Solar Stocks Rank High, But Investors Find Problems Under The Hood

By | February 19, 2016

Scalper1 News

In December, the solar energy industry group seemed headed to mediocrity with federal subsidies for installation of residential and commercial systems winding down. Then, as part of a budget compromise, Congress extended the investment tax credit for solar projects. Instead of dropping to 10% this year, the subsidy will be 30% through 2019, falling to 26% through 2020 and down to 21% in 2021. The industry group shot up 35% in December, although it has given up that gain and then some as the market dragged everything down in the first six weeks of this year. The group ranked No. 14 out of 197 groups in Friday’s IBD. Still, the chart of the industry group doesn’t look all that sunny. It’s found resistance at its 200-day moving average and has been making lower lows in recent weeks. It only has a Relative Price Strength Rating of 95 because all the other groups have done worse. Five stocks in the group have Composite Ratings greater than 90. A leading beneficiary of the extension of solar tax credits is Israel-based SolarEdge ( SEDG ), which makes optimizers and converters that turn the sun’s light into electricity. Its customers include the two biggest residential installers, SolarCity ( SCTY ) and Vivint Solar ( VSLR ). It also partners with Tesla Motors ( TSLA ) on an in-home stationary battery that can be used to store solar energy for later use. SolarEdge is ranked No. 1 out of 23 stocks in the group. Its Composite Rating is a best-possible 99. It came public March 26, 2015, with a offering price of 18. It’s been a rough ride for shareholders, but the stock now trades near 25. The No. 2 stock in the group by Composite Rating is JA Solar ( JASO ), a Chinese company that makes solar cells that are assembled and integrated into modules that create electricity from solar power for residential, commercial and utility-scale power generation. The Composite Rating is 98. The stock has set up in a cup-with-handle base, but investors should be wary. It trades below 10. Few stocks that cheap attract enough institutional interest to advance. Analysts see just 5% profit growth in 2016. The No. 3-ranked stock is First Solar ( FSLR ), based in Tempe, Ariz. The company builds and operates some of the world’s largest grid-connected solar power plants in the world. Most of its plants are in the U.S. and Europe. The company also makes solar modules. It has a Composite Rating of 97. In its Q3 earnings report Oct. 29, the stock gapped up and closed nearly 10% higher. The company blew away analysts’ estimates. When the company reports Q4 after the close on Tuesday, analysts are expecting earnings of 77 cents a share, a 59% decrease from a year earlier. Analysts expect an 8% EPS decline in 2016. Scalper1 News

Scalper1 News