Will Canadian Solar Continue its Downward Spiral?

With oil prices hovering near multi year lows, solar stocks have failed to perform nicely. Although the recent extension of the Investment Tax Credit gave the solar stocks a boost, stocks have still underperformed over the last few months. While the dip in solar stocks is grim, I think investors can use it to their advantage by buying undervalued solar stocks. One such stock is Canadian Solar (CSIQ).

Efficient Costs

2015 was an awful year for almost every oil company as oil prices declined from $69 per barrel to almost $30 per barrel previous year.
In the first quarter of 2015, several clean-tech funds conveniently outperformed the S&P. Furthermore, when a surplus of Chinese manufacturing flock dozens of solar firms into obscurity, the sector did not perceive a wave of bankruptcies and pullbacks same as that dispersed it ten years ago. As a matter of fact, universal clean-energy investments escalated 17 percent in 2014, touching $270 billion, withdrawing two years of falloffs.

Over the last few years, Canadian Solar has turn into a foremost solar player and is even starting to compete against the likes of SunPower and First Solar in terms of revenue. Despite the instability experienced by Canadian Solar previous year, the company has performed comparatively nicely during that period. Keeping in mind Canadian Solar’s speedy growth and efficient cost structure, the company’s recent achievement will probably prolong into the future.

Canadian Solar is bolstering its reputation as a cost leader in the extremely competitive solar producing industry. During Q3FY15, the company’s polysilicon, module, and cell costs came in at $0.18 per watt, $0.14 per watt, and $0.10 per watt respectively. Canadian Solar’s low costs are almost unique in the competitive sector and have been a chief driving force for the company’s future growth. With the overall manufacturing cost structure of $0.42, Canadian Solar can only be compared to few solar firms including Trina Solar.

As the financial side of solar will likely progress at a hasty rate mainly due to the recent worldwide climate deal, Canadian Solar holds an even superior position. The company will probably be able to yield benefit of new markets across the globe as various countries start to familiarise pro-solar policies. Apart from this, Canadian Solar’s acquisition of Recurrent Energy is playing an enormous role in escalating the company’s presence in the U.S.

Conclusion

With renewable energy expected to grow at a rapid rate over the next few years, I think long-term investors can consider buying the stocks in the solar industry. Canadian Solar is currently one of my favourite picks, and as explained above, I think investors can consider buying it on the pullback.
Published on Feb 8, 2016
By Akshansh Gandhi

Copyrighted 2016. Content published with author's permission.

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