by Leslie N. Masonson, MBA
Nextracker Inc. (NYSE:NXT), a worldwide integrated energy, solar and software solutions company was founded in 2013 in Fremont, CA where it is currently headquartered. It has $2.1 billion in annual sales and a market capitalization of $2.95 billion with only 606 full-time employees.
The company’s services are used in utility-scale and distributed generation solar power plants. Moreover, its solar panels can track the sun’s movement across the sky to optimize performance. Additionally, its NX Navigator product helps to maintain optimum tracker equipment health and availability.
On December 26, Zacks highlighted NXT as a promising renewable energy play for 2024. The Zacks Consensus Estimate for NXT’s fiscal 2024 sales indicates an improvement of 23.2% from the previous year’s reported figure. Piper Sandler recommends NXT as one of their favorite ideas for 2024. On Dec 13, the company announced its surpassing of a milestone of 10 Gigawatts of smart solar trackers in both operational or under fulfillment for projects in the Middle East, Africa and India.
For its size and unique product lines, the company is popular among institutions as 262 hold 109% of their 62 million shares outstanding. The top three institutional players holding shares include TPG GP A, LLC with 20.6% of the shares, BlackRock Inc. with 9.1%, and Vanguard Group Inc. with 11.6%. This sizable interest by large institutions is a big plus, as those are the type of firms that can push the stock price higher as they buy more shares for their clients, mutual funds or ETFs. Currently, 15 analysts cover the company.
NXT Inc. is probably not a well-known name to investors, which is common for many mid-sized in non-glamourous industries, nevertheless NXT has landed at the #1ranking in VectorVest’s Energy (Coal)business sector out of 16 companies, as well as #5 in the broader Energy sector of 95 companies. Moreover, this business sector is ranked 133 out of 222 industry sectors tracked by VectorVest, which is in the middle of the pack. So, the stock is outperforming its competitors by a wide margin.
NXT’s Strong Metric Ratings, Undervaluation, and Analyst Forecasts Portend a Positive 2024
The VectorVest software issues buy, sell, or hold recommendations on 9,125 stocks. This proprietary stock rating system splits the data into three simple ratings: relative value (RV), relative safety (RS), and relative timing (RT). Each is measured on a scale of 0.00-2.00, with 1.00 being the average for quick and easy interpretation, and 2.00 being the best.
The VectorVest ratings for NXT are as follows:
- Excellent Upside Potential: The Relative Value (RV) rating focuses on a stock’s long-term, three-year price appreciation potential. The current RV rating for NXT is 1.41, which is exceptionally high. Moreover, VectorVest determined that NXT is significantly undervalued with a calculated value of $53.27. Therefore, the stock can move another 13.7% before reaching the value placed on it from its current price of $46.85.
- Fair Safety: The Relative Safety (RS) rating is based on the company’s business longevity, financial predictability/consistency, debt-to-equity ratio, and additional risk parameters, including price volatility. Its RS rating of 0.91 is above average, indicating above average risk. Therefore, long-term conservative investors would probably be uncomfortable holding this stock.
- Excellent Timing: The Relative Timing (RT) rating focuses on the price trend over the short, medium, and long term. The components include price direction, dynamics, and price magnitude of price changes over daily, weekly, quarterly, and yearly comparisons. NXT has a slightly above average RT rating of 1.37 compared to the average 1.11 RT of all the stocks in the database.
- Very Good Comfort Index: This index measures the consistency of a stock’s long-term resistance to severe and lengthy corrections. This index compares the individual stock to the fluctuation of the VectorVest Composite price. With a CI rating of 1.28, NXT rating is well above average Therefore, this is another positive metric indicating that it is suitable for long-term conservative investors.
- Excellent Earnings Growth Rate (GRT): NXT has annual sales of $2.1 billion and a 30% forecasted growth rate. Moreover, its sales growth of 23% over the last year is exceptional. These are just two of the important fundamentals that are calculated in the VectorVest software and available with a mouse click.
- Very Good VST Score: The VST Master Indicator ranks 9,125 stocks from high to low and brings to the top of the rankings those stocks with the highest VST scores. NXT’s score is 1.25 which is above average. Using VST enables users to determine stocks that are performing much better than average, as well as the opportunity to find the cream of the crop with a few mouse clicks. NXT is not at the top of the VST scoreboard, but it is certainly in the top 1% of companies reviewed.
Overall, NXT is a successful renewable energy company with positive metrics, as well as a high Return on Equity of 33.7%. It also has a positive MACD (see graph below), and has been in a choppy uptrend since its October 5 low of $32.14. More often than not, strongly acting stocks at all-time highs tend to move much higher when earnings and sales continue to be strong. The average daily volume of 1.971 million shares is sufficient for a low bid-to-ask spread for investors and traders.
NXT’s shares surged 55% in the year-to-date period, more than doubling the S&P 500’s return of 24.2%. The current stock price is 14.4% above its 40-day moving average, which is not excessive. The RSI (14) that is not shown on the chart is at a reasonable 60. That is considered mid-range with nothing to be concerned about. The stock can accumulated, if it rises above its high of $49.82, as that is its resistance level. Any near-term price decline below $45 would indicate there is possibly more downside indicating that investors should stay away. Currently, NXT is on a VectorVest ‘Buy” signal since December 8, but has declined the last four days with the MACD curling down. So caution is urged at this point.
Want These Types of Insights at Your Fingertips so You Can Win More Trades?
Use VectorVest to analyze any stock free. VectorVest is the only stock analysis tool and portfolio management system that analyzes, ranks and graphs over 18,000 stocks each day for value, safety, and timing and gives a clear buy, sell or hold rating on every stock, every day.
Before you invest, check VectorVest! Click here to ANALYZE ANY STOCK FREE and see our system in action!