Opinions
Jim Cramer - Mad Money
Nextracker
NXT-Q
BUY
Feb 12, 2024
Stock price when the opinion was issued
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The global provider of solar panel monitoring technology has over $2 billion in order backlogs. It trades at 28x earnings and supports a 43% ROE. We like that cash reserves are growing, while shares are aggressively bought back and debt is reduced. We recommend setting a stop-loss at $44, looking to achieve $65 -- upside potential of 22%. Yield 0%
(Analysts’ price target is $64.88)We would attribute a lot of the weakness simply to investor boredom and digesting recent gains. In the short-term, NXT can trade in sympathy to interest rate expectations, with rates impacting feasibility of solar projects, so there might be some sentiment around rates weighing on shares. Overall though, the fundamentals remain strong as does the growth and tax credits/infrastructure spending over the next two years should act as a support for demand of their products.
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One of the most successful IPOs last year and has generally climbed since its debut. They make solar tracker systems so that solar panels rotate to follow the sun and maximize power generation. NXT enjoy a duopoly in its sector. The Inflation Reduction Act is a tailwind. As the renewable sector has struggled, NXT keeps reporting good earnings and raising its guidance. When NXT bottomed in mid-January, it was a buying opportunity. Then, it announced a monster 38% revenue growth and boosted full-year guidance. Enjoying a ton of demand. Their US business grew 70% YOY; energy demand is forecast to grow in coming years as legacy power generation facilities retire. Trades at a cheap 19x 2025 PE.