Tag Archives: SPWR

3 Growth Stocks for the Long Term

A favorite maxim of Warren Buffett is that the best time to sell is never. While not even the Oracle of Omaha abides by that advice all the time, his track record makes clear that owning a stock for an extra-long time is still a sound approach.

Yet finding the best stocks to buy and hold isn’t easy. So to help get you started, we asked three Foolish investors to pick a growth stock that they believe investors would be wise to buy now and hold for the long term. Read on to learn why they like SunPower (NASDAQ:SPWR), salesforce.com (NYSE:CRM), and XPO Logistics (NYSE:XPO).

Rooftop solar panels

Image source: Getty Images.

A solid foundation for profitable expansion

Maxx Chatsko (SunPower): Despite record solar power capacity additions in the United States and globally, many companies in the solar industry have struggled to turn a profit in recent years. That’s because solar panel and cell manufacturers have been adapting to new market realities, and transforming themselves into stronger and leaner businesses has not come cheap. But while the last few years have been painful, it’s possible investors will be able to look back on them as a crucial turning point for sustainable long-term growth. SunPower might be the most likely solar manufacturer to follow that trajectory.

Management has said the business should return to profitability by the end of 2018. That would be a welcome reprieve for shareholders, as financial flexibility could improve quickly from there. That’s because SunPower recently acquired SolarWorld Americas in a move that will give the high-efficiency solar panel manufacturer a production base in the United States. That could prove valuable from a political standpoint in the near term and from a growth standpoint in the longer term.

As SunPower CEO Tom Werner told The Motley Fool’s Travis Hoium, the deal aligned the company’s strategy with the Trump administration’s aim to bolster U.S. manufacturing. The goodwill motion could make it easier to receive an exemption from tariffs imposed on imported solar panels and solar cells SolarWorld produces abroad (products that don’t have domestic competition anyway). That alone would provide an additional $50 million in adjusted earnings before interest, taxes, depreciation, and amortization in the second half of 2018 and an additional $100 million in adjusted EBITDA in each full year thereafter.

It could also set the stage for SunPower to earn a sweet subsidy package if it builds a new manufacturing facility in the United States — something it will need to do to keep pace with industry demand while simultaneously appeasing the current administration. In other words, if management executes on a growth strategy that hinges on profitable (and possibly “fast tracked”) manufacturing expansion in the United States, then this $1.1 billion company could be at the beginning of an awesome long-term growth trajectory.

Digital representation of computers being connected to the cloud

Image source: Getty Images.

The future’s biggest software company?

Nicholas Rossolillo(Salesforce):Customer relationship management (CRM) software company Salesforce is one of the biggest disruptors in the technology industry. The provider of various cloud-based services to help businesses manage relationships and marketing efforts became the fastest enterprise software company to reach $10 billion in annual sales; it surpassed that milestone last year. Salesforce isn’t finished yet, though, setting its sight on an even more ambitious goal.

In the next decade, the goal is to reach $40 billion in revenue, and in the next 15 years it aims to hit $60 billion. That would make Salesforce one of the largest software companies in the world. To get there, though, it’s going to need to continue expanding outside of its current wheelhouse of relationship management. Fortunately for investors, founder and CEO Marc Benioff has a proven track record of pulling that off.

In its latest stunt, Salesforce purchased up-and-coming integration software company MuleSoftfor $6.5 billion. That’s a big price tag, but MuleSoft says businesses will spend hundreds of billions on integrating apps and technology in 2018 alone. And Benioff has promised more exciting announcements to come this fall, including some sort of cryptocurrency and blockchain service.

Salesforce is growing into more than just a CRM company as its various services are becoming an integral part of big enterprises’ technology initiatives. With lofty goals in the years ahead, this stock is worth owning for a while.

XPO Logistics tractor trailer

Image source: XPO Logistics.

Keep on trucking

Rich Duprey (XPO Logistics):One way to give your business a competitive edge is to make your services indispensable to your customers. XPO Logisticsis creating an aura of invincibility for itself by making its logistics and transportation services a critical component of the survival of its retail customers.

XPO recently launched XPO Direct, a service that will put small and medium-sized businesses — and even large ones — on an equal footing with the retail giants. One of the advantages Walmartand Amazon.comhave over their rivals is scale. Their far-flung operations allow them to be within hours of their customers, meaning they can deliver products to a customer’s doorstep almost without thinking.

