18. November 2021 | 12:07 CET
RWE, Nordex, Water Ways, JinkoSolar: These shares are just starting to blossom
Sustainability pays off! Even utility RWE believes that the EUR 50 billion the Company plans to invest in transforming its corporate structure is capital well spent and expects profit increases of up to 10% annually in the course of the measures. Since operating sites also determine whether a company's sustainability account is in the green or not, photovoltaic suppliers are also likely to benefit from climate change. Industrial companies will also fare better in the long term with renewable energy - companies like Nordex are already looking forward to it. This article explains where opportunities are waiting around climate change and whether there are still niches that have received little attention from the market.
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ISIN: RWE AG INH O.N. | DE0007037129 , NORDEX SE O.N. | DE000A0D6554 , Water Ways Technologies | CA9411881043 , JINKOSOLAR ADR/4 DL-00002 | US47759T1007
Nordex: Good business, weak margin
Wind turbine manufacturer Nordex is well positioned for the future. Only some time ago, the Company converted its turbines to a new platform, promising more profitability. The Company is also perfectly equipped for the trend towards ever-larger wind turbines with the largest series wind turbine in the world. In the first half of the year, Nordex installed more new turbines than ever before. The main focus of its activities is in Europe. While sales rose by around 31.7% in the first half of the year, the margin only increased to 2.5%. That shows: Even with the more profitable Delta 4000 platform, Nordex is under cost pressure.
Rising raw material prices for steel, copper and also carbon have a significant impact on this. To remain competitive in the long term, Nordex is working on technological innovations, focusing primarily on rotor blades and turbines. To increase the number of units, it is also apparent to shift the focus from Europe to other regions. Nordex has chosen India as its target: renewable energies are less widespread there, but demand is increasing. Nordex shares have lost more than 6% over the past year, and the low profitability is not going down well in the market. Now the focus is on the India plans.
Water Ways Technologies: Save water, earn returns
A company that does good business in both developed and emerging markets is the small-cap Water Ways Technologies. Measured by market capitalization, the Company, which has a market capitalization of around EUR 30 million, is of course not comparable to Nordex. But the small size and the associated lean structure also have advantages. But first things first: Water Ways Technologies is an agrotech company dedicated to the efficient use of water. Water is scarce in many regions of the world. Analysts, such as Charles Iceland of the World Resources Institute, even predict that humanity will wage wars over the precious liquid in the 21st century. The majority of water is currently wasted in agriculture. Here is where Water Ways Technologies comes in, offering complete solutions based on sensors and apps that help use water in a targeted manner and ultimately save it.
The business model is hitting a nerve in the market: in the first half of the year, the Company generated revenue of CAD 12.1 million and EBITDA of CAD 832,000. The Company is active worldwide and landed a record order in China a few months ago with a volume of CAD 4 million. More recently, it followed up with additional orders around an automated system for irrigation and fertilization. Water Ways is benefiting in this area from high demand from the cannabis sector, which is growing strongly in many countries in the wake of liberalizations. Water Ways Technologies' stock has been building momentum in recent days. Recent history shows that the share is good for jumping revaluations. That is due to the low valuation and the importance that new orders have in this context.
JinkoSolar: Good prices are not everything
New orders also beckon for JinkoSolar - after all, the Company is well positioned and convinces with low prices at good quality. In recent weeks, the share came under a bit of pressure in the wake of China's concerns. In the long term, however, photovoltaic and solar energy should remain a dynamic growth area. Since China has secured raw materials in recent years, manufacturers from the Middle Kingdom, in particular, could gain further market share in a phase of a general shortage of basic materials in the industry. However, one risk for JinkoSolar lies in the increasing consideration of supply chains when assessing how sustainable products are. Solar panels made from non-sustainable mined raw materials could soon be penalized and thus be less in demand from companies that need to pay attention to their carbon footprint.
While Nordex has a good business but earns relatively little from it, it looks better for JinkoSolar. Both companies are still often the first choice for investors regarding wind or solar energy - despite all the problems and risks. An insider tip so far is the second-tier stock of Water Ways Technologies. Saving water makes sense, especially in agriculture. Orders from China and Israel show that the business model is well received around the world.