With plans to accelerate long-term growth in the energy storage market, geothermal energy leader Ormat Technologies has earned a spot on on the IBD Breakout Stocks Index. ORA stock is now heating up a new buy point ahead of earnings on Aug. 3.
Headquartered in Reno, Nev., Ormat is the only vertically integrated company engaged in geothermal and recovered energy generation (REG). It owns, operates, designs, manufactures and sells geothermal and REG power plants primarily based on the Ormat Energy Converter — a power generation unit that converts low-, medium- and high-temperature heat into electricity.
Ormat has engineered, manufactured and constructed power plants, which it currently owns or has installed for utilities and developers worldwide, totaling roughly 3,200 MW of gross capacity.
Additionally, Ormat is expanding activity into energy storage services, solar photovoltaic (PV) and solar PV plus energy storage. Currently, the company's total generating portfolio is 1.2 GW with 1,075 MW of geothermal and solar generation. Ormat's output is spread globally in the U.S., Kenya, Guatemala, Indonesia, Honduras and Guadeloupe. It also has an 88 MW energy storage portfolio in the U.S.
On Monday, Ormat announced the start of operations at its Casa Diablo IV 30 MW geothermal plant to serve multiple regions within California. The facility will also provide 16 MW of its geothermal power capacity to the Southern California Public Power Authority under a 25-year deal.
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Ormat Energizes Estimates For 2023
Growth for Ormat Technologies has been sporadic. But after several quarters of slowdowns, sales growth has started to pick up, climbing to a 10% gain for Q1 vs. a year earlier. In Q4 of 2021, the top line rose 6%, ending a seven-quarter drought in growth.
Earnings growth has also been spotty. Analysts expect Ormat to post a 9% EPS slowdown when it reports next month and a 5% slowdown for the year. But for 2023, analysts forecast a 50% spike in earnings to $1.97 a share.
Ormat has an 79 Composite Rating, meaning it's outpacing 79% of all stocks in terms of key stock-picking traits. Ormat ranks No. 5 among its peers in the alternative energy industry group, which ranks No. 44 among the 197 groups IBD tracks.
Geothermal Energy Leader Powers New Setup
Ormat Technologies is working on a double bottom showing an 85.70 buy point. Such chart patterns tend to form during volatile markets, like the one we've experienced this year during a tough bear market.
After hitting a new high in February of last year, Ormat pulled back sharply, crashing below its 10-week moving average. While still filling the effects of that decline, the geothermal energy leader has been brewing a potential setup, retaking its 10-week line along the way.
ORA stock remains a long way off its 2021 high, but it is closing in on the 85.70 entry. Note that its relative strength line, which slumped sharply last year, is now right around a new 52-week high.
Also keep in mind that it's risky to buy a stock just before the company reports earnings. But see if Ormat Technologies can tap into its store of geothermal energy to power a new breakout.
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Follow Matthew Galgani on Twitter at @IBD_MGalgani.
