ORA stock is the IBD Stock Of The Day as the geothermal energy producer works on a new base-on-base buy point, with the Inflation Reduction Act set to boost Ormat earnings.
Reno, Nev.-based Ormat Technologies is expanding in energy storage and solar. It has tied up with NV Energy, a utility company owned by Berkshire Hathaway, which is developing battery storage projects in Nevada.
Ormat isn't yet, but could be some day, a beneficiary of the Tesla Gigafactory outside of Reno. That plant makes battery packs for Tesla's electric vehicles, and for its Powerwall and Megapack power backup products.
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Tesla is said to have built the Nevada Gigafactory partly due to the state's geothermal resources. Geothermal power plants use steam trapped below the earth's surface to produce electricity.
Ormat claims a 30% and growing share of geothermal power generation in the U.S. The U.S. is the world's top producer of geothermal energy.
ORA Stock
Shares of Ormat eased 1.5% to 95.03 amid renewed selling on the stock market today.
ORA stock is consolidating above a prior base after finding support at the 21-day moving average. By Friday, Ormat's new consolidation should become a flat base with a 98.22 buy point.
The relative strength line for ORA stock is perched at highs, according to MarketSmith chart analysis. While the RS line has rallied this year, it remains below January 2021 highs. A rising RS line means that a stock is outperforming the S&P 500.
A 95 Relative Strength Rating shows that Ormat has outperformed 95% of all stocks in IBD's database over the past year.
ORA stock shows one quarter of rising fund ownership. Investment giant BlackRock, the firm behind iShares ETFs, is Ormat's second-biggest shareholder, after increasing its stake to 12.5% in August.
Out of 197 groups tracked by IBD, the alternative energy industry group ranks No. 4.
Both traditional energy stocks and alternative energy stocks are acting well in the current market. Devon Energy and the Invesco Solar ETF earn a spot on the IBD Leaderboard. Tesla belongs to the IBD 50 list of top growth stocks.
Ormat Earnings
Ormat earns a superior IBD Composite Rating of 90 out of a perfect 99. The Comp rating combines key fundamental and technical metrics in a single easy-to-use score.
A 39 EPS Rating reflects, in part, a decline in Ormat earnings in the latest two quarters. However, revenue grew 10% in the March quarter and 15% in the June quarter. Ormat tied the weak bottom line to foreign currency hedging.
"The strong performance of our Electricity and Energy Storage segments is expected to continue in the second half of the year, benefiting from the ramp-up" of five new projects, Ormat CEO Doron Blachar said in an Aug. 3 earnings release.
The company anticipates a "strong tailwind" from the Inflation Reduction Act, signed into law Aug. 16. The IRA's provisions include an extension of geothermal and solar tax credits, as well as other tax benefits, according to an Ormat investor presentation in September.
In 2023, analysts polled by FactSet expect Ormat earnings to rebound 54% from an estimated 5% decline this year.
Year to date through Sept. 14, ORA stock shows a 22.7% gain vs. a 16.2% decline for the S&P 500.
