The US presidential election will have numerous impacts on US policy and the country’s future direction. Trump and Biden have different approaches toward rebuilding the economy from the pandemic-driven recession. Trump is more focused on the reopening of the country, while Biden emphasizes safety and social distancing measures to curb the spread of the virus. They have assumed different stances on nearly every topic.
Recent national polls show Biden, with 52% support compared to Trump’s 42%. A Biden presidency would be bullish for the clean energy industry, as his plan calls for the United States to become a 100% clean energy nation by 2050.
To that end, Biden has outlined a $2 trillion investment plan to rebuild infrastructure and boost clean energy, to achieve zero net carbon emissions by 2035 in the power sector. He has also vocalized support for the decriminalization of cannabis use, which should give a considerable boost to companies operating in this sector. Biden has also stated on record that if elected, he would reverse Trump’s decision to withhold funding to the World health organization, as well as re-enter the Paris accord climate change deal.
With this background, companies such as Tesla, Inc. (TSLA), SolarEdge Technologies, Inc. (SEDG), and Aphria, Inc. (APHA) should thrive if Biden wins the election.
Tesla, Inc. (TSLA)
In the early days of the pandemic, TSLA defied market expectations to reach record highs. The price momentum led TSLA’s CEO Elon Musk to state that the prices are “too high,” following which a 5-for-1 stock split was carried out. Many investors expected TSLA to be included in the S&P Dow Jones indices as it reported profits in four consecutive quarters, which is the main requirement to be enlisted. However, the stock plummeted in September, as it was not included in the S&P 500 index.
TSLA’s popularity comes from the fact that it is one of the leading electric vehicle (EV) manufacturers in the market. TSLA Model S was one of the fastest electric cars manufactured back then and was tested to be the safest car ever by the National Highway Traffic Administration. Former vice president and the presidential nominee has touted the significance of climate change throughout his nomination and has put forward elaborate plans intending to rebuild America’s infrastructure and economy with renewable energy. Hence, the green energy electric cars industry is expected to soar even higher if Biden wins.
TSLA’s EV deliveries increased 7% year-over-year (subject to operating lease accounting) in the third quarter ended September 2020. In the second quarter ended June 2020, TSLA reported net revenue of $6.04 billion, indicating a year-over-year decline. However, net revenues grew 1% sequentially. Net income of $104 million and EPS of $0.50 for the quarter indicate significant improvement from the year-ago negative values. Cash and cash equivalents balance improved 74% year-over-year to $8.62 billion.
CleanSpark software and services company recently partnered with TSLA to use its batteries for a Microgrid project in South America. TSLA is currently planning to expand to Indonesia to ensure a steady supply of nickel, a key component in manufacturing car batteries.
TSLA is currently planning to launch three new electric vehicles soon, including a Tesla cybertruck and 2 electric cars. It is reportedly planning to launch its product in India in 2021. With a huge population and thereby a market base, this expansion is expected to ramp up the profits for the company.
The consensus EPS estimate of $0.56 for the third quarter ended September 2020 indicates a 51.4% rise from the year-ago value. Moreover, TSLA has an impressive earnings surprise history, as it beat the street EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $8.26 billion for the about-to-be-reported quarter indicates a 31% improvement over the prior-year quarter.
TSLA has gained more than 615% since hitting its year-to-date low of $50.04 in March. The stock hit its 52-week high of $502.49 in September.
How does TSLA stack up for the POWR Ratings?
A for Trade Grade
B for Buy & Hold Grade
B for Peer Grade
B for Industry Rank
B for Overall POWR Rating.
It is also ranked #4 out of 29 stocks in the Auto & Vehicle Manufacturers industry.
SolarEdge Technologies, Inc. (SEDG)
SEDG designs, manufactures, and sells direct current (DC) optimized inverter systems for solar photovoltaic (PV) installations. Its SolarEdge system operates through a cloud-based monitoring platform comprising inverters, power optimizers, and smart energy management solutions. SEDG is expected to thrive under the Biden administration (if elected), as he has been advocating the significance of climate change as a focal point in his campaigns, and has also published extensive details about the green new deal dedicated to providing stimulus to the renewable energy industry.
SEDG launched Energy Hub inverters with prism technology earlier this year, which provides higher flexibility to users, as well as easier installation technology. SEDG recently raised $550 million through senior notes offering for meeting its general corporate expenses.
SEDG’s revenues for the second quarter ended June 2020 improved 2% year-over-year to $331.90 million. Net income grew 11% from the same period last year to $36.70 million, while EPS increased 6.1% from the year-ago value to $0.70.
Though the consensus estimates of $0.81 for the third quarter ended September 2020 indicates a year-over-year decline, SEDG has beaten the street EPS estimates in three out of the trailing four quarters, which bodes well for the stock. Analysts expect SEDG’s revenues to grow 22.6% to $1.83 billion next year.
SEDG gained more than 365% to hit its 52-week high of $314 in March since hitting its 52-week low of $67.02 in March.
SEDG’s strong fundamentals and reflected in its POWR Ratings. It has a “Strong Buy” rating with an “A” for Trade Grade and Buy & Hold Grade, and a “B” for Peer Grade and Industry Rank. In the 15-stock Solar industry, SEDG is ranked #1.
Aphria, Inc. (APHA)
APHA manufactures and supplies cannabis and its derivative extracts for medical use across the world. Based in Canada, APHA’s supply chain includes a wide chain of distributors on its online website. The legalization of marijuana is a highly controversial topic and is a major contentious point between the two presidential nominees for the 2020 general elections. Democratic candidate Joe Biden has outright supported the legalization of marijuana throughout his nomination. In fact, in the recent Town Hall debate, Biden said, “We should decriminalize marijuana. We have got to change the system,” as reported by Al Jazeera in its live coverage of the debate.
Earlier this year, APHA moved its listing from NYSE to NASDAQ. In this regard, APHA’s CEO Irwin D. Simon said, “Additionally, as a purpose-driven company, we believe Nasdaq will be a good fit for Aphria, particularly given our focus on, and the progress we have made, integrating ESG practices across our business.”
In August, APHA entered into a strategic supply agreement with Canndoc Ltd., one of the largest cannabis producers in Israel, to supply 3000 kg of dried bulk flowers to the company, which would be co-branded and sold exclusively in the Israeli market.
On October 7th, APHA announced the completion of its first certified European Union Goods Manufacturing Practices (EU GMP) shipment of dried flowers to its wholly-owned subsidiary CC Pharma GmbH in Germany. The sale of APHA branded cannabis in the German market is expected to begin by the fiscal second quarter of 2021.
APHA’s net revenue increased 18% year-over-year to $152.2 million in the fiscal fourth quarter ended May 2020. This growth can be attributed to an 81% year-over-year increase in net cannabis revenue to $53.1 million. APHA reduced its debt and eliminated $670 million in interest expenses over this period, by repurchasing convertible senior notes, thereby improving its liquidity and cash flow position.
APHA has gained more than 230% since hitting its 52-week low of $1.95 in March. The stock hit its 52-high of $6.44 in October.
APHA is rated “Buy” in our POWR Ratings system, with an “A” for Trade Grade and Peer Grade, and a “B” for Industry Rank. In the 240-stock Medical Pharmaceuticals industry, APHA is ranked #45.
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TSLA shares were trading at $447.23 per share on Friday afternoon, down $1.65 (-0.37%). Year-to-date, TSLA has gained 434.54%, versus a 9.92% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don’ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More…