This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

SunPower Is a Hot Investment Again



Japanese consumers prefer high-efficiency solar panels due to the smaller available area for installation on their rooftop. Thus, Japan's PV installation, especially rooftop, makes it an ideal market for SunPower's high efficiency solar panels. The company has some of the leading conversion efficiency solar panels, which provide efficiency as high as 21.5%.

It plans to bring its first 23% X-series panel by the end of 2015from the new plant (Fab 4), which is under-construction. Fab 4 is expected to start in early 2015, and this state of art facility will produce at 35% lower cost per watt than fab 2, adding further value to its ongoing cost reduction. SunPower reported approximately 100% year over year shipment growth in Japan in the fourth quarter, accounting for approximately 24% of the company's solar module volume.

SunPower has a strong base in terms of its project pipeline, robust demand from Japan, and solid bottom line. Thus, SunPower looks perfectly positioned to post a strong financial performance in 2014.

SunPower operates in the utility and residential/ commercial segments, which makes the company a strong player in the solar PV industry. Utility projects have always been a strong territory for First Solar (FSLR) as low efficient CdTe solar panels make the company's job tougher in residential installation. Contrary to this, SolarCity (SCTY) has been a dominant player in the U.S. residential installation, and unlike First Solar or SunPower the company doesn't manufacture solar panels.

SunPower has strength in both segments, and with its strong utility project base, the company added a lease program in 2011 to target the residential rooftop market.

SunPower's high conversion efficiency technology and manufacturing capabilities perfectly position the company in the residential segment. Up to now, SunPower has more than 20,000 lease contracts, and the company is leveraging its strong partnership with seven of top 10 builders to receive new residential installation contracts.

Residential installation is growing at the brisk pace in the U.S., surpassing overall solar installation growth in the U.S. SunPower recently announced an extension of its financing program with Bank of America, in which the bank would financially assist $220 million worth of residential solar lease projects. This extended financing will ensure SunPower's growth in lease contracts.

In addition, the cost to finance this new deal will be lower than the previous signed deal. Therefore, this new deal should positively impact the retained value of SunPower's lease projects. SunPower could also add asset backed securitization in the near term for financing the solar projects, which will help monetize the long-term solar lease projects beforehand.

So what does this all mean?

SunPower has strong growth fundamentals that mirror the strong demand of solar panels. The company has built a diversified vertically integrated business model, which could add value to its financial performance. In addition, support of French oil major Total SA will help it target international projects.

I recommend buying this stock.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
SPWR $30.39 -2.85%
AAPL $130.28 -1.14%
FB $79.19 -1.19%
GOOG $532.11 -1.42%
TSLA $250.80 -0.26%

Markets

DOW 18,010.68 -115.44 -0.64%
S&P 500 2,107.39 -13.40 -0.63%
NASDAQ 5,070.0260 -27.95 -0.55%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs