Decades ago, electricity powered a few household appliances. Today, it powers cloud servers, electric-vehicle charging stations and bitcoin mining warehouses.
The future of energy is electricity. Clean, renewable electricity.
We can make money as renewable energy capacity grows. One way is with a stock tied to a renewable energy that’s rarely talked about … geothermal power.
Ormat Technologies Inc. (NYSE: ORA) is the largest U.S.-based geothermal operator. It runs 851 megawatts around the world. The western U.S. is home to 67% of its operations.
The geothermal industry is the smallest segment of U.S. renewable energy sources. But it has huge potential for growth.
Existing worldwide geothermal capacity could grow by nine times!
Technology in development could unlock 100 to 500 gigawatts of new capacity in the U.S. alone, many multiples of existing capacity and growth expectations.
For now, Ormat expects to grow its capacity 35% by 2022.
Geothermal energy is heat locked up in reservoirs of water and steam miles below the earth’s surface. Ormat taps into those reservoirs, pumps fluid out of the ground and isolates steam.
The steam turns turbines that generate electricity. Leftover fluid flows back into underground reservoirs for future generation. This recycling helps generate electricity around the clock. (You can’t say that about solar and wind power.)
There are three types of geothermal power plants. Ormat invented one of them. Ormat also developed technology to capture unused waste heat from production processes. Its technology converts that heat to electricity.
At the same time, it’s growing its energy storage division. Its turnkey battery systems integrate with other Ormat equipment.
Ormat has a bright future. But our opportunity comes from its recent past.
That was the last good buying opportunity.
Until now.
Shares of Ormat fell 27% this year. Today it’s trading at $55.41 per share. And we have a chance to buy at a good price.
My initial target is $62 per share by year end. I’m looking for $69 to $76 per share in 2019. Meaning: Ormat could jump 14% to 38% between now and then.
Of course, if the bull market blows off to extreme highs, Ormat could gain a lot more than 38% in the next 12 months.
Good investing,
John Ross
Senior Analyst, Banyan Hill Publishing