Renewable energy has gotten immense buzz in 2020. And while a lot of the biggest and best-performing stocks are not exactly household names, investors are getting more and more familiar with the top companies. But there's one that, chances are, you've never heard of: TPI Composites (TPIC -4.53%).
On the Nov. 12 edition of "The Wrap" on Motley Fool Live, host Jason Hall makes the case for TPI Composites as one of the best growth stocks in the wind energy industry. While most people have no idea who the company is, the biggest wind turbine makers in the world are very familiar with it, and rely on the company to make turbine blades for them. Check out the video below to learn more about this under-the-radar green energy stock.
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Jason Hall: A little company called TPI Composites. I might have mentioned at once or twice on The Wrap. I know I've talked about it a couple of times on Industry Focus with our good friend, Nick Sciple. I know I've written about it a few times, but I think I've only seen one other Fool maybe two other Fools ever write about it in the past five years.
TPI Composites manufacturers blades for wind turbines. Their niche is a contract manufacturer, they supply for the all they basically I think like 90% of the companies that are like 90% of the market share that are not Chinese companies. They do business with TPI Composites and where it fits in is, for the most part these turbine manufacturers, they like to make their own blades where they can. It's part of their intellectual property, but it just doesn't work everywhere because these things are gigantic. The logistics costs make it really difficult for them to make turbine blades everywhere that they want to compete.
TPI Composites, since they basically make turbine blades for everybody, they can build factories in geographic areas where they can soak up some of the output from everybody enough that they could be competitive and they can be a supplier there in an area that it might not make sense for, say Vestas to build a factory right next to a factory from GE. Everybody can't be there, so they are really good at this.
Revenue grew 24% last quarter. Operating income was up 141%. Free cash flow, $50 million in free cash flow last quarter, still negative free cash flow for the year, but they are spending a lot of capital going on to grow their capacity. That should pay off down the road.
Here's another thing I really like about TPI Composites as they have this, because of their expertise in engineering and manufacturing carbon fiber and other composites, they've had a lot of the EV companies, electric vehicle companies come to them. They're working with Protera and Workhorse, Navistar is one of the big names, General Motors, to make bodies, to make chassis using these super ultralight components. The thing is the auto industry has a long history of working with suppliers to do this kind of manufacturing. I think it's a great place for them to be in, maybe for their next phase of growth.
I think combine that with their dominant position as a really preferred supplier to the big turbine makers, you add into that the prospects for the electric vehicle space to be a growth market for them. I think it's just a really interesting company that a lot of people don't really know about.