Bank Of America Says It's Time To Invest In This Under-The-Radar Wind Stock.

Investors should take a look at this little-known wind blade manufacturer, which is poised to benefit from the tailwinds of the Inflation Reduction Act, according to Bank of America.

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Despite near-term challenges like the ongoing transition to solar, Julien Dumoulin-Smith double-upgraded shares of TPI Composites to buy from underperform in a note to clients on Thursday.

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“As shares are only modestly off their all-time lows and as the cash burn backdrop in 1Q23E has eased, we believe this is an opportune moment to get more constructive,” he wrote, as investors seek out stocks associated with the Inflation Reduction Act and construction in Europe.

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Despite a 30% slump in 2022, shares of the wind stock have jumped nearly 39% in 2023 after a 32% slump in 2022. There was an increase in the bank's price target for the shares from $9 to $14, suggesting the shares are likely to remain rangebound in the near term. In spite of fourth-quarter earnings missing estimates, shares have gained nearly 11% this week.

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“Fourth quarter results released last night showed surprising confidence in inflection in 4Q based on the fact that it appears to be confident to ramp back up with commitments (to keep facilities open - but not necessarily use them yet) in 2024,” he wrote.

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Dumoulin-Smith for his part cited a margin recovery and an improvement in free cash flows among the reasons for the double upgrade.

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“We view the company's low single-digit EBITDA margin (implied by Street at 2.5% as perhaps higher, and the most important factor is that the company's recovery EBITDA margin of high single digits can be viewed as effectively a '25+ target," he concluded.

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