. In 2020, the company’s wind blades accounted for approximately 32% of all those sold onshore globally, on a MW basis, excluding those sold in China.
As with its wind energy counterparts, macroeconomic headwinds persisted for TPI Composites in the fourth quarter and are expected to continue into 2022. However, the company still achieved record 2021 net sales of $1.73 billion. dollars compared to $1.67 billion in 2020.
Interestingly, nearly all of TPI Composites’ revenue in 2021 came from three major wind turbine blade customers: GE Wind, Vestas (VWDRY) – a member of the Kiplinger ESG 20 – and Nordex (NRDXF). These three companies accounted for 24.7%, 40.4% and 22.4% of TPIC’s total net sales in 2021, respectively.
Another highlight for the company in the fourth quarter was the signing of a “significantly” deal for an electric vehicle (EV) platform for the supply of composite components.
However, the company’s outlook for this year remains murky. “As we look to 2022, we expect the operating environment to continue to be challenging,” said Bill Siwek, President and CEO of TPI Composites, in the earnings release. the company’s fourth quarter. “That said, the long-term drivers of wind, both domestically and internationally, remain intact and we are well positioned to capture this growth in the future.”
It was this lack of visibility for 2022, due to macroeconomic pressures, that kept Stifel analyst Stephen Gengaro (Hold) out of the stock. The analyst nevertheless admits that there were “some positive developments during the fourth quarter”, including the company’s addition of four new lines in China for major customer Vestas and continued strong growth in global services. . He also has a price target of $27 for TPIC, indicating an implied upside of 91.2%.
And TPIC Composites actually started 2022 on our short list of stocks to sell. Analysts at UBS, for example, had just cut their 12-month price targets to $20 per share from $44. The TPIC has since fallen to $20, then dropped to $9.23. Now, a consensus price target of $19 per share is 35.6% higher than current prices. The upside potential of the mid price target suggests the stock may be undervalued at current levels.
Two of the seven analysts polled by TipRanks categorize TPIC stocks in the buy category. Check out their price targets and analysis on TipRanks.