Zacks Investment Ideas feature highlights: Tesla, Ja Solar Holding, Guggenheim
Solar ETF and EnerSys
CHICAGO, June 4, 2013
CHICAGO, June 4, 2013 /PRNewswire/ --Today, Zacks Investment Ideas feature
highlights Features: Tesla (Nasdaq:TSLA), Ja Solar Holding (Nasdaq:JASO),
Guggenheim Solar ETF (AMEX:TAN) and EnerSys (NYSE:ENS).
Can Tesla Power These Energy Plays?
Battery and Solar Stocks Driven By Tesla The recent moves by Tesla
(Nasdaq:TSLA) have attracted a lot of attention into the green space that was
tarnished not too long ago by companies like First Solar. This increase in
attention has led to investors taking a few more speculative gambles in the
space, but let's take a look at a few names that have near term positive
potential thanks to higher earnings estimates.
Model S Driving The Market
Many of the companies in the solar and battery power space should be sending
not only "Thank you" notes to Elon Musk, they should be sending him gift
baskets stuffed with cash. His success with the Model S and turning Tesla into
an earnings positive company.
With the electric car seeing strong demand, outselling both BMW and Mercedes
Benz comparable models, investors are looking deeper into the ecosystem of
electric power for other places to invest. They are quickly finding out that
choices are limited to battery and solar stocks. These industries are not with
their concerns though, so let's leverage the Zacks Rank to find the highest
Ja Solar Holding (Nasdaq:JASO) is a Zacks Rank #2 (Buy) and has beaten the
Zacks Consensus Estimate in two of the last three quarters. Over that stretch
the company has also shown consistent, albeit small, revenue growth. Each top
line result was also better than expected by an average of about 10% more than
the Zacks Consensus Estimate.
Among the issues that investors might have is that the company is losing money
and is projected to lose money throughout 2014. That said, the estimated loss
has been decreasing recently. The Zacks Consensus Estimate for 2013 stood at
-$3.87 in February 2013, and declined to -$3.55 in March and more recently
moved to -$2.74. Over the same time period estimates for 2014 have also
increased from a loss of $2.03 to a the current level of -$1.43.
From a valuation standpoint, JASO has negative earnings so the old standby of
Price to Earnings is not a meaningful measurement. Instead we have to look at
price to book and price to sales. The company is trading at 0.4x price to
book, well below the 1.3x industry average while the price to sales shows a
more modest discount to the industry average of 0.3x compared to 0.7x.
What is keeping investors interested in JASO is the mild revenue growth of
1.5% in 2013 compared to an industry that is seeing - 33.5% revenue growth. At
the same time the shrinking loss makes earnings growth seem wildly better than
the 1% industry average and that rate of growth continues into 2014.
Not Getting Burned
All other solar stocks are carrying a Zacks Rank #3 (Hold), so picking one or
another might not make too much sense. What could protect an investor looking
for more solar exposure is an ETF that would diversify the risk of holding
just one name.
There is no Zacks Rank on the Guggenheim Solar ETF (AMEX:TAN), but you have to
love the ticker symbol. You can get more information on TAN in these articles
written by our ETF specialists. Clean Energy ETFs and Go Green with These 3
Clean Energy ETFs.
EnerSys (NYSE:ENS) is a producer of industrial batteries. A market
capitalization of $2.3B may seem small, but in the world of battery stocks,
it's a monster. Its profitable and has seen revenue grow over the last few
The valuation of the stock is in line with its peer group. Trading at 13.4x
trailing earnings, the company is at a slight discount to the peer group
average of 14x. The forward multiple of 13.8 is right in line with the 13.7
peer group average. Price to book and price to sales both show the stock
trading at slight premium to the peer group average.
Where ENS is set apart from its peers is its net margin. With several peers
struggling to produce any earnings at all, the 7.3% net margin is well above
the 5.6% peer group average.
The stock is a Zacks Rank #3 (Hold) and that is likely because of a lack of
growth in 2013 estimates and a recent move lower in 2014 estimates. Analysts
had been moving estimates for 2013 in the right direction in March and April,
but May has been another story. There was a two cent decrease in estimates for
2013, and a more surprising eleven cent drop in 2014 numbers. That decrease
has prevented the stock from being a Zacks Rank #1 (Strong Buy) or a Zacks
Rank #2 (Buy).
The Musk Trade
It's not a secret that Home Run Investor added Tesla to its portfolio on
February 1, 2013. The idea of electric cars being here to stay is driving
investors to look at other alternative energy companies. The craze that Tesla
and Solar City have created has driven prices up on many of these stocks, but
its earnings that drive stocks over the long haul. Right now, most stocks in
the space have not seen positive earnings revisions, so there might be a
better time down the road.
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