3 Solar Stocks to Warm Your Portfolio

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While oil prices have been cheered by American consumers, for the energy sector it hasn’t been such a great thing. Shares of energy stocks have plunged over the last few weeks as the lower price has been crimping margins and reducing drilling activity. But it’s not just hurting the drillers, oil service and fossil fuel producers.

Investing in Solar Stocks

It’s hurting solar stocks as well.

Since mid-summer, the uber-popular Guggenheim Solar ETF (TAN) — the go-to benchmark of solar stocks — has fallen by more than 20%. Traders and investors have abandoned solar stocks as the perception is that the two energy sources are competitors.

Lower oil costs means less users will turn solar power. However, that concept is actually false.

Solar and oil aren’t direct substitutes. Almost none of the world’s electricity generation comes from burning fuel oil any more. Oil is very much a transportation fuel and feedstock for various chemical products. Solar, on the other hand, is strictly a way to generate electricity. And while oil demand is falling, the need for more electricity continues to surge.

That means for investors looking for long term bargains, the fall in various solar stocks could be a huge opportunity to buy some assets on the cheap.

Here’s three solar stocks to buy today.

Solar Stocks To Buy Today #1: Canadian Solar Inc.

canadiansolarcsiq185Shares of Canadian Solar Inc. (CSIQ) have fallen by roughly 50% since hitting its 52-week high. That makes CSIQ an ideal pick for investors looking for solar stocks bargains. Also making it a huge buy is the fact that CSIQ has been quite successful in repositioning itself as a solar company.

CSIQ is no longer strictly affected by the commodity-like nature of solar panel pricing and module shipments. The firm has continued to beef up its solutions business. This includes utility-scale solar project development as well as related maintenance services.

Currently, CSIQ has a global pipeline of nearly 4.5 gigawatts (GW) worth of new solar facility projects in development across Japan, China, Brazil and the U.S. It’s been pretty successful at selling these completed projects to utilities and government to add solar into their energy mixes.

All in all, Canadian Solar has managed to grow its solutions/solar facility unit to 50% of revenue this year, up from 10% back in 2011.

This has driven cash flows and profits at the solar stock — causing CSIQ to have no net debt. Add in the firm’s price-to-earnings ratio of under 7 and you have a real solar stocks bargain to buy.

Solar Stocks To Buy Today #2: Sunedison Inc.

SunEdison 185When it comes to solar stocks, Sunedison Inc. (SUNE) is making all the right moves and is getting “lean and mean.”

During the middle chunk of the year, SUNE spun-out its regular semiconductor business as Sunedison Semiconductor Ltd. (SEMI). That has allowed SUNE the ability focus 100% of its energy on solar power. That focus has the firm plowing head first into a variety of solar subsectors.

Like CSIQ, SUNE now is looking to build out large scale utility-sized facilities as well as entering the potentially lucrative home solar installation market. This is in addition to its bread-and-butter modules business.

However, SUNE has an ace in the whole. It operates a lucrative YieldCo.

Similar to a MLP, SUNE’s YieldCo subsidiary — TerraForm Power Inc (TERP) — has allowed it raise some cheap cash for new projects. As Sunedison continues to drop-down new facilities into TERP, it’ll keep the good-times going. So much so, that analysts estimate that SUNE stock could be worth $40 per share as it continues to exploit the relationship with TERP.

Currently, SUNE stock can be had for $19 per share.

Solar Stocks To Buy Today #3: SolarCity Corp

solar city-logo-scty-stock-185Perhaps the hottest area for growth among the solar stocks is in the residential market. Higher costs for electricity has many America’s getting fed up and getting off the grid. Leading the way is residential rooftop solar installer SolarCity Corp. (SCTY).

SCTY continues to see its market share rise. Currently the firm has more than 168,000 customers and more than $4.1 billion in contracted payments. Those payments continue to provide nice cash flows and have been able to push expansion plans.

SCTY was the first company to raise money via so-called solar bonds. Yet, the potential is pretty limitless over the longer term. Less than 1% of total electricity generation in the U.S. is supplied by solar energy.

There’s plenty of homes and small business buildings that can add panels to their roofs.

As for SCTY shares, the recent rout in oil prices have caused the solar stock to plunge by around 40%. That could be a huge bargain considering that oil has bearing on electricity in the U.S. With analysts’ estimating that SCTY stock shares are worth in excess of $80 per share, the current $50 price tag could seem like a huge discount to intrinsic value.

For risk-tolerate investors, SCTY could be one of the best solar stocks to buy today.

 As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.

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Aaron Levitt is an investment journalist living in Ohio. With nearly two decades of experience, his work appears in several high-profile publications in both print and on the web. Also likes a good Reuben sandwich. Follow his picks and pans on Twitter at @AaronLevitt.


Article printed from InvestorPlace Media, https://investorplace.com/2014/12/three-solar-stocks-to-buy-today-csiq-sune-scty/.

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