According to the companies, they will benefit from annual cost synergies of $90 million once the acquisition is complete. Lynn Jurich, co-founder and CEO of Sunrun, said this about the deal:
“This transaction will increase our scale and grow our energy services network to help replace centralized, polluting power plants and accelerate the transition to a 100% clean energy future.”
All parties say the deal should close in the fourth quarter.
Since July 7, when the deal was announced, both Sunrun and Vivint stocks are up more than 70%. Over the same stretch, the S&P 500 inched up just a few percentage points.
Clearly, committing hours of research to find the most likely merger-and-acquisition (M&A) targets and betting on them can be a lucrative investment strategy. That is … if you’re right. Just as often, you end up with a dud.
A better investment strategy is finding and betting on the best companies within the biggest and fastest-moving megatrends.
If you do that consistently, you’re practically guaranteed market-beating returns. And if one of your picks finds itself with an M&A target on its back … well, that’s just gravy.
That’s what we do at my premium services — find the best companies in the biggest megatrends.
And time and time again, my subscribers are rewarded with triple-digit returns in just a matter of months.
Let’s check out one example that delivered 145% returns in less than nine months.
And while it didn’t even require an M&A boost, we did get a different kind of trigger that we couldn’t have possibly foreseen.
I’ll explain that in a minute …
Find the Trend … and Then the Stock
According to a recently released report from the Solar Energy Industries Association (SEIA) and Wood Mackenzie, the U.S. solar industry installed 3.6 gigawatts (GW) of new solar photovoltaic (PV) capacity in the first quarter of 2020.
In fact, over the first three months of the year, solar accounted for nearly 40% of all new power generation capacity added in the United States.
That’s the solar industry’s largest quarter ever.
Even with the novel coronavirus, SEIA and Wood Mackenzie forecast 33% overall growth this year due to utilities, which are expected to install more than 14 GW of new solar capacity in 2020.
Just imagine what this industry — and solar stocks — will look like once the coronavirus threat passes.
Solar is fast becoming the power-generation source of choice, and it could easily become the dominant source of electricity within the next 20 years.
The International Energy Agency anticipates global spending on solar power to total $4 trillion over the next two decades — or about $180 billion per year.
So there’s my megatrend…
And I’ve long thought Daqo New Energy (NYSE:DQ), a leading manufacturer of high-purity polysilicon for the global solar photovoltaic (PV) industry, was one of the best companies in that sector.
So last Oct. 23, I recommended that members of The Speculator buy stock in Daqo, a leading manufacturer of high-purity polysilicon for the global solar photovoltaic industry.
Daqo is a low-cost giant of the PV industry that, at the time, was on track to double its production early this year.
The company was to report its third-quarter earnings on Nov. 5. That report was not likely to show any meaningful strength because the new production had not yet come online. In fact, I believed that report would show some weakness.
Despite that risk, I recommended establishing a position right then and there.
Usually in The Speculator I recommend options plays. Unfortunately, option prices on Daqo at the time were much higher than I liked. So I suggested a straight buy of the stock instead. At its then depressed price, I thought the stock was trading at option-like levels.
If the company doubled production as planned, and silicon prices merely stabilized, I thought DQ stock could double over the next 12 months.
And I was right — and way ahead of schedule!
Take a look …
A ‘Flawless’ Performance From DQ Stock
Based on Daqo’s most recent earnings report, the company is performing as flawlessly as I thought it would when I recommended it last October.
Daqo showed itself to be solidifying its position as a premier, low-cost provider of polysilicon to the global solar industry.
The company accounts for about 15% of the global supply and is operating at full capacity. So it is well-positioned to “mint money” in a stable pricing environment. Daqo is predicting exactly that. It is looking for polysilicon prices to recover from the recent Covid-19 crisis lows and to strengthen throughout the rest of this year.
That’s why the stock had been steadily rising since its recent lows in March.
However, that rosy scenario was far from certain. So to err on the side of prudence, I recommended Speculator members trim their DQ stock position by selling half of it for a gain of 112%.
Then, just this Monday morning, Daqo went on an absolute tear — soaring well over 20% in just a few hours.
What was going on wasn’t clear yet … so we rung the register and closed out the second half of our Oct. 23 trade for 178% returns.
That’s a total return of 145% in just nine months … truly option-like returns.
Turns out, Daqo leaped to a new record high Monday morning after a factory explosion in China damaged operations of a key rival.
According to Bloomberg, the damage reduces the global supply of polysilicon by about 10%. Obviously, that’s good news for DQ stock — and a trigger for its share price – which now has a grip on a product whose supply was already lean.
You can see the power of investing in great stocks in huge megatrends — and then having a little bit of luck go your way … whether it’s an M&A deal or an industrial accident that hurts your rival.
You can’t plan for luck like that. But you can set yourself up for it.
P.S. Something remarkable happened to me recently while I was visiting America’s richest ZIP code. (It’s located far from Manhattan, Palm Beach and Beverly Hills.) First, someone smashed our car windows — and stole thousands of dollars’ worth of video equipment.
But the good news is that, while there, I found what I think could be my next 1,000% winner. (I’ve already found 40-plus 1,000% or higher stock market winners.) And today I’m giving away the name and ticker symbol of this company for free here.
Eric Fry is an award-winning stock picker with numerous “10-bagger” calls — in good markets AND bad. How? By finding potent global megatrends… before they take off. And when it comes to bear markets, you’ll want to have his “blueprint” in hand before stocks go south. Eric does not own the aforementioned securities.