Why Massive Solar Installations in China Could Drive 4 Solar Stocks Higher
In an effort to suppress a slowdown in growth and the economy in China, the nation’s central bank cut the reserve requirement ratio for all banks by 1% to 18.5% on Sunday. The move helped to spark Monday’s rally. Another huge positive in the country was that also on Sunday, the China National Energy Administration announced that the country installed 5.04 gigawatts (GW) of new solar power capacity, including 4.38 GW utility-scale power plants and 660 megawatts (MW) distributed generation capacity.
A new report from RBC Capital Markets points out that these are massive numbers for what is usually a seasonally slow first quarter. They also think the better first-quarter numbers increase the possibility of the huge 2015 full year installation targets being hit in China. This could be big for the top solar stocks rated Outperform at RBC: JA Solar Holdings Co. Ltd. (NASDAQ: JASO), SunEdison Inc. (NYSE: SUNE) SunPower Corp. (NASDAQ: SPWR) and Trina Solar Ltd. (NYSE: TSL).
This leading manufacturer of high-performance solar power products that convert sunlight into electricity for residential, commercial and utility-scale power generation is one of the world’s largest producers of solar power products. Its standard and high-efficiency product offerings are among the most powerful and cost-effective in the industry. JA Solar distributes products under its own brand and also produces on behalf of its clients.
The company’s principal products include monocrystalline and multicrystalline solar cells and modules. It also provides monocrystalline and multicrystalline silicon wafers; solar product processing services; and engineering, procurement and construction services for utility companies and independent power generators.
The RBC price target for the stock is an impressive $13. The Thomson/First Call consensus price target is lower at $12.83. Shares closed trading on Monday at $9.92 apiece.
A top U.S. company on the RBC list of stocks to buy, its stock is widely recommend around other Wall Street firms we cover as well. The company manufactures solar technology and develops, finances, installs and operates distributed solar power plants, delivering predictably priced electricity and services to its residential, commercial, government and utility customers. SunEdison also provides 24/7 asset management, monitoring and reporting services for hundreds of solar systems worldwide via the company’s Renewable Operation Center (ROC).
SunEdison and its yieldco company TerraForm Power signed a definitive agreement last year to acquire First Wind for a total sum of $2.4 billion. The combined entity becomes one of the largest clean energy companies in the world. With the cash generation potential of SunEdison due to the multitude of positive corporate moves becoming increasingly clear, the sum-of-the-parts-based value above $30 a share seems very realistic.
The RBC price target for the stock is $33. The consensus target is posted at $30.25. The stock closed Monday at $26.77.
Along with rival First Solar, SunPower announced last quarter plans to jointly form a publicly traded yieldco. Some on Wall Street feel this may make both companies a combined takeover target.
SunPower offers solar power products, including panels, balance of system components and inverters. It also designs, manufactures and sells high-performance rooftop and ground-mounted solar power systems, as well as utility-scale photovoltaic power plants. In addition, the company offers operations and maintenance services, including remote monitoring, preventative and corrective maintenance services, as well as rapid-response outage restoration and inverter repair services.
The company recently announced a huge joint venture with tech giant Apple in China to build two solar power projects totaling 40 MW. SunPower, with its advanced solar solution capacity, has already partnered with Apple in six U.S. projects totaling 90 MW of green energy. This will be the first overseas joint venture for the two.
The RBC price objective is $36, while the consensus price target is set at $41.08. The stock closed trading on Monday at $34.05.
China’s largest profitable panel manufacturer 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. Wall Street analysts see the company very well positioned for share gains here and in U.K. project sales. They also see those gains starting this year.
The company was recently selected by Toyo Engineering to supply 116 MW of high efficiency modules to the largest solar power project in Japan. This solar project will be built in Setouchi City, Okayama. Continued large-scale wins like this are very impressive, and they keep the backlog at very high levels.
The RBC price target for the stock is $15, and the consensus target is right in line at $15.04. The stock closed Monday at $12.20 a share.
With ever more power generation turning to solar and away from coal, years of growth continue to lie ahead for these top stocks to buy. Note that they can be very volatile and are for aggressive accounts only.