3. TPI Composites, Inc. (NASDAQ: TPIC)
Number of Hedge Fund Holders: 27
TPI Composites, Inc. (NASDAQ: TPIC) is an Arizona-based company that markets wind energy production equipment. The firm is ranked third on our list of 10 best wind energy and renewables stocks to buy in 2021 and was founded in 1968. TPI stock has returned more than 150% to investors over the past twelve months. TPI makes and sells wind blades, precision molding, and assembly systems for renewable power plants. It has business interests in the US, Mexico, Europe, and several parts of Asia.
On May 6, TPI Composites, Inc. (NASDAQ: TPIC) posted a revenue of more than $400 million for the first quarter of 2021, beating market estimates by more than $8.4 million. It also provided guidance for the 2021 fiscal year, expecting net sales of up to $1.85 billion and capital expenditures of up to $65 million.
Out of the hedge funds being tracked by Insider Monkey, London-based investment firm Greenvale Capital is a leading shareholder in the firm with 1.1 million shares worth more than $62 billion.
In the Q4 2020 Investor Letter, Baron Discovery Fund highlighted a few stocks and TPI Composites Inc (NASDAQ:TPIC) is one of them. Here is what Baron Discovery Fund said:
“TPI Composites, Inc., a manufacturer of composite blades for electricity generating wind turbines, and composite bodies for electric buses did very well in the quarter, with shares rising 82.3%. The company reported record revenue that grew 23.5% against a 50% year-over-year comparable, and double-digit cash flow margins for the first time in a year. Investors (including Baron Discovery Fund) have been waiting for this recovery since the end of 2019, when management took down 2020 numbers due to increased manufacturing line transitions (product retooling). After the guidance reduction we thought shares at $16 were a bargain, trading at 6.5 times 2020 cash flow and 4.7 times 2021 cash flow. They became more so after they fully bottomed in the mid-$9 range at the height of the pandemic in mid-March 2020 (trading at about 4 times and 3 times the same metrics). But our long-term perspective held and we added on weakness. This proved profitable, as shares ended the year at $52.78. At this price level, shares trade at about 12 times and 10 times our estimated 2021 and 2022 cash flow targets and we still see nice upside. The recovery is even more remarkable given that it’s been executed during the pandemic illustrating the strength of this management team. Management also hinted in the third quarter earnings call that it plans to increase its long-term targets based on the increasing expectations for annual wind capacity installations. We like the setup particularly given some nice macro tailwinds which include global stimulus with money earmarked for renewables, extended production tax credits, lowered wind energy production costs and the anticipation that the Biden administration will be more friendly to renewable energy. On top of the strength in the wind industry, we believe the company will continue building out its transportation business where it supplies composite parts for passenger EV and commercial trucking applications. TPI is seeing strong early traction with both production awards and pilot programs with major OEMs and we expect additional production contracts in the coming years.”