XPO Logistics is leveling the playing field by allowing retailers to use its warehouses, trucks, and logistics services to gain a comparable reach. If a retailer had to build out its own network of stores and distribution centers, the cost would likely be more than it’s worth as the capital expenditures would result in higher prices. By sharing its facilities and capabilities, XPO becomes essential to the retailer’s survival in the hyper-competitive environment.

That’s but one service XPO Logistics has launched and is building on its record of growth. Analysts expect the global intermodal freight transportation market to grow at a compounded annual rate of 16.4% through 2019, hitting $26.2 billion. XPO’s first-quarter revenue surged over 18%, with organic growth in the last-mile segment hitting 15%.

At 24 times Wall Street’s expected earnings for 2018, XPO Logistics might appear pricey, but it is the industry leader. Considering it trades at only 15 times the free cash flow it produces, while not a bargain-basement stock, it’s attractively valued and could be considered as a long-term holding in any portfolio.

Why Solar Stocks Charged Higher Thursday

Solar stocks were on fire Thursday after Sunrun Inc (NASDAQ:RUN) reported earnings and California mandated solar on all new homes. Sunrun jumped as much as 19.7% while Vivint Solar Inc (NYSE:VSLR), Enphase Energy Inc (NASDAQ:ENPH), and SolarEdge Technologies Inc (NASDAQ:SEDG) were up 12.5%, 15.6%, and 16.3% respectively at their highs for the day.

So what

Sunrun’s first quarter saw installations fall 5 megawatts (MW) to 68 MW and creation costs were up 3.8% to $3.51 per watt. What surprised investors was net income of $28 million, or $0.25 per share, which beat estimates by a penny. If earnings alone were all investors had to digest, I don’t think shares would have moved much, but there was other news on the market’s mind.

Large roof with solar panels.

Image source: Getty Images.

On Wednesday, the California Energy Commission passed a rule that effectively mandates solar panels on new homes starting in 2020. According to Sunrun’s presentation to investors, about 100,000 new homes are built each year in California and if the average rooftop solar system is 6 kW, that could mean 600 MW of demand each year from new homes, a lot of which would be incremental growth for the market.

As two of the top three solar installers in the country, Sunrun and Vivint Solar could see a sharp rise in demand from the new rule in California. According to GTM Research’s U.S. Solar Market Insight report, there was 2,147 MW of residential solar installed in the entire country in 2017, so California’s mandate could increase the market by 10% or more, depending on how many new homes already included solar.

As component suppliers, Enphase Energy and SolarEdge Technologies would also see an increase in demand from the California rule. That’s why they were following solar installers higher.

Now what

The next challenge will be building the partnerships necessary to exploit a growing California residential solar market. There’s an opportunity for each of these companies to grow, but they don’t have residential homebuilders as regular partners right now.

Its stock didn’t move Thursday, but as of last June SunPower (NASDAQ:SPWR) had partnerships with 10 of the 13 largest home builders in the country. It seems they would be in the lead when it comes to selling more solar systems in California.

Nevertheless, the stock market sees California’s policy environment as a good thing for residential solar stocks on Thursday and it’s easy to see why Sunrun, Vivint Solar, Enphase Energy, and SolarEdge Technologies will see greater demand when the rule goes into effect.

4 Solar Stocks to Buy Now

A new day is dawning. As solar energy gets cheaper, it is spreading rapidly around the world, and many countries are preparing to spend a great deal of money on it. In addition to the fact that it is much cleaner than oil, solar energy also creates many jobs and eliminates the need for developing countries to undertake costly extensions of the electricity grid to remote areas.

Furthermore, as I’ve mentioned in the past, the proliferation of electric cars should make the solar energy business more lucrative. Given all of these positive catalysts, I think it’s likely that solar energy prices will stabilize — i.e. stop going down rapidly — very soon.

Meanwhile, the cost of producing solar energy should keep dropping, causing solar energy companies to become much more profitable. By buying First Solar, Inc. (NASDAQ:FSLR), JinkoSolar Holding Co., Ltd. (NYSE:JKS), SunPower Corporation (NASDAQ:SPWR) and SolarEdge Technologies Inc (NASDAQ:SEDG), investors should be able to profit tremendously from these trends.

