Always on the lookout for sleeper stocks. This trade for Broadwind Energy came up today as an OlivePick in my defined outcomes trading algo so I decided to look into the company. Do your own due diligence, the following is for informational purposes only, not financial advice, etc.

Simple cash secured put strategy to make 6% yield (25% annualized yield) as long as BWEN stays above $2.50 at maturity (a 50% drop from current prices). Sell 2 $2.50 put contracts expiring 4/21/23. Capital required: $471

Transformational Two-Year Contract

Broadwind Energy, a diversified precision manufacturer of specialized components and solutions serving global markets, announced that it has received approximately $175 million in new tower orders from a leading global wind turbine manufacturer. The fulfillment of the new order will occur during the full year 2023 and conclude by the end of 2024, and the ordered tower sections will be produced at both the company's Abilene and Manitowoc facilities.

Why it matters: This new order is considered transformational for Broadwind as it reflects the company's continued execution of its business development strategy. Over the last three years, Broadwind has pursued an aggressive development strategy designed to increase its share-of-wallet with existing customers and expand into complementary adjacent markets and new customer relationships, leveraging its precision manufacturing expertise. This order is the largest-ever received from this OEM customer, and is expected to scale over time.

The order secures significant production capacity over a multi-year period, approximately 50% of optimal tower production capacity across Broadwind's facilities in 2023 and 2024. This is expected to further optimize plant utilization over the near-to-medium term, and facilitate improved economies of scale, liquidity and financial performance, versus the prior-year period.

The order also carries favorable economics, including the benefit of the federal tax credit. The Inflation Reduction Act (IRA) passed into law in 2022 provides critical industries, including those supporting the energy transition, with tax credits designed to accelerate a generational shift in the energy production mix from fossil fuels towards renewable energy, including wind. Included within section 45x of the IRA is a provision for a new advanced manufacturing tax credit for which this order qualifies.

What they're saying: Broadwind's management stated that this new order will more than double the company's current total backlog, and carry a favorable margin profile, supportive of its strategic focus on profitable growth. They also anticipate that their tower order book will continue to fill throughout 2023, as raw materials prices and supply chain conditions further normalize and development activity gradually improves.

Source: Yahoo Finance

Mixed history

Broadwind Energy operates in the wind energy industry, which is characterized by significant government support and a growing demand for renewable energy sources. However, the industry is also subject to fluctuations in commodity prices, and the company's financial performance may be affected by these fluctuations.

Revenue: Broadwind Energy has seen a decline in recent years, with revenues falling from $205.5 million in 2015 to $110.5 million in 2019. This can be attributed to a decline in demand for the company's products and services, as well as increased competition in the industry.

Profit Margins: The company's profit margins have also been negative in recent years, with operating losses in 2017 and 2018. This can be attributed to a variety of factors such as increased competition, lower demand for the company's products, and higher costs.

Liquidity: the company has a moderate current ratio of 1.2 in 2019, which indicates that the company has enough assets to cover its short-term liabilities. However, the company has a high debt level, with a debt to equity ratio of 1.4 in 2019.

Overall, Broadwind Energy operates in a challenging industry with fluctuating demand and intense competition. The company has been facing significant financial pressure in recent years, with declining revenues and negative profit margins. While the company has a moderate liquidity, its high debt level is a concern. It is important to keep an eye on the company's financial performance and the overall state of the wind energy industry before making any investment decision.