Bargain hunters circling the solar stock space have no doubt spotted SunEdison Inc (SUNE). The renewable energy company sticks out like a sore thumb. A nasty, gangrened one that stinks to high heaven.
With a $2 price tag, SUNE stock is beckoning to cheapskates all over the street to come and try their hand at the age-old game of knife catching.
Run, don’t walk away from SunEdison. If you need more convincing check out the following three reasons why you shouldn’t touch SUNE right now.
SUNE Stock a Disease on a Portfolio
First, the price action in SUNE stock is utterly horrendous. You don’t have to sip from the fountain of fundamentals to know SunEdison sucks. That fact is being broadcast loud and clear by the technicals, thank you very much.
Over the past year, SunEdison has morphed from darling to devil. Since peaking at $33.45 last July the stock has fallen to $2, a drop — nay, a slaying — of 94%. That’s not a bear market, it’s a death spiral taking the once-shining stock to the graveyard.
I’ve scoured the chart of SUNE and can’t find a shred of bullishness. I see zero reason to buy here.
Second, if you’re interested in the solar space, why oh why would you go with the dullest stock in the group? Have you no appreciation for relative strength, buying winners or embracing the best of breed?
Virtually every other solar stock is shining brighter than SUNE. Take a look at First Solar, Inc. (FSLR), SunPower Corporation (SPWR) or Canadian Solar (CSIQ). No need to relegate yourself to the trash. Even if SUNE stock doesn’t eventually crumble to zero, that doesn’t mean it can’t be dead money for months on end.
The third and final reason is an expansion of the prior one. Were we to expand our universe of investment choices to, well, the entire investing universe, the number of plays that look superior to SUNE is legion.
I mean seriously. You have a finite amount of capital and time. Do you really want to devote it to this stock? Aside from the fact that the stock is low priced, what do the bulls have to go on here? Nada, Zip, Zilch. Throw a dart at the S&P 500 and you’ll find something that looks better.
If you’re hell-bent on playing the lottery with SUNE, fine. But, please, wait for at least some signs of a turnaround — and we’re not talking about one strong up day. No doubt the stock will be littered with sharp rips and flips in the near future. I’m talking about a bona fide uptrend taking root. Signs that the tides have turned and the crowds are loving SUNE anew.
Until then, steer clear of this murder hole.
At the time of this writing Tyler Craig had no positions in any of the aforementioned securities.
