Solar Stocks in Focus: Consolidation Spells Opportunity (CSIQ, SEDG, GSFI, SOL, SPWR, RUN, ARRY, JKS)

Solar energy stocks have been consolidating over recent months, potentially providing a value opportunity for market participants looking to allocate new capital to names like Canadian Solar Inc. (NASDAQ:CSIQ), Solaredge Technologies Inc (NASDAQ:SEDG), Green Stream Holdings Inc (OTC US:GSFI), ReneSola Ltd. (NYSE:SOL), SunPower Corporation (NASDAQ:SPWR), Sunrun Inc (NASDAQ:RUN), Array Technologies Inc (NASDAQ:ARRY), and JinkoSolar Holding Co., Ltd (NYSE:JKS).

The solar energy industry had a breakout year in 2020 in the developed world, setting new records for expansion in places like the US market, despite the carnage of the pandemic recession.

That’s an important data point because it suggests the growing tide of capital flowing into the space is robust and unwavering, and independent of the short-term debt cycle or the business cycle. In other words, it isn’t slowing down even when people are at their least speculative up and down the funding chain.

That’s important because it derisks the structural investment thesis in the space, clearing the way for more conservative fund managers to up their exposure. We take that kind of dynamic very seriously, especially when a space with a solid long-term thesis is pulling back and consolidating on the longer-term charts.

With that in mind, we take a closer look below to some of the more interesting stocks and stories defining the solar space.

Canadian Solar Inc. (NASDAQ:CSIQ) is one of the best executers in the solar space, quarter in and quarter out. The management team is frequently lauded as one of the best in the business. 

The company engages in the manufacture of solar photovoltaic modules and provides solar energy solutions. It operates through the Module and System Solutions (MSS) and Energy segments. The MSS segment involves in the design, development, manufacture, and sales of solar power products and solar system kits, and operation and maintenance services. The Energy segment comprises primarily of the development and sale of solar projects, operating solar power projects and the sale of electricity. 

Canadian Solar Inc. (NASDAQ:CSIQ) recently announced it has signed a 10-year power purchase agreement (PPA) with Centrica Energy Trading A/S for two solar power projects totaling 12 MWp in Italy. Centrica Energy Trading is a leading provider of energy management and optimization services, operating in power, gas and energy certificate markets across Europe.

Dr. Shawn Qu, Chairman and CEO of Canadian Solar commented, “I am proud to announce our second 12 MWp PPA in Italy in less than 2 months. The two solar projects signed with Centrica are part of a 1.3 GWp portfolio of subsidy-free solar assets we are developing in Italy, with various counterparties, as we execute on our portfolio management strategy and expand our presence in this market. We are proud to work on this opportunity with Centrica, one of the leading energy traders in Europe, and look forward to collaborating further.”

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 CSIQ shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -8% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities. 

Canadian Solar Inc. (NASDAQ:CSIQ) managed to rope in revenues totaling $1.1B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 31.9%, 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 $3.9B, respectively).

 

Solaredge Technologies Inc (NASDAQ:SEDG) is a solar play working to provide inverter solutions. The firm operates through its Solar and All Other segments.

The Solar segment includes the design, development, manufacturing, and sales of an inverter solution designed to maximize power generation. The All Other segment includes the design, development, manufacturing and sales of UPS products, energy storage products, e-Mobility products, and automated machines. Its products and services include photovoltaic inverters, power optimizers, photovoltaic monitoring, software tools, and electric vehicle chargers. 

Solaredge Technologies Inc (NASDAQ:SEDG) most recently announced its financial results for the first quarter ended March 31, 2021, including news of revenues of $405.5 million, revenues from solar products of $376.4 million, GAAP gross margin of 34.5%, GAAP gross margin from sale of solar products of 38.3%, and Record non-GAAP gross margin from sale of solar products of 39.7%.

“We are happy to report our first quarter results, representing continued growth in our solar business across geographies and segments,” said Zvi Lando, CEO of SolarEdge. “We are particularly pleased with our operational performance this quarter, which will enable us to meet the continued increase in demand for our residential and commercial products worldwide. This quarter, we also began delivering full powertrain kits for the e-Mobility sector in Europe in line with our growth strategy beyond solar.”

Even in light of this news, SEDG has had a rough past week of trading action, with shares sinking something like -12% 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. 

Solaredge Technologies Inc (NASDAQ:SEDG) managed to rope in revenues totaling $405.5M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of -6%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($870.4M against $397.7M).

 

Green Stream Holdings Inc (OTC US:GSFI) is particularly interesting as an emerging player in the solar space because it has a disruptive model – unique in being a publicly traded name in the “community solar” application – and because it has yet to really blossom in terms of energy and excitement from the retail market participant side of the equation despite the fact that it has a strong model and narrative well placed to excite the millennial/zoomer Robinhood/Reddit mentality so defining to this bull market at this point.

In short, GSFI 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. The company 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 (OTC US:GSFI) recently announced has been contracted to transform the campus of Christ the King High School in Queens, NY, to include its car ports, roadways and sidewalks, with 1.53 megawatts, generating a socially conscious profit stream for the Company with a project that will have impactful benefit to the school and surrounding community.

The Queens school is well-known for its basketball program, which has won several championships in the last 10 years. Notable alumni include former NBA players Lamar Odom and Jayson Williams, and current WNBA stars Sue Bird and Tina Charles. The school received new basketball gear and a complete locker room upgrade donated by iconic NBA star LeBron James in 2018.

CEO James DiPrima states, “We are honored to have the opportunity to work with the State of New York in such an important and impactful initiative. This accomplishes so many things at once in terms of benefit to the school, the community and, ultimately, the planet, in line with the advent of an unprecedented increase in such programs. We’re thrilled to offer shareholders an additional revenue stream alongside a burgeoning increase in opportunities for Green Stream in the tri-state area and beyond.”

The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 3% in that timeframe. 

Green Stream Holdings Inc (OTC US:GSFI) had no reported sales in its last quarterly financial data. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($,-0 against $1.1M).

 

ReneSola Ltd. (NYSE:SOL) engages in the manufacture of solar wafers and modules. It operates through the following segments: Wafer, Cell and Module, and Solar Power Projects. 

The Wafer segment includes manufacture and sales of monocrystalline and multicrystalline solar wafers and processing services. The Cell and Module segment involves in the manufacture and sale of PV cells and modules. The Solar Power Projects segment offers solar power project development, EPC services, and electricity. 

ReneSola Ltd. (NYSE:SOL) recently announced the closing of the sale of a 38 MW portfolio of solar projects located in Poland to Obton, a leading international solar investment company headquartered in Aarhus, Denmark.

Mr. Josef Kastner, CEO of ReneSola Power European Region, commented, “We are thrilled to once again work with Obton to complete this transaction, and we look forward to collaborating in the near future. Importantly, we have worked diligently to execute on our strategy and optimize our solar assets through strategic sales. I am proud of our team’s achievement!”

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 SOL shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -13% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities. 

ReneSola Ltd. (NYSE:SOL) managed to rope in revenues totaling $22.8M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 7.6%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($301M against $51.1M).

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