As we've been saying for years, green energy isn't just responsible: It's highly profitable.
You can certainly reap those rewards by buying shares in a solar stock or a high-profile electric car company like Tesla Inc. (NASDAQ: TSLA).
But there's one stock you haven't thought of that's poised to bring in huge, reliable gains from the clean energy revolution.
This is a company that's a leading provider of specialized electric vehicles. It serves a market with 590,000 fleet vehicles, which transport 26 million Americans and Canadians every day.
And those numbers are growing every year.
This company's products are absolutely essential. But because it's not a high-profile company like Tesla, it's managed to slip under the market's radar. In fact, according to at least one metric, it's undervalued by nearly 60%.
That's probably why it's been given a top score by our Money Morning Stock VQScore™ system.
That's a fantastic opportunity for our readers. As we'll see, this is a company that's not only poised for a quick pop. It could also be one of the most stable growth companies you have in your portfolio for years to come.
Why This Company Is Emerging as the Clear Leader in a Must-Have Sector
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Blue Bird Corp. (NASDAQ: BLBD) began in 1927 as a side project for a Ford Motor Co. (NYSE: F) dealership in Georgia. Its founder, Albert Luce, Sr., developed a bus body using steel and sheet metal instead of wood, which fell apart easily.
As car sales tanked during the Great Depression, Luce ramped up production of school buses to boost the local economy and support an increasingly consolidated school system.
Today, the company's headquarters are just about 25 miles from its original location, and it's one of three major providers of school buses in North America.
But it's Blue Bird that's emerging as the clear leader. That's due in part to its general excellence: Freedonia Custom Research ranked it No. 1 in four out of the five qualities that were most important to customers.
It's also taking the lead because of its leadership in alternative fuel--powered buses. Blue Bird developed its first buses powered by propane, compressed natural gas (CNG), and electricity in the 1990s. Today, it provides electric options in all three major types of school buses it offers.
That's a huge profit opportunity as school systems replace their aging buses and are looking for more efficient, environmentally friendly options.
According to researchers at R.L. Polk & Co., alternative fuel--powered options rose from 4% in 2012 to 17% in 2018. At that pace, North American schools would add approximately 450,000 new alternative fuel--powered buses over the next six years.
And that's an area where Blue Bird dominates with a 70% market share. Hence, its alternative fuel--powered bus sales are rising at a nearly 14% annual clip.
Another reason Blue Bird stock is so attractive is its "protective moat," as Warren Buffett likes to tout for his favorite companies. The barriers to entry for the school bus industry are extremely high, and the demand is not subject to the vicissitudes of trends or taste.
In other words, the day we don't need school buses anymore isn't coming anytime soon. And as long as we need them, Blue Bird is going to be the obvious choice.
Plus, thanks to its low profile, the market has let this one slip well under its fair value. That creates the perfect profit opportunity for you.
Now Is the Time to Buy BLBD
Blue Bird stock has fallen below $19 recently, after trading above $25 in October. But this is a case where the market just isn't seeing the value on the table.
Sales have risen every year since 2015, and net income has skyrocketed 327% from $7.2 million in 2016 to $30.8 million in 2018. According to FactSet, earnings per share (EPS) is projected to jump 18% in fiscal year 2020.
That explains why three out of four analysts tracked by FactSet call BLBD a "Buy," and Eric Stine at Craig Hallum Capital Group has set a target price 34% above its current level.
But valuation metrics suggest a bigger rise. Blue Bird's price-to-sales ratio comes in at 0.48, just 42% of the industry average.
That means this stock would have to jump 140% just to reach its fair value.
Combine that with its long-term growth prospects, and this is a stock that could give you a nice short-term pop and then keep delivering for years to come.
And if you want to learn how to bring in faster gains, week after week...
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About the Author
Stephen Mack has been writing about economics and finance since 2011. He contributed material for the best-selling books Aftershock and The Aftershock Investor. He lives in Baltimore, Maryland.