More Upside for CSIQ Stock?
Solar energy is the future. At least that is what appears to be the case if you trust Elon Musk, the CEO of Tesla Motors Inc (NASDAQ:TSLA), after the company’s acquisition of SolarCity Corp (NASDAQ:SCTY), which I will discuss tomorrow. The solar industry has been under some turmoil after the collapse of Sunedison Inc (OTCMKTS:SUNEQ). However, I like the solar sector, specifically Canadian Solar Inc. (NASDAQ:CSIQ) stock.
Canadian Solar may be based out of Canada, but the company is one of the best solar plays with operations in 20 countries and sales to over 90 countries.
My bullish thesis is based on the premise that alternative energy, especially solar power, will continue to be a market leader going forward. Unlike wind and hydropower, there is really no shortage of sun power, even on cloudy days.
Whether it’s for Fortune 500 companies, smaller companies, or even for your home, solar is a massive global business that’s in the tens of billions of dollars.
Yet due to intense competition and declining prices for solar power, we have seen an upheaval in the industry. With the restructuring, only the strong will survive.
That’s where Canadian Solar comes in, especially given the stock is off more than 50% from its 52-week high.
Chart courtesy of www.StockCharts.com
Fundamentals Support My Bullish Case
Canadian Solar has built a solid global business developing solar photovoltaic (PV) modules for both commercial and residential use. The size of the solutions ranges from a small home application to major projects that can generate in excess of one gigawatt (GW) of power, or about one billion watts, which is sufficient to power hundreds of thousands of homes.
Canadian Solar is working on numerous ongoing big projects with a current pipeline of projects with power production of about 10.3 GW.
Canadian Solar has seen its revenue rise in two straight years to a record $3.47 billion in 2015. The company expects minor softness this year, but predicts a rally of 1.4% to $3.25 billion in 2017, according to Thomson Financial.
The company returns profits to investors and has consistently beaten the consensus earnings-per-share (EPS) estimates in five straight quarters by an average of more than 90%.
The near term for CSIQ stock is uncertain but the longer term is encouraging if the company can deliver on its growth.
On the chart, should CSIQ stock retrace its 200-day moving average, we could then see a rally back toward $30.00 and above.
Ultimately, the steady global push to a greener climate will be the catalyst to drive up the solar segment and companies like Canadian Solar.