Warren Buffett just made his second sizeable investment in the U.S. solar industry this month, adding more fuel to the debate over whether U.S. solar is on the cusp of a comeback. Berkshire Hathaway's MidAmerican Energy Holdings bought a 49% stake in NRG Energy's (NYSE: NRG) $1.8 billion Agua Caliente solar project (via Bloomberg).
Last week Kapitall reported on Buffett's first-ever investment in U.S. solar, where MidAmerican Energy Holdings bought the $2 billion Topaz power plant from First Solar (Nasdaq: FSLR).
Tax incentives were cited by analysts as one of the reasons for last week's purchase. According to Jefferies analyst Gerard Reid, "tax credits for wind in the U.S. expire at the end of next year, while solar ones run till 2015."
Buffett's most recent purchase may reflect the same thing, however according to analyst at Mizuho Securities Paul Clegg, Buffett's foray into solar shows that utility-scale power plants offer good returns with little downside risk.
According to Bloomberg, competition from China has forced U.S. solar companies such as First Solar to shift from selling panels to rooftop developers to building larger scale power plants.
Investing ideas
Warren Buffett is one of the world's most renowned investors -- where he sees value, others follow. Do you think his investments will cause others to reevaluate the clean energy market?
To help you explore the market, we ran a screen on clean energy stocks for those trading well below their most pessimistic analyst target prices, possibly indicating that these stocks are undervalued.
List sorted by potential upside implied by target price. (Click here to access free, interactive tools to analyze these ideas.)
1. Maxwell Technologies (Nasdaq: MXWL): Develops, manufactures, and markets energy storage and power delivery products, and microelectronic products. Market cap of $425.04M. Of the 11 analysts that have set a target price on the stock, the lowest price target stands at $20.00. This implies a potential upside of 30.72% from current levels around $15.30.
2. Fluor (NYSE: FLR): Provides engineering, procurement, construction, maintenance, and project management services worldwide. Market cap of $8.16B. Of the 20 analysts that have set a target price on the stock, the lowest price target stands at $61.00. This implies a potential upside of 26.37% from current levels around $48.27.
3. Newpark Resources (NYSE: NR): Provides fluids management, waste disposal, and well site preparation products and services primarily to the oil and gas exploration and production industry. Market cap of $754.64M. Of the 9 analysts that have set a target price on the stock, the lowest price target stands at $10.00. This implies a potential upside of 24.38% from current levels around $8.04
4. Progressive Waste Solutions (NYSE: BIN): Operates as a vertically integrated waste management company in North America. Market cap of $2.25B. Of the 14 analysts that have set a target price on the stock, the lowest price target stands at $23.00. This implies a potential upside of 21.95% from current levels around $18.86.
5. Clean Energy Fuels (Nasdaq: CLNE): Provides natural gas as an alternative fuel for vehicle fleets in the United States and Canada. Market cap of $832.13M. Of the 6 analysts that have set a target price on the stock, the lowest price target stands at $14.00. This implies a potential upside of 21.11% from current levels around $11.56.
6. ABB (NYSE: ABB): Provides power and automation technologies for utility and industrial customers worldwide. Market cap of $41.18B. Of the 6 analysts that have set a target price on the stock, the lowest price target stands at $21.11. This implies a potential upside of 19.13% from current levels around $17.72.
7. Ashland (NYSE: ASH): Operates as a specialty chemicals company in the United States and internationally. Market cap of $4.32B. Of the 10 analysts that have set a target price on the stock, the lowest price target stands at $65.00. This implies a potential upside of 18.59% from current levels around $54.81.
8. Waste Connections (NYSE: WCN): Provides solid waste collection, transfer, disposal, and recycling services. Market cap of $3.58B. Of the 7 analysts that have set a target price on the stock, the lowest price target stands at $37.00. This implies a potential upside of 17.57% from current levels around $31.47.
9. Ameresco (Nasdaq: AMRC): Provides energy efficiency solutions for facilities in North America. Market cap of $532.89M. Of the 7 analysts that have set a target price on the stock, the lowest price target stands at $14.00. This implies a potential upside of 17.35% from current levels around $11.93.
10. Green Plains Renewable Energy (Nasdaq: GPRE): Engages in the production, marketing, and distribution of ethanol and related distillers grains in the United States. Market cap of $336.57M. Of the 7 analysts that have set a target price on the stock, the lowest price target stands at $12.00. This implies a potential upside of 16.73% from current levels around $10.28.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Alexander Crawford does not own any of the shares mentioned above. Target price data sourced from Thomson/First Call (via Yahoo! Finance)
