Following the passage of the inflation reduction act, the sun is shining on solar stocks, such as SunPower. The next big winners in a bull rally could be companies showing fundamental and technical strength.
MarketBeat.com - MarketBeat Solar stocks can be found there.
The bill offers tax credits to people who install solar energy equipment.
There are other stocks from its industry that are performing better than the market as a whole. Unusual strength can be seen in large-cap names like Enphase Energy.
The S&P 400 Mid-Cap index tracks the performance of the S&P MidCap 400.
The company makes solar systems and batteries for home use.
Big investors anticipated the passage of the inflation reduction act and the stock advanced in July. It bounced 18% higher in August, and is up 3% so far in September, holding up better than its index, which is down 10% for the month.
The company lost money from 2016 to 2020. Net income was $0.21 per share last year. Analysts expect earnings to come in slightly lower this year, at $0.19 per share, but posting a strong rebound next year, to $0.64 per share, due to the inflation reduction act.
It would be a huge gain.
The analysts have a hold rating on the stock and a price target of $22.20.
Given that earnings are expected to grow at a triple-digit rate, what is happening there?
Strong earners are getting whipsawed on a moment's notice, along with the broader market. Some analysts think that the company's business model relies on direct sales rather than a subscription model.
The trend seems to be heading in the right direction. The company said in its second-quarter earnings report that it added more than 20,000 customers, more than doubling the number from a year earlier.
Peter Faricy said in the earnings conference call that the gain was due to a boom in new home construction and the use of green technology to appeal to younger buyers. Incentives that existed before the inflation reduction act also play a part.
Revenue increased by 60% in the quarter. MarketBeat earnings data shows that adjusted earnings came in at $0.06 per share.
The company beat views by a small margin.
The sideways pattern on the chart was shown in mid-August. The stock undercut its previous structure low in a formation that began in April and can be a good start for a new rebound.
Whether or not some investors approve, regulatory and governmental changes are a driver of price growth. One of the great lessons of investing is to set opinions aside and watch what the stock is doing.
Even those with great prospects can get swept lower in a market that is volatile. There is an opportunity to buy shares at a lower price. Don't try to catch the falling knife.
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