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Picking Winners After SunEdison Crash: Canadian Solar And Solar Edge?

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April 4, 2016 10:46 am
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Sometimes when a stock starts to slip, it just glides lower. Other times, a slip leads to a magnificent plummet off the side of a cliff and into a chasmic abyss.

Down an outstanding 95+ percent year to date and a colossal 50 percent in early Monday trading, Sunedison Inc (NYSE: SUNE) seems to fall into the latter category.

Following a series of bad news, the stock neared penny stock territory last week after new reports began emerging from Dow Jones that bankruptcy was imminent.

Is There Any Value To Be Found In Solars?

While SunEdison is clearly losing Wall Street’s favor, not all names in the solar sector are falling so far from grace.

According to two Monday analyst notes, there are still valuation finds in the space.

Related Link: SunEdison Barely More Expensive Than An Eisenhower Coin

Barclay’s Jon Windham and Daniel Ford have announced the firm is initiating coverage on Canadian Solar Inc. (NASDAQ: CSIQ) with an Overweight rating and price target of $24.

“We view CSIQ as an industry-leading solar module manufacturer with a strong development platform, and believe it is well positioned to grow market share through manufacturing capacity expansion outside of China, coupled with US policy-driven demand growth in the more stable North American market,” the analysts commented.

While the analysts still view First Solar, Inc. (NASDAQ: FSLR) as their top pick in the alternative energy sector, they are singing the praises of Canadian Solar, particularly for investors willing to withstand a little more risk. “Our Top Pick in the Alternative Energy space remains FSLR (OW, $90 PT) as we prefer U.S. utility scale development and its strong net cash position (2016E $22/sh). However, for investors interested in a higher risk/reward profile we view CSIQ as currently attractive.”

In a separate report, the same Barclay’s analysts initiated coverage of Solaredge Technologies Inc (NASDAQ: SEDG).

Justifying their initiation, the analysts stated, “SEDG’s inverter/optimizer solution is well positioned for further share gains in the residential/commercial solar segments and we forecast adj. 3-yr EPS CAGR of 56 percent in FY16-18E, driven by 40 percent pa volume growth.”

Barclays has an Overweight rating on SolarEdge, with an attached price target of $35.

At Time Of Writing…

  • SolarEdge was up 3 percent at $25.41.
  • Canadian Solar was essentially flat at $18.98, off $0.03 from Monday’s open.
  • First Solar was up 1.88 percent at $68.75.
  • SunEdison was down 51.3 percent at $0.224.

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