After years of cheap natural gas eating photovoltaic’s lunch, solar stocks are back with a vengeance. Already, we’ve seen better earnings from a host of hot solar stocks like First Solar (FSLR) and Canadian Solar (CSIQ). And now, its smaller solar stock ReneSola’s turn (SOL) … and SOL stock may just surprise investors.
That’s because SOL has been undergoing a transformation over the last few quarters. Switching gears, SOL stock is now more than just a wafer play and continues to ship more solar modules to larger scale projects. That newfound focus could put SOL stock into the upper echelon of solar stocks when it announces earnings on Dec. 5.
Positive Tailwinds For SOL Stock
Solar stocks have been building on positive momentum in the sector … and SOL stock shouldn’t be any different. While SOL has reported some pretty volatile earnings in its short history, it did improve earnings year-over-year in the recent quarter. In fact, ReneSola saw a 40% jump in earnings per share of SOL stock in Q2.
The reason? SOL stock has been shifting towards being a more balanced solar provider.
Like FSLR, CSIQ and JinkoSolar (JKS), ReneSola has moved beyond its original focus of creating just wafers. That means SOL stock investors are now betting on one of the more integrated solar stocks … and one that has grown to become a strong module shipper over the last few years. That includes outsourcing modules to nations like India, South Africa and Poland. SOL has done well in this regard and has been catching up to sizzling solar stocks like Yingli Green Energy (YGE).
Data provided by IHS (IHS) show that ReneSola merchant shipments more than tripled in the first six months of 2013 when compared to the first half of 2012 — something that should obviously have SOL stock investors smiling. More importantly, that’s something other solar stocks have not yet done.
Those pre-sells are going into a wide range of projects, too — both residential and commercial. That’s even more good news for fans of solar stocks overall and SOL stock in particular.
While ReneSola doesn’t build and operate massive solar farms like solar stocks FSLR and SunPower (SPWR), its modules are becoming the choice for smaller independent power producers due to their efficiency and price. That’s given SOL stock an edge on other solar stocks, too. Recent projects for SOL include supplying 2 MW of solar modules to the Uenohara-shi solar farm in Japan and 1 MW worth of modules to Hecate Energy for a project in Georgia.
These increasing module sales and the shift towards becoming a more balanced company should help ReneSola turn the tide of its losing earnings streak … and help SOL stock keep climbing. Already, we’ve seen many solar stocks report better-than-expected profits and ReneSola’s situation may finally moving into the positive direction.
SOL Stock Is Improving … and Cheap
Like many of the solar stocks, SOL hasn’t reported a profit in many quarters. The last time for ReneSola was actually back in 2011. And that trend could continue this quarter and for the full year of 2013. SOL stock analysts still expect ReneSola — one of the last solar stocks to report — to lose 22 cents a share for the third quarter.
However, the name of the game for SOL stock is improvement.
Last fiscal year, ReneSola reported a full year loss of $2.80 per share of SOL stock. This year, analysts expect a vast improvement to just a $1 in losses per share. While it won’t be profitable just yet, SOL is getting there. Increased demand for its solar modules in 2014 should help SOL stock follow other profitable solar stocks into the black next year.
In the meantime, shares of SOL stock are still cheap when compared to other premier solar stocks like FSLR stock and CSIQ stock. The price-to-book ratio for SOL stock is only 1.3, while its quarterly revenue growth is pretty enviable.
Overall, ReneSola could represent an interesting turnaround story in the booming solar stocks sector. For investors, picking up shares of SOL stock after its reports earnings could translate in gains in the New Year as ReneSola continues to sell more modules.
SOL stock investors should just be prepared that the earnings ride could be a bit bumpy in the next few quarters.
As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.