Earn 13% Today or Buy NXT 40% Cheaper – It’s a Win-Win

At about $121.37 a share, Nextpower (NXT) is trading near its 52W high.

Do you think NXT stock is a good long-term bet at current levels? What about at a 40% discount at about $75 per share? If you think that is a steal, and have some cash ready to go, here is a trade.

13% annualized yield at 40% margin of safety, by selling Put Options.

• Sell a long-dated Put option expiring 1/15/2027, with a strike price of $75
• Collect roughly $660 in premium per contract (each contract represents 100 shares)
• That’s about 9.4% annualized yield on the $7,500 you’re setting aside for the possibility of buying the stock
• This cash parked in a savings or money market account will earn an extra 4.0%, taking total yield to 13.4%
• And you give yourself a chance to buy NXT stock at deep discounted price of $75

However, this is not the only stock strategy in town. Trefis High Quality Portfolio is a sophisticated framework designed to reduce stock-specific risk while giving upside exposure.

Possible Trade Outcomes: You Win Either Way

But to hold this trade with conviction, you want to see long term upside in the stock. Because if it comes to it, you want to be excited about buying the stock cheap.

First, you want fundamentals to check out. For details, see Buy or Sell NXT Stock or check Nextpower Investment Highlights

Second, you want to better understand competitive advantage and industry tailwinds.

Why Hold NXT Stock Long-Term

Nextpower is a durable market leader with a widening moat through vertical integration and high switching costs. The company is a direct beneficiary of the secular shift to renewable energy and electrification. Its fortress balance sheet allows for continued investment in R&D and strategic acquisitions to maintain its competitive edge. It is a critical supplier for the secular build-out of the world’s energy infrastructure.

Competitive Advantage

We classify NXT’s economic moat as WIDE, with the primary source being Switching Costs

• Maintained #1 global market share in solar trackers for a decade.
• Rebranding from a component supplier to an integrated energy technology platform with a connected ecosystem of hardware and software, increasing customer lock-in.
• Compliance with U.S. Inflation Reduction Act (IRA) domestic content requirements provides a 10% tax credit on entire project costs for customers, creating a significant pricing advantage and barrier for competitors.
• Strategic acquisitions have expanded product offerings to include robotics, AI-driven maintenance, and electrical components, further locking customers into its ecosystem.

See Nextpower Full Analysis.

Industry Tailwind

The industry tailwind is NEUTRAL, with CAGR projection of 8.4% (Allied Market Research)

Secular Trend: Global Energy Transition & Electrification
Key Risks: Regulatory changes to renewable energy incentives and patent infringement litigation.

Financial Guardrails

Cash Generation: Positive Free Cash Flow
Balance Sheet: Fortress-like balance sheet with over $845 million in cash, minimal to no debt, and a new $1 billion unsecured credit facility, indicating a very low risk of bankruptcy.

If you are not comfortable with options or stock-specific trades, Portfolios are the way to go as they can protect and grow wealth even better.

Portfolios Beat Stock Picking

Single stocks swing wildly but staying invested matters. A well built portfolio helps you stay invested, captures upside and softens the blows from individual stocks

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.