Right about the time we started researching opportunities in Clean Technology last fall, President Obama was reelected. Suddenly, investors who’d been shying away from “Green Stocks” rediscovered their appetite—and how. Of course, the market in general has risen since then too, but loads of stocks in sectors like solar and energy efficiency and storage have absolutely exploded.
In the six weeks since my newest investment book, 100 Stocks for the Clean Technology Revolution, was released in January, stocks I rated a ‘buy’ like Cree (CREE) and Advanced Energy Industries (AEIS), have gone up by 33% and 29%, respectively. And Exide Technologies, rated a ‘sell’ in the report, has since fallen 27%. Can’t really sneeze at 30% returns in six weeks!
Of course, not every ‘buy’ is up and not every ‘sell’ is down—and that’s a good thing. Because even though the market may move swiftly, the underlying fundamentals of relative valuation and growth prospects change more slowly. And that means there are still a lot of Clean Tech nuggets to be mined and trades to be made.
One I still like a lot is Enersys (ENS). It’s risen about 9% since the report came out, but still trades for low multiples relative to the demand for energy storage that will emerge over the next decade. Not just in the U.S., but worldwide, energy storage for utilities is becoming a prominent issue. Enersys’ solutions are also used by telecommunications companies, and we all know demand there isn’t slowing any time soon. In the most recent quarter, reported two weeks ago, Enersys posted record gross profit margins and exceeded its own guidance for revenue, and in the conference call, CEO John Craig said, “Our current orders are holding at the higher levels we saw on the latter part of the third fiscal quarter. Our Americas and Asia segments continue to see solid orders while Europe, Middle East, and Africa are holding steady.”
Here’s the analysis we provided in 100 Stocks for the Clean Technology Revolution, updated for the current stock price:
|Cash and Cash Equivalents:||212.3||M|
|Short Term Investments:||–||M|
|Long Term Investments:||–||M|
|Net Cash / Share:||$ (0.32)|
|Share Price:||$ 41.96|
|Enterprise Value / Share:||$ 42.28|
|Total Market Cap:||2,034.3||M|
|2013e Sales Growth:||7.3%|
|2013 Earnings Estimate:||$ 3.73|
|Forward Earnings Multiple||11.3||X|
|Forward Revenue Multiple||0.8||X|
EnerSys manufactures and distributes reserve power and motive power batteries, chargers, power equipment, and battery accessories to customers worldwide. Motive power batteries are utilized in electric forklift trucks and other commercial electric powered vehicles. Reserve power batteries are used in the telecommunication and utility industries, uninterruptible power supplies, and numerous applications requiring stored energy solutions including aerospace and defense systems.
EnerSys is involved in a variety of battery and energy storage fields, but one that may have substantial upside is its recently announced large-scale energy storage solution, OptiGrid Stored Energy Solutions. Analysts put the market size for large scale storage over the next one to two decades at between $200 and $600 billion. Large scale storage will allow utilities to better stabilize the grid and cope with issues like voltage regulation, frequency regulation, peak management and renewable power (i.e. wind and solar) integration.
There’s a solid balance sheet, steady growth and good cost management here, we like it long-term.
Revolution Investing Rating: 7/10
I’m not putting this one in my own portfolio just yet. But with the huge moves many of these alternative energy stocks have made since we published that book just 45 days ago, I thought I’d remind you guys to take a look at our 100 Stocks for the Clean Tech Revolution to learn more about these names and this sector.