Jim Cramer’s Charitable Trust is purchasing 200 shares of Nextracker at around $34.20 per share, increasing its ownership to 1,150 shares and adjusting its weighting to 1.2% from 1%. The decision to buy was made after the market had declined significantly since the Morning Meeting, with the trust believing it is a good time to enter the market cautiously. While September is traditionally a tricky month for investors, they believe it is okay to selectively purchase stocks that have recently been affected. However, they do not plan on becoming aggressive in their buying until the S&P Short Range Oscillator moves into oversold territory, which has not happened as of Thursday’s close.
Nextracker, a solar tracking solutions provider for large utility-scale projects, has seen a significant decline in its stock price, falling from the high $50s to around $34. The drop can be attributed in part to policy uncertainties surrounding the upcoming presidential election, with implications for renewable energy depending on the winning candidate. Additionally, concerns about the size and longevity of the artificial intelligence data center rollout have affected the stock as part of the broader theme of electricity power generation. Despite these challenges, the trust initially invested in Nextracker on the belief that the U.S. was facing electricity shortages due to the growing demand from data centers. However, the company’s second quarter earnings report triggered a further decline in the stock price, despite beating Wall Street estimates, due to concerns about project delays and lack of guidance raise.
Looking ahead, the trust remains optimistic about Nextracker’s potential for growth, citing the company’s backlog exceeding $4 billion in the second quarter as a positive sign. They believe that management’s conservative approach in providing guidance may lead to a pickup in new projects towards the end of the year, especially with potential interest rate cuts from the Federal Reserve and clarity from the White House. The sensitivity of renewable energy projects to changes in interest rates is also highlighted, with lower rates expected to make solar projects more economically viable. Additionally, at roughly 11 times the consensus earnings estimate for the current fiscal year, Nextracker’s stock is considered cheap and has the potential for a higher multiple if certain factors align favorably.
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