The Risks of Buying Canadian Solar

With the entire solar industry being extremely volatile over the last few years, finding a stable long-term company has been very difficult for investors. The bankruptcy of SunEdison (SUNE) further deteriorated the condition of the entire sector and many investors now believe that there is no great long-term stock left in the sector.

Although the solar industry is still a very risky sector to put your money into, I still think Canadian Solar (CSIQ) is a stock that investors can buy.
Canadian Solar is now one of the largest solar companies around the globe. However, that does not mean that it generates the most profit and manufactures the best product, but the company has a superior scale compared to several rivals. Canadian Solar is the strongest firm in China’s lively solar panel sector, and successfully managed to remain profitable in the previous year in spite of difficult conditions in the worldwide solar market.

In the most recent quarter, Canadian Solar reported that its top-line decreased 16 percent, but the company escalated its guidance for this year in the range of $3 billion to $3.2 billion, as opposed to prior guidance of $2.9 billion to $3.1 billion. That said, the company did not change its actual module shipments forecasts, which clearly suggests that its projects prices will be sturdier than it formerly projected.

Moreover, the company has invented a robust formula for increasing sales by manufacturing solar power plants and then selling them to long-term holders after accomplishment. The company has a strong collection of projects, and its rising figure of worldwide utility-scale projects is very encouraging.

Over the past few years, the company has successfully managed to ascend to the top of the module manufacturing industry, which is a very difficult thing to achieve considering the huge competition in the solar industry. Canadian Solar is continuously building out its manufacturing capacity at a quick pace, whereas, many companies are still struggling due to the financial issues in the solar industry.

It is clear to everyone that efficiency plays a significant role in the solar industry. While there are various companies whose efficiency is more than 22 percent, Canadian’s products delivers a maximum efficiency of 17 percent, which is considerably low compared to the industry’s front-runner. Therefore, it is very necessary for the company to aggressively focus on its products efficiency to differentiate itself from other players in the industry.

Although efficiency is a problem for Canadian Solar, this also means the company has a lot of room for improvement. If the company continues to keep its debt in line and manages to improve its efficiency, the stock could move considerably higher in the long-term.
Published on Jun 27, 2016
By Akshansh Gandhi

Copyrighted 2020. Content published with author's permission.

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