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SunPower Is a Hot Investment Again

NEW YORK (TheStreet) -- A new day has dawned for solar company SunPower (SPWR - Get Report) and I recommend buying this stock.

Why? Consider: Back in mid-2013, TheStreet's Jim Cramer urged investors to "sell, sell, sell" SunPower. Two days ago, Baird raised its price target on the company to $42 from $38.

What happened in nine months?

SunPower, whose shares are up 8.7% for the year to date at $32, ended its fiscal year 2013 with a net income (GAAP) of $95.6 million, up from a loss of $352 million in fiscal year 2012.

The company reduced its manufacturing costs by 20% in 2013, thus improving the gross margin from 15.4% in 2012 to 20.4% in 2013. The cost structure will further improve following the acquisition of the solar panel robotics company Greenbotics in the fourth quarter. This acquisition will help reduce water usage by 90% at the solar projects, saving money and boosting the annual energy yield in dry and dusty regions by 15%.

Reducing costs and improving margins allows SunPower to maintain a healthy bottom line, insulating it against events like solar PV demand reduction and falling panel prices due to competition.

In addition, the company has been running at full capacity over the past two quarters, which shows strong demand for SunPower's high-efficiency solar panels. The company started its fiscal year 2014 with two-thirds of its bookings (in megawatts) being held as backlog. In addition, the company has a strong 6 gigawatts (GW) of global pipeline in power plants, or utility projects, which include:

The project pipeline doesn't end here. the company has received projects in different regions across globe with the help of the strong network of Total SA (TOT), which owns 60% of the company.

The projects will provide strong growth to SunPower's top line and ensure strong demand for its solar panels. The company is benefiting from strong demand from the Japan PV market, especially in the distributed and rooftop solar segment.

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