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The global wind power market is highly concentrated with just four companies accounting for 57% of deployed wind turbines: Vestas (VWDRY), Goldwind of China, General Electric (GE), and Siemens Gamesa (SIEGY). In 2018 developers commissioned 45 gigawatts of onshore wind turbines globally.

Vestas increased its lead in the global market to 22% from 16% in 2017 with 10.1 gigawatts of onshore turbines commissioned.In the United States Vestas and General Electric tied for the lead in market share in 2018. The two companies accounted for just over 3 gigawatts of commissioned wind turbines in 2018 with Vestas ahead of General Electric by just 44 megawatts.

You may have noticed that 1) General Electric is in a bit of trouble right now, which doesn’t help when you’re trying to sell a long-lived asset such as a wind turbine to a wind farm developer who is looking to make money over a decade or more; and 2) that wind power capacity in the United States is set to boom in the next few years.

This last observation is a little tricky. In many parts of the country wind power has reached grid parity with other sources of new electricity. That means that in those parts of the country wind power is now economically competitive, subsidies and tax breaks aside, with other sources of new capacity. With utilities and corporate customers looking to produce electricity from sources that don’t add more carbon to the atmosphere, wind power capacity is projected to grow faster than electricity capacity as a whole. The U.S. Energy Information Administration projects that total U.S. electricity generation from all fuels will fall by 2% in 2019 and then show very little growth in 2020. However, the EIA also projects that wind generation capacity will grow by 10% in 2019 and 14% in 2020.

Now some of that is because wind power has reached grid parity–even though the storage problem of how you store electricity generated by wind turbines when the wind is blowing for the times when the wind isn’t blowing–hasn’t been solved on a utility scale. But some of it is because the Production Tax Credit, which provides an inflation-adjusted per-kilowatt-hour tax credit for wind power, is, under current law, due to drop to 60% of its current level in 2022, to 40% in 2023, and to 0 in 2024. Consequently wind project developers have a sizable incentive to get their capacity up and running before the credits disappear. Energy consulting company Wood Mackenzie estimates that 57.6 gigawatts of new capacity will come on line in the United States between 2018 and 2027. (The EIA, for context, believes that 11 gigawatts of wind capacity will come on line in 2019. That would be the highest new capacity installed since 2012.) But, Wood Mackenzie forecasts, 40% of the new capacity expected to come on line between 2018 and 2027, will be added in 2019 and 2020.

Now, there is for course, the possibility that if President Trump loses in 2020 or the Republicans lose their Senate majority in 2020, that Congress might restore or even increase tax credits for wind and solar after 2020 as part of an  attack on the problem of global warming. (It’s this longer range possibility that has led me to add Vestas to my Special Report: 10 stocks for Global Warming on my subscription site.)

In the shorter term, however, that possibility remains speculation. But the troubles at competitor General Electric, the impetus from grid parity, and the boost from the looming expiration of wind power tax credits, all provide the prospects for powerful growth and earnings stability in 2019. Which is why I made Vestas No. 7 in my Special Report: 10 stock picks for an earnings recession, also on my subscription site.

And why I will be adding it to my Jubak Picks Portfolio (and my global warming picks list) as of Monday, March 4.

For the fourth quarter of 2018 Vestas saw order intake 1,673 megatwatts higher than in the fourth quarter of 2017. For the full year order intake of 14.2 gigawatts was up 27% from 2017. Orders from all geographic areas rose, even from Europe where increased orders from Norway, Sweden and France made up for a drop in orders from Germany. (Like the rest of the wind industry, Vestas is seeing the biggest percentage growth in equipment orders in the offshore wind market. The first utility-scale U.S. offshore wind project, Vineyard Wind, got approval this year. Vestas is a preferred supplier.)

I’d note one other factor that adds stability to Vestas’ revenue and earnings. The company’s big share of all currently installed wind capacity means that Vestas collects a lot of service revenue (up 10% in 2018)–and service revenue comes with a much higher profit margin that new equipment sales. The EBIT (earnings before interest and taxes) on service revenue in 2018 was 25.2%. Company-wide EBIT margin was just 9.5% in 2018.Going forward for the full year in 2019 Vestas is expecting a company-wide EBIT margin of 8% to 10% with a service EBIT margin of 24%. In the fourth quarter of 2018 revenue grew by 10% from the fourth quarter of 2017.

My target price is $32.50. The shares closed at $27.33 on March 4.