First Solar (FSLR) and SunPower (SPWR) Watchlist
Several potential catalysts are building for U.S. based solar panel manufacturers.
California approved regulations Wednesday requiring most homes constructed after Jan. 1, 2020, to be built with solar panels.
The news is a perceived boost for solar companies, not only guaranteeing contracts but also validating the yet-nascent market’s move to become mainstream.
SunPower Corporation SPWR expects the change to boost California’s residential solar demand by 50 percent, according to Bloomberg.
SunPower Metrics and recent upgrades suggest analysts are watching the industry group. We are looking for the number of funds in the right panel to increase as catalysts emerge in the face of rising energy costs. Tariffs on non-US based companies are affecting fund decisions as well.
Bloomberg estimates an increase in annual demand by about 260 megawatts. The state of California adds about 80,000 new homes each year, and about 19 percent are already built with solar panels.
FSLR Upgrade- JPM Turns Bullish
This morning, First Solar Inc. FSLR, surged 3.2% in early Thursday trading after J.P. Morgan turned bullish on the solar panel manufacturer. Analyst Paul Coster raised his rating to overweight, citing valuation, revenue (sales) and earnings metrics. He raised price targets from $74 to $84/share.
The analyst went on to say, First Solar is arguably the “highest-quality” stock in solar module space, he believes earnings growth is range bound in the absence of pricing power in a global commodity market. With this in mind, he suggested investors consider buying and selling the stock within a $60 to $110 range through the end of 2019. Prices were near the lower end of that range after earnings. The stock is up over 89.9% over the past 12 months.
MarketSmith metrics are lucrative. Funds are adding positions, as Relative Strength (RS) line rises.
We have a small position in FSLR and will consider adding if the stock regains support levels in the coming weeks. Strength in energy and cost of fuel will continue to support current interest in renewable energy companies. Therefore, this should be viewed as more of a position or long-term swing trade.
Guggenheim Solar ETF (TAN) – source graphic Benzinga
Stocks moving higher on the news.
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