People in India carrying out online stock trading in American stocks have something positive to look out for. Solar stocks are now coming cheap!
The solar manufacturing sector is a promising industry, but various factors have contributed to their prices coming down now. Investors are worrying about whether there would be sufficient demand in 2017 for new solar panels. This is mainly due to the changes to the rates in China, and also the worry about the Solar Investment Tax Credit expiring at the end of the year though the date was eventually extended. These factors meant that it became hard to predict how the demand would be next year for solar installations.
Solar stocks have now, as a result, become quite cheap. These could become great winners for you, if 2017 exceeds the modest expectations. The following stocks could be the ones that could be among those winners.
First Solar (NASDAQ: FSLR) is one of the world’s biggest solar developers. But it has strangely been overlooked by many investors. Over the years though, the company has taken vital steps for long term competitiveness and improving panel efficiency.
Shares of the company now trade at only 6.4 times trailing earnings. But the concerns investors have now are regarding its ability to secure contracts next year and beyond, and the uncertainty over who would finance its projects in the long term and how much demand would come from utilities. It can be argued, though, that these concerns are overdone since solar energy has now become competitively priced with fossil fuels, and the recent thrust on climate change has generated significant interest in the solar industry. The industry is only set to grow and, with an improving infrastructure, so is First Solar. So buying now could pay off well in the long run.
SolarEdge Technologies (NASDAQ: SEDG) has been experiencing astronomical growth and profitability, something not quite synonymous with the current state of the solar industry. The company has won contracts of some of the largest residential solar companies and is also diversifying into monitoring systems and inverters. If SolarEdge continues to secure big contracts in the field of residential solar infrastructure, it can start making itself conspicuous in the international industry and have a role to play in energy storage as well. If the company continues its winning ways, it could be a winner for you too.
Canadian Solar (NASDAQ: CSIQ) is one of those solar panel manufacturers that have transitioned successfully to project development. Major contracts in Canada have given it significant profits in the past two years. The purchase of Recurrent Energy has made it a major developer in the United States and internationally. This generates captive solar panel demand. It is also worth noting that project development usually provides higher margin than manufacturing panels.
Canadian Solar is now only trading for 6.8 times trailing and 5.1 times forward earnings. That’s in addition to the estimated project assets worth $2.5 billion it will be operating by the end of 2016. Solar demand could continue to be strong in 2017, which means this could end up as a winning stock.
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