Bright Outlook for SUNE Stock
The upward momentum just keeps going for SunEdison, Inc. (NYSE:SUNE). After a huge jump earlier last week, SunEdison’s stock price continued to climb. Even the first rate hike by the U.S. Federal Reserve in seven years did not cool down the heat in this renewable energy company. On Monday, December 21, at around 2:00 p.m., SUNE stock was up another two percent to $6.62. After some gruesome losses earlier in the year, could this be the beginning of a new era for SunEdison?
New Era for Renewable Energy Companies
Last week was nothing less than phenomenal for solar stocks. The first bull factor came from results of the United Nations COP 21 summit in Paris, where 196 countries signed an agreement to limit the rise in global mean temperatures to two degrees Celsius (3.6 degrees Fahrenheit) by the end of the century. Every country also agreed to come up with a carbon reduction plan and renew it every five years. Moreover, rich countries will provide $100 billion a year in climate financing for developing countries by 2020, with a commitment to further finance in the future. (Source: “2 Degrees, $100 Billion: The World Climate Agreement, By The Numbers,” NPR.org, December 12, 2015.)
Sure, results from the Paris conference might not seem concrete enough, but then on Tuesday, the U.S. congress reached a deal to extend a 30% federal tax credit for those that install renewable energy systems in their homes and offices. And on Friday, both the U.S. House of Representatives and the U.S. Senate passed the omnibus spending bill, which includes the extension on subsidies to renewable energy.
As a renewable energy company, SunEdison’s stock price skyrocketed. In just 10 days, SUNE stock price has climbed more than 95%!
Chart courtesy of www.StockCharts.com
Other than a boost from the government, there are other drivers for SUNE stock’s future growth. In November, the company struck a deal with the San Diego government to quadruple the number of solar power installations in the city. (Source: “San Diego Ramping up Solar Power,” The San Diego Union Tribune, November 2, 2015.)
Also in November, Bloomberg entered into a power purchase agreement with SunEdison. The solar company is going to power Bloomberg’s New York-based data center with 2.9 megawatts of solar energy. (Source: “Bloomberg to Power New York Data Center with 2.9 Megawatts of SunEdison Solar,” SunEdison, Inc., November 2, 2015.)
In addition, SunEdison just received its first commercial large-scale grid-connected energy storage project. On December 10, the company announced that it has signed a 10-year agreement with Ontario’s Independent Electricity System Operator to supply five megawatts—20 megawatt-hours—of battery storage to the province in Canada. The project is expected to start in the first half of 2017 and be completed in the following year. (Source: “Ontario IESO Contracts for Large Scale Flow Battery Storage with SunEdison,” SunEdison, Inc., December 10, 2015.)
Analysts are also starting to become bullish on SUNE stock. Last Thursday, FBR Capital initiated coverage of SunEdison with an “Outperform” rating. Moreover, the brokerage firm has set a price target of $10.50, which is more than 58% higher compared to today’s price. (Source: “SunEdison is Initiated by FBR Capital to Outperform, Price Target at $10.50,” Money Flow Index, December 21, 2015.)
The Bottom Line on SUNE Stock
Globally, countries are becoming more interested in renewable energy after the Paris conference. With the passing of the omnibus spending bill in the U.S., wind and solar adoption will likely increase in the next few years and the SUNE stock price could see more upside potential.