Type to search

Wealthpop News

3 Wind Energy Stocks to Consider Adding to Your Portfolio This Summer


Last year the global wind industry grew 53% year-over-year with 93 GW of new capacity installed.  That is the fastest growth for the industry ever.

China and the US, the two largest global wind power markets, were responsible for most of this growth and account for more than 50% of the world’s total wind power capacity.

The International Energy Agency’s (IEA) for the global growth of wind and solar energy predicts that these two renewable energy sources will match global gas capacity by 2022.

With that in mind, investors should consider adding these three wind energy stocks to their portfolio: TPI Composites Inc. (TPIC), NextEra Energy Inc. (NEE), and Vestas Wind Systems (VWDRY).

TPI Composites Inc. (TPIC):

TPIC is an independent manufacturer of composite wind blades with a global manufacturing footprint. In 2020, the company accounted for approximately 32% of global sold onshore wind blades on a MW basis, excluding China.

Though TPIC has underperformed thus far in 2021, the company posted solid results in the past two years. The company managed to raise net sales year-over-year and is expected to reach $1.79b in 2021, representing an increase of 7.6% year-on-year

However, TPIC’s net income remained negative since 2019, but the company is anticipated to deliver a net profit of $23.2m in 2021 and to become net cash positive by 2023, which should boost its stock price.

In terms of valuation, the company trades at a 2021 estimated EV/EBITDA of 14.7x and a P/E ratio of 74.1x.

NextEra Energy (NEE):

NEE is the world’s largest producer of wind and solar energy. NEE is specializing in electricity production, transmission, distribution and sale of electricity to residential, commercial and industrial customers based in the U.S.

NEE managed to remain profitable in 2020, following the decrease of electric consumption witnessed during the curfew. This year, analysts expect net sales to bounce back to pre-Covid19 levels, reaching $20b versus $19.2b in 2019, representing an increase of 4.33%.

More interestingly, net income is expected to jump 32.4% to $4.99b in 2021 compared to the year 2019 and net margin should top 25%, due mainly to the CAPEX slowdown, down 18.1% year-on-year to $11.7b.

On the negative side, the company has increased its net debt in 2021, up 11.5% year-on-year to $52.3b in 2021 and posts now an elevated leverage ratio of 4.58x.

Yet, the company is currently trading at high valuation metrics, with a 2021e EV/EBITDA of 17.5x and a P/E ratio of 29x.

Vestas Wind Systems (VWDRY):

VWDRY is the world’s leading manufacturer of wind turbines. The company manufactures, installs and services wind turbines across the globe and has more than 117 GW of wind turbines under service. 

VWDRY’s financial metrics have been marginally impacted by the pandemic. The company has grown its net sales by 10.8% year-on-year to €16.4b and is expected to post a stable net income of €761m in 2021, following the sharp CAPEX increase, up 37.9% year-on-year to €949m

Besides, while VWDTY’s net cash position declined 7.1% year-on-year to €1.78b in 2021, the company is well-capitalized and  has a comfortable cash position to pursue its investments.

Nevertheless, Vestas’ valuation metrics are trading at a discount compared to NEE. With a 2021e EV.EBITDA of 16.5x and a P/E ratio of 41.4x, VWDRY looks slightly more attractive than its peers.

Take away

While renewable energy stocks have been underperforming the market in the past six months, TPIC, NEE and VWDRY are game-changing players in the energy transition. I believe that long-term investors should take advantage of any retracements in these stocks.

Cristian Docan

Cristian is an experienced investment analyst and financial writer. Prior to Wealthpop.com, Cristian spent three years as a consultant providing investment research and content to financial services companies and online publications on the Oil & Gas sector. Cristian enjoys researching and writing about stocks and the markets. He takes a fundamental, technical and quantitative approach in evaluating stocks for readers. Previously, Cristian was Power Portfolio Manager at Engie Global Markets. Cristian started his career in portfolio management at Société Privée de Gestion de Patrimoine, an independent wealth management firm. He received a Bachelor Degree in Economics and Management at Université Panthéon-Assas University and a Master of Science in Financial Markets at INSEEC Business School.

  • 1