The Q1 reporting cycle is set to start for clean energy stocks, particularly

solar

and

alternative energy

companies, which are part of the broader

Oil-Energy sector

. Notably, results of these companies are expected to reflect solid installation activities driven by pent-up demand.

As stated by the American Clean Power Association (ACPA), wind is currently the largest source of renewable electricity generation in the United States, providing more than 7.4% of the country’s electricity. With the gradual recovery of the economy since the third quarter of 2020, an upward trend in solar installation has been observed, a trend expected to have continued in the first quarter of 2021.

Factors like rapidly increasing corporate investments in renewables, favorable government policies such as extended federal Investment Tax Credit (ITC) for offshore wind energy,  extension of production tax credit along with declining price of raw materials like wind turbines and solar modules are likely to have played key roles in contributing to clean energy stocks’ quarterly performance.

Moreover, interest in hydrogen as an alternative transportation fuel has been increasing owing to its ability to power fuel cells in zero-emission vehicles. Hence, stocks involved in fuel cell like

Bloom Energy


BE

,

Plug Power


PLUG

and

FuelCell Energy, Inc.


FCEL

that use fuel cell technology to supply clean energy have been gaining traction. We expect these stocks to report favorable Q1 results.

However, both the earnings and revenue projections for the broader market indicate a decline from the first-quarter 2020 scorecard. This annual slack, we believe, is likely to have stemmed from lower oil price and production, which might have affected energy majors’ upstream operations.

Q1 Projections

Per the latest

Earnings Preview,

first-quarter earnings for the Oil-Energy sector are expected to decline 18.9% on 8.2% sales drop.

Zacks Methodology

Given the high degree of diversity in the clean energy space, finding the right stocks with the potential to beat estimates might be quite a daunting task.

However, our proprietary Zacks methodology makes this fairly simple.

We are focusing on stocks that have the combination of a positive

Earnings ESP

and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can see


the complete list of today’s Zacks #1 Rank stocks here


.

Our research shows that for stocks with this combination, chances of an earnings surprise are as high as 70%.

Earnings ESP provides the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our

Earnings ESP Filter

.

Our Choices

Here we present three stocks that are expected to beat earnings estimates in this reporting cycle.

Ameresco


AMRC

is an independent provider of comprehensive energy efficiency solutions for facilities throughout North America. The company designs and constructs a wide range of renewable energy plants using LFG, wastewater treatment biogas, solar, biomass, other bio-derived fuels, wind and hydro sources of energy. The company, with an Earnings ESP of +16.05% and a Zacks Rank #3, is expected to release earnings on May 4.

The company beat the Zacks Consensus Estimate in the trailing four quarters, delivering an earnings surprise of 78.24%, on average.

Another company likely to come up with an earnings beat this time around is

Ormat Technologies


ORA

. It has a Zacks Rank #3 and an Earnings ESP of +12.66%. It is scheduled to release earnings on May 5.

Over the trailing four quarters, the company surpassed the Zacks Consensus Estimate on each occasion, the surprise being 16.08%, on average.

Another prominent clean energy stock is

SolarEdge Technologies


SEDG

, which has a Zacks Rank #3 and an Earnings ESP of +0.99%. The company is one among the pioneers in manufacturing inverter systems for solar photovoltaic installations. It is scheduled to release earnings on May 3.

Over the trailing four quarters, the company surpassed the Zacks Consensus Estimate thrice, and missed once, the surprise being 21.65%, on average.

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