While the S&P 500 is on course to end the week lower than where it began, shares of battery stock EnerSys(NYSE: ENS) and energy-efficiency leader Ameresco(NYSE: AMRC) have soared. But not all clean energy stocks are headed for gains. LithiumAmericas(NYSE: LAC), a company developing lithium production assets, plummeted this week in response to a critical report from a short seller.
From the end of trading last Friday through the market's close Thursday, shares of Enersys and Ameresco were up 12% and 17.8%, respectively, while Lithium Americas stock was down by 15%.
What's powering the bulls' buying activity?
For its fiscal 2024 fourth quarter, which ended March 31, analysts expected that EnerSys would post $892 million on the top line and earnings per share (EPS) of $2.02. Instead, on Wednesday, it reported revenue of $911 million and adjusted diluted EPS of $2.08. And it's not only the company's recent performance that has investors excited. Management provided an auspicious outlook for its fiscal 2025 -- one that likewise exceeds analysts' consensus estimates. While those covering the stock had been forecasting revenue of $3.6 billion in fiscal 2025, management projects it will land in the $3.675 billion to $3.825 billion range. Similarly, the consensus among analysts is that EnerSys will report EPS of $8.38, while management is now guiding for EPS in the range of $8.55 to $8.95.
And then there's Ameresco: News this week that it has received two project awards clearly has investors charged up about its prospects. On Monday, the company announced a $21 million project to help the city of Henderson, Nevada, upgrade its street lighting, including the conversion of 30,000 streetlights to LEDs. Days later, it reported that it had entered into a $249 million contract (as well as a long-term service agreement) with regard to a battery storage project in England. Ameresco expects the battery project to commence operations in 2026. While these two projects won't move the needle for Ameresco, it's an encouraging sign that the company is succeeding at moving projects through its ample backlog, which currently stands at more than $4.1 billion.
A sharply critical report about Lithium Americas
Lithium Americas was the subject of a critical report from short seller Bleecker Street Research. The catalyst for the company's growth is the development of the Thacker Pass mine in Nevada. While Lithium Americas is keen on advancing the project, Bleecker Street is not as optimistic. Among other things, Bleecker Street argues that the development of Thacker Pass, a clay-based lithium deposit, is far from guaranteed since previous efforts at similar types of mining have mostly proven unsuccessful.
Bleecker Street doesn't pull any punches in its characterization of Lithium Americas, calling the company "an underfunded, Vancouver-based stock promotion." And throughout the report, the short seller argues that the economics of the Thacker Pass project are not viable unless lithium prices remain elevated, which is unlikely to happen.
What should investors do now?
From its strong end to fiscal 2024 to its encouraging outlook for 2025, it's unsurprising that EnerSys has jumped this week. And with the stock trading at 16.6 times trailing earnings, a discount to its five-year average multiple of 20.6, it is quite possible that the stock can continue to run higher if the company meets its 2025 targets. Ameresco, meanwhile is changing hands at 14.7 times operating cash flow, a discount to its five-year average multiple of 15.6. It warrants further investigation from investors interested in clean energy stocks.
With regard to Lithium Americas, it's always best to remain slightly skeptical about short sellers' critical reports since those who publish them have a financial interest in the stock falling. In this case, though, investors may want to watch the stock from the sidelines for now to see if the company can make material progress in advancing the Thacker Pass project. Fortunately, there are plenty of other lithium stocks to consider in the meantime.
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Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
