Energy
3 Stocks to Benefit From Fast Growing Global Solar Power Demand in 2015
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If any sector was smashed in the early October sell-off, it was the solar stocks. High growth usually equals high beta, and some of the best stocks and companies in the industry were down as much as 40%. A research note from Deutsche Bank reports that data points from the largest solar industry trade-show in the United States (Solar Power International) support the firm’s view that the global demand and supply environment will continue to improve in 2015 and could drive stock prices significantly higher.
The analysts focused on three stocks to buy on any potential weakness. All of them are rated Buy.
Trina Solar Ltd. (NYSE: TSL) is China’s largest profitable panel manufacturer and is a global leader in photovoltaic (PV) modules, solutions and services, as well as a top company based in China for investors to consider. Founded in 1997 as a PV system integrator, Trina Solar today drives smart energy together with installers, distributors, utilities and developers worldwide. The company announced just last week that it will sell its 10.6-megawatt photovoltaic power plant to funds managed by Foresight Group. Located at Trehawke in the United Kingdom, this utility-scale solar power plant is the first of two U.K. projects under Trina Solar that were connected to the grid during the first quarter of 2014.
The Deutsche Bank price target is $15. The Thomson/First Call consensus estimate is much higher at $18.49. Shares closed Thursday at $10.18.
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SolarCity Corp. (NASDAQ: SCTY) is a pure-play leader in the fast-growth, roof-top solar as a service market. With many long-term contracts providing visibility into future cash flows, the company is a top name for risk-tolerant investors to own. The company recently announced the first registered public offering of solar bonds for retail investors in the country. This latest announcement is aimed to provide the company with an opportunity to participate in the growing and transforming U.S. energy landscape as it had previously issued solar bonds exclusively for financial institutions and corporations.
Deutsche Bank has a gigantic $90 price target for the stock. The consensus number is huge as well at $89.40. SolarCity closed Thursday at $54.10. A move to the aggressive Deutsche Bank target would be a large 67% gain for shareholders.
SunEdison Inc. (NYSE: SUNE) is rated a top pick at Deutsche Bank and the stock, which was absolutely pounded in the sell-off, got a big boost this week when hedge fund legend David Einhorn of Greenlight Capital talked his book and said the stock remains a huge fund holding. The company announced Thursday that it had closed on construction financing to construct the 26 megawatt (MW) DC Vega solar power plant located in Merced County, Calif. The plant is designed to generate enough electricity to power over 3,500 homes per year. According to the EPA Greenhouse Gas Equivalencies Calculator, the Vega plant will offset the CO2 emissions of over 41 million pounds of coal annually.
The Deutsche Bank price target is $30, and the consensus target is $26.64. The stock closed Thursday at $18.69 a share.
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While always an aggressive trade, these are three of the top stocks in the sector, and could provide massive growth for long-term investors that are tolerant of the high volatility in the solar energy world.
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