Solar Stocks to Buy: First Solar (FSLR) Solar Stocks to Buy: First Solar (FSLR)Source: U.S. Department of the Interior via Flickr

The main reason I like First Solar stock, in addition to its ability to benefit from the general positive trends I described above, is its ability to benefit from Saudi Arabia’s gargantuan upcoming investments in solar energy.

It appears that First Solar previously agreed to supply 2.36 million solar modules for a project led by Saudi Arabia’s ACWA Power in the country of Dubai which is located next to Saudi Arabia.  Earlier this year, ACWA won a bid for a much smaller, 300 megawatt solar energy project in Saudi Arabia. The fact that ACWA won the previous deal, and has worked with First Solar in the recent past, suggests that  ACWA and First Solar will make a great deal of money from Saudi Arabia’s upcoming solar projects.

Additionally, as many others have noted, First Solar will benefit from its existing U.S. factory which will allow it to avoid U.S. tariffs, and it recently raised its 2018 shipping guidance, citing strong demand for its modules.

Solar Stocks to Buy: SunPower (SPWR) Solar Stocks to Buy: SunPower (SPWR)Source: via SunPower

SunPower has several attributes that make the outlook for the company and SunPower stock especially positive. The company’s solar panels are known as some of the most efficient in the industry.

It has a major presence in three of the world’s largest and fastest growing solar markets: India, Japan, and the U.S.  Although the company’s fourth-quarter results were hit hard by the tariffs that President Donald Trump placed on the sector, SunPower is countering by launching a factory in the U.S., and it may receive an exemption from the tariffs. SunPower also has a very strong business in South America, and it signed a deal to provide a significant amount of solar panels to NextEra Energy Inc (NYSE:NEE), which owns a number of electric utilities in the U.S.

Assuming that the latter deal goes well, NextEra could expand its dealings with SunPower, and other U.S. utilities could look to sign similar deals with SPWR. News tends to travel fast within sectors, and companies emulate moves by their colleagues and competitors that work well.

One reason for the low price of SunPower is the large amount of debt it’s carrying. But the company’s sale of its stake in renewable company 8point3 Energy should alleviate this problem. Moreover, French energy giant Total SA (NYSE:TOT) owns a majority stake in SunPower, and would be able to kick in additional cash if necessary to prevent the solar company from facing a near-term cash crunch until the solar sector really starts booming.

Solar Stocks to Buy: JinkoSolar (JKS) Solar Stocks to Buy: JinkoSolar (JKS)Source: Russ Ferriday via Flickr (Modified)

JinkoSolar’s sales have boomed in recent years , partly because its solar panels are quite affordable and efficient. But as PvTech pointed out, the company also has “maintained its gross margins in the 10%-20% range” and has “a global sales operations capable of winning opportunities in all key end markets.”

Indeed, according to the publication, in 2017 JinkoSolar ranked “number two in the Chinese and Japanese markets, third in India, fourth in the U.S., and top-rank in Europe and the all-other category.”

Meanwhile, JinkoSolar signed a huge deal with Nex Era. As with SunPower, there’s a decent chance that if NextEra is pleased with JinkoSolar’s modules, it will expand the deal and other U.S. utilities will look to buy JinkoSolar’s panels, boosting JKS stock.

Solar Stocks to Buy: SolarEdge (SEDG) Solar Stocks to Buy: SolarEdge (SEDG)Source: Shutterstock

As I mentioned in a previous column, SolarEdge has strong technology and impressive partners and has delivered great financial results.  Since I wrote the previous column, Deutsche Bank issued a fairly bullish note about SolarEdge stock.

After meeting with the company’s management, the firm wrote that “Concerns over increased competition from Huawei and potential risks of a slowdown in 2018 industry volumes are fading, ” The Fly reported. Deutsche Bank raised its price target on the stock to $57 from $45 but kept a Hold rating on the shares.

But given SolarEdge’s strong growth and the relatively low valuation of SolarEdge stock,  along with Deutsche Bank’s bullish outlook, the firm’s “hold” rating seems illogical. Specifically, SolarEdge’s EPS jumped more than 150% year-over-year last quarter, while it’s trading at less than 20 times analysrs’ forward earnings estimate.

As of this writing, Larry Ramer owned shares of SunPower stock, JinkoSolar stock, and SolarEdge stock. 

Compare Brokers