Navigating the Solar Stock Shakeout (FSLR, SPWR, GSFI, CSIQ)

The big answer is “ESG”, which stands for “Environmental, Social, and Governance”. The ESG movement is a defining aspect of the business economy now and will be for the long-term.

The upshot is that companies now file ESG reports to show how they are working to reduce their carbon footprints and make a positive contribution to society. While it extends well beyond environmental issues, the green movement is an enormous piece of the ESG puzzle.

In fact, it is estimated that as much as $68 trillion may be invested according to ESG proficiency over the coming decade as millennials and gen-z-ers inherit wealth from their parents and grandparents and mobilize in investable asset markets.

Solar energy stocks stand to be in the uppermost echelon of the biggest beneficiaries of this movement. In recent days, the rip in interest rates has helped to drive a shakeout pullback in solar names might offer investors an interesting opportunity to get involved.

With that in mind, we take a look at some of the most interesting names in the space, including: First Solar Inc (NASDAQ:FSLR), SunPower Corporation (NASDAQ:SPWR), Green Stream Holdings Inc (OTCMKTS:GSFI), and Canadian Solar Inc (NASDAQ:CSIQ).

First Solar Inc (NASDAQ:FSLR) frames itself as a supplier of PV solar modules. In fact, it identifies itself as the world’s largest thin-film PV solar module manufacturer and one of the world’s largest PV solar module manufacturers.

The company’s integrated power plant solutions deliver an economically attractive alternative to fossil-fuel electricity generation. First Solar’s thin-film technology is cheaper to make and generates more solar electricity than a number of its competitors.

First Solar Inc (NASDAQ:FSLR) recently announced that it has entered into a Purchase and Sale Agreement with Leeward Renewable Energy Development, LLC pursuant to which Leeward will acquire from First Solar a utility-scale solar project platform of approximately 10 gigawatts (GW)AC. The transaction is expected to close in the first quarter of 2021, after obtaining regulatory approvals and satisfying customary closing conditions.

According to the release, Leeward is a portfolio company of OMERS Infrastructure, an investment arm of OMERS, one of Canada’s largest defined benefit pension plans. Upon closing of the transaction, Leeward will acquire the US project platform, which includes the Rabbitbrush, Madison, Oak Trail, Horizon, and Ridgely projects that are expected to commence construction in the next two years, as well as the 30 MWAC Barilla Solar project, which is operational. First Solar will retain 1.1 GWAC of projects in the US that are expected to be sold separately. Key members of the First Solar project development team are also expected to join Leeward upon closing.

While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action FSLR shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -12% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -17%.

First Solar, Inc. (NASDAQ:FSLR) managed to rope in revenues totaling $927.6M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 69.6%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($1.6B against $731.1M).

SunPower Corporation (NASDAQ:SPWR) operates through three segments: Residential, Commercial, and Power Plant. The company provides solar power components, including panels and system components, primarily to dealers, system integrators, and distributors.

SPWR also offers commercial rooftop and ground-mounted solar power systems, and residential mounting systems, as well as utility-scale photovoltaic power plants. In addition, the company provides post-installation operations and maintenance services.

SunPower Corporation (NASDAQ:SPWR) recently announced the new mySunPower app, the company’s new experience for homeowners to review and manage their energy generation, consumption, and battery storage settings from a mobile device.

According to the release, the new mySunPower app for monitoring will be available for download for SunPower Equinox customers on Feb. 16 on the Apple App Store and Google Play and will be available to all of SunPower’s 285,000 monitoring customers by spring 2021.

While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action SPWR shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -24% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities.

SunPower Corporation (NASDAQ:SPWR) managed to rope in revenues totaling $341.8M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of -43.3%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($238.3M against $529.7M, respectively).

Green Stream Holdings Inc (OTCMKTS:GSFI) is a more speculative name in the space, but has engineered a unique and intriguing model that could shake up the space to the benefit of its shareholders provided that the execution comes together effectively. The Company targets commercial property owners with a surplus of rooftop or sky-facing square footage space for installation of photovoltaic systems to harness energy access at prices outcompeting local utility pricing.

GSFI uses solar power purchase agreements (PPAs) or equipment leasing arrangements with the property owners, and benefits from marginal efficiencies as well as various federal or state tax credits, regulatory agency rebates, and long-term revenue streams generated from the sale of the harnessed electricity.

Green Stream Holdings Inc (OTCMKTS:GSFI) most recently announced key updates on its flagship project site 160 Imlay Street in Brooklyn, NY. According to the release, the Company has officially completed its structural engineering for the 160 Imlay Street Project and has submitted its application to integrate its solar and photovoltaic initiatives with conEd’s powerful electric distribution grid.

As noted by the company, Con Edison provides electric services to 3.2 million customers in New York City and portions of Westchester County. Electricity is delivered through approximately 94,000 miles of underground cable, and almost 37,000 miles of overhead cable.

The stock has suffered a bit of late, with shares of GSFI taking a hit in recent action, down about -28% over the past week. But that action comes in the context of its massive upward trend, which has still seen gains for shareholders of over 200% in the past two months.

Green Stream Holdings Inc (OTCMKTS:GSFI) has yet to begin booking revenues, but the company has put in place a fertile pathway to potential strong results in the future given its positioning and range of projects in one of the most promising market spaces for investors over coming years.

Canadian Solar Inc (NASDAQ:CSIQ) promulgates itself as one of the world’s largest solar technology and renewable energy companies. It is a leading manufacturer of solar photovoltaic modules, provider of solar energy and battery storage solutions, and developer of utility-scale solar power and battery storage projects with a geographically diversified pipeline in various stages of development.

Over the past 19 years, Canadian Solar has successfully delivered over 49 GW of premium-quality, solar photovoltaic modules to customers in over 150 countries. Likewise, since entering the project development business in 2010, Canadian Solar has developed, built and connected over 5.6 GWp in over 20 countries across the world.

Canadian Solar Inc (NASDAQ:CSIQ) most recently announced today the successful close of the Japan Green Infrastructure Fund. Canadian Solar will partner with Macquarie Advisory & Capital Solutions, the advisory and capital markets arm of the Macquarie Group (ASX:MQG). Macquarie is both the financial advisor and a minority investor in the Fund.

Dr. Shawn Qu, Chairman and CEO of Canadian Solar, commented, “We are pleased to partner with Macquarie and other long-term investors to launch this new development fund. JGIF’s more dedicated capital pool will further boost our competitiveness in developing clean, sustainable and high-quality solar energy projects in Japan, leveraging our strong track record both as one of the largest solar developers in the country and as the sponsor of the Canadian Solar Infrastructure Fund. Meanwhile, we expect to deliver attractive and stable returns to our long-term capital partners, including insurance companies and asset managers, who are searching for yield and looking to deploy capital to advance the clean energy transition.”

Even in light of this news, CSIQ has had a rough past week of trading action, with shares sinking something like -20% in that time. That said, chart support is nearby, and we may be in the process of constructing a nice setup for some movement back the other way.

Canadian Solar Inc (NASDAQ:CSIQ) managed to rope in revenues totaling $914.4M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 20.3%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($1.5B against $3.2B, respectively).

 

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Published by Steve Hackney

Steve Hackney is a corporate finance professional with over 14 years of experience in cash management and investing. He earned a Bachelor of Science in Finance from Florida State University and holds a Certified Treasury Professional certification. Steve lives in Orlando, Florida with his family.