TerraForm Power - A Short-Term Trade Or One For The Long Haul?

08/15/19 04:28:51 PM

by Matt Blackman

This new economy stock is rallying. But can it keep up this performance?

Security: N/A
Position: N/A

Here is another new economy stock that is not only well positioned to benefit from the forecasted $11.5 trillion invested in energy and technology over the next three decades, according to Bloomberg New Energy Finance, but is also up more than 60% since its December 2018 low.

TerraForm Power (TERP) owns and operates a portfolio of solar and wind assets in North America and Western Europe producing more than 3.7 gigabits of renewable power under long-term contracts.

Fundamentally, TERP boasts a 4.8% forward dividend yield, gross margin of 72%, has seen revenues rise 58% over the last year and institutions hold more than 92% of its shares.

Figure 1. Daily chart of TerraForm Power showing the 63% rise since December 2018.

Graphic provided by: Freestockcharts.com.

From a long-term perspective, TERP has seen better days as we see in the next chart. Following its IPO in July 2014 at $25 per share, the stock peaked at $42.66 in April 2015 before dropping more than 75% into the low $7-range by November.

Since then, the stock has built a long-term base capped by a strong rally in 2019.

Figure 2. Weekly chart of TERP since its IPO in July 2014.

Graphic provided by: Freestockcharts.com.

From an immediate earnings perspective however, TERP lost $61.3 million on sales of $940 million in the last year with a total net income loss of $3.6 million in the latest quarter.

But overall, TerraForm Power is a stock that has the potential to work for both shorter-term traders and investors seeking a respectable dividend return if business opportunities and revenues continue to grow.

Matt Blackman

Matt Blackman is a full-time technical and financial writer and trader. He produces corporate and financial newsletters, and assists clients in getting published in the mainstream media. Matt has earned the Chartered Market Technician (CMT) designation. Follow Matt on Twitter at www.twitter.com/RatioTrade

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TerraForm Power - A Short-Term Trade Or One For The Long Haul?

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