Many of the tailwinds that drove renewable energy stocks higher in 2020 continue to prevail in 2021. Low interest rates, favorable government policies, cost reductions, new investments, and investments from established companies looking to diversify their revenue streams are some of the key growth drivers paving a long runway for renewables. Leading solar energy stocks had a big run in 2020, but many could be overpriced at this time. However, there's value in big-name wind energy stocks and smaller companies as well. TPI Composites (NASDAQ: TPIC) is a pure-play wind energy company that may be worth adding to your portfolio. Here's why. Image source: Getty Images. An established business TPI is the leading independent manufacturer of composite wind turbine blades. Despite just a $2.2 billion market capitalization, it accounted for 18% of 2019 onshore wind turbine blade sales on a MW-basis. MW-basis is a more accurate description of power generation potential than simply adding up the number of blades sold since some blades generate more power than others. TPI was founded over 50 years ago as a sail and powerboat manufacturer. It wasn't until 1999 that it refocused its business on the wind turbine market. Today, its customers are large original equipment manufacturers (OEMs) and power generation companies like Vestas, GE, Nordex, Siemens, Enercon, and others. Together, these companies supply 87% of the global wind energy market (excluding China). Because of the complicated logistics of wind energy projects, TPI fills the role of supplying turbines to these manufacturers when they lack the resources to do so or it's simply cheaper to go with TPI. TPI's long-term supply agreements have minimum volumes, discounts for higher volumes, and extend over several years -- providing TPI with predictable revenue streams. Minimal annual volume commitments protect TPI from downside risks. And because its customers save based on the more blades they buy, TPI incentivizes its existing customers to spend more money. Image source: Getty Images. Growth drivers Although based in Arizona, TPI generated 88% of 2019 net sales from international operations, up from 84% in 2018 and 80% in 2017. The reason for this is because a lot of TPI's customers are non-U.S. companies. But TPI isn't building manufacturing facilities in regions just because they have attractive growth drivers. It's taking it a step further by making sure it can partner with at least one of its established customers, thereby locking in predictable revenue and forming a foundation in a new marketplace. A little research shows that all of TPI's manufacturing facilities are centered around long-term service agreements from its core customers. Region Year Established Facility Type Major Customers Rhode Island Early 2000s Research and Development Proterra, Navistar, Workhorse Group China 2007 Manufacturing Vestas, Nordex, Siemens Gamesa, ENERCON Iowa 2008 Manufacturing GE Wind, Proterra Turkey 2012 Manufacturing Vestas, Nordex, Siemens Gamesa, ENERCON Mexico 2014 Manufacturing Vestas, GE Wind, Nordex, Siemens Gamesa, ENERCON Denmark 2018 Technical and engineering support services Germany 2019 Engineering center India 2020 Manufacturing Vestas Data source: TPI Composites 2019 annual report Although 96% of TPI's business is blade and precision molding and assembly, it does have a growing transportation business. In November 2017, TPI signed a five-year agreement with Proterra to supply composite bus bodies. In February 2018, it signed an agreement with Navistar to develop a tractor cab. And in 2019, it agreed to develop a composite body prototype for electric vehicle company Workhorse Group. TPI invested $11.5 billion into its Rhode Island facility to pilot composite body styles for the electric vehicle market. TPIC Revenue (Quarterly) data by YCharts In terms of its overall numbers, TPI grew its trailing 12-month (TTM) revenue by just shy of 150% over the last five years.It's guiding for $445 million in revenue in the fourth quarter of 2020, which would be a 15% increase over 2019 sales. This is less than the 40% growth rate the company experienced from 2018 to 2019 but still impressive considering the challenges of the COVID-19 pandemic. Balance sheet Building new manufacturing facilities could help TPI grow its business over the long term. But in the short term, it has lead to a surge in spending. Between 2016 and 2019, revenue nearly doubled and capital expenditures increased over 140%. The result has been negative free cash flow (FCF) and higher debt. However, management expects that it can use its scale to drive down costs over the long term as well as grow revenue. Simply put, TPI's rapid growth is driving up costs and hurting its FCF. The good news is that the company has less than $100 million in net debt. Its financial leverage, as measured by debt to equity, remains low despite increased spending and higher debt. TPIC Financial Debt to Equity (Quarterly) data by YCharts Valuation Given its growth, TPI Composites has a low price-to-sales (P/S) ratio at just 1.4 -- which is lower than some of its much larger, slower-growing customers. TPIC PS Ratio data by YCharts Concerns TPI notched record quarterly profit in the third quarter of 2020, but this was helped by income tax benefits and subsidies. TPI needs to prove it can become profitable, stay profitable, and increase profitability without external benefits. Another big risk for TPI is that GE Wind acquired LM Wind Power in 2017, which was TPI's largest competitor. TPI estimates that GE will rely on LM for services that used to be provided by TPI. TPI's contracts with GE only extend to 2022, so TPI is forecasting a decrease in its sales to GE after 2022. This is a pretty major concern considering that GE is one of TPI's largest customers. Takeaways TPI Composites has a market-leading position in a growing industry. It continues to post solid growth as its core customers renew and expand their long-term service agreements. TPI is trading at a very reasonable P/S ratio and has a strong balance sheet. It has ramped spending considerably over the last few years, which should help it tap into new growth markets, gain new customers, and ultimately succeed even with the anticipated decline in sales to GE. Unlike industrial conglomerates and utilities, TPI gives investors concentrated exposure to wind energy and looks to be the best pure-play wind energy stock on the market today. 10 stocks we like better than TPI CompositesWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and TPI Composites wasn't one of them! That's right -- they think these 10 stocks are even better buys. See the 10 stocks *Stock Advisor returns as of November 20, 2020 Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool recommends TPI Composites. The Motley Fool has a disclosure policy.Source