AMSC: A Good Way For Investors To Ride The Renewable Energy Trend

on December 30, 2020

There’s a big tomorrow in power generation. No, not in public utilities, which always are draggy stocks. At issue is the equipment that will help the world meet a growing need for more electricity, and doing that via renewable energy.

And a good means for investors to take advantage of that trend is with a company that does a lot of power-related things well, enjoys good revenue growth, still isn’t profitable, but has seen its stock quadruple over the past five years. That sounds a lot like Amazon AMZN +1.2% in the 1990s.

In this case, we’re talking about AMSC (it stands for American Superconductor Corporation AMSC -12.9%),  which focuses on the electrical grid, the lifeblood of modern civilization, and does so with modern technology. The outfit also is a big player in wind power, cementing its place in renewable energy.  Recently, it expanded yet again via its purchase of Northeast Power Systems, which makes gear vital to the grid’s operations. Acquiring companies often see their share price dip. Not AMSC. This year alone, its stock is up a bracing 228%.

Make no mistake: The electricity biz has a big future. According to U.S. Energy Information Administration, global power generation will almost double, to 45 trillion kilowatt hours by 2050. “The grid is going to get bigger” with renewable energy, needed to combat climate change, rising too, says Dan McGahn, AMSC’s chief executive. One propellant of the demand for more electricity output, he notes, is a coming surge in electrical vehicles.

Small wonder the company’s revenue growth has been substantial. In its fiscal second quarter, ending Sept. 30, revenue swelled to $21.1 million, compared with $14 million for the year-earlier period. Part of its success is in the burgeoning field of wind power. The existing grid is 56% of its business, with wind at 44%. The company’s slogan is: “We don’t generate the energy. We keep it moving.” AMSC likens itself to an orchestra conductor. Instead of melding woodwinds, brass, strings, drums and the like, AMSC harmonizes transmission lines, substations and generators.

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Fractal Energy Storage ConsultantsAMSC: A Good Way For Investors To Ride The Renewable Energy Trend