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Analyst Blog

On May 9, 2013, the shares of SunPower Corporation climbed to its 52-week high of $16.92 primarily driven by robust performance in first-quarter 2013. On a year-over-year basis, the company’s top and bottom line increased significantly due to high efficiency solar panels and strong performance from both rooftop and ground mount teams.

Globally, utilization of renewable energy is rising primarily due to its clean nature and a growing awareness among the masses regarding its benefits. These influence utility providers to shift their mode of power generation to solar, wind and water.

SunPower Corporation is continuously receiving orders from domestic and international clients for solar modules and other allied services. The company has already begun construction of the 579-megawatt Antelope Valley Solar Projects for MidAmerican Solar. SunPower Corporation has almost completed the construction of the California Valley Solar Ranch project, owned by NRG Energy, Inc. .

It is evident from SunPower Corporation’s activities that it is currently in an expansion mode. The company manufactures its solar cells and solar panels at its factories in the Philippines, a low-cost production region, and is building another facility in Mexico. This gives the company a distinctive cost advantage over its U.S.-based manufacturing peers. These initiatives will enable SunPower Corporation to improve its future margin.

We believe SunPower Corporation’s strong project backlog, continued growth in residential lease and global focus on improving its cost structure, will enable it to achieve its targets.

However, we are apprehensive about the rising competition, glut of solar panels in the market and lower average selling prices.

SunPower Corporation currently has a Zacks Rank #3 (Hold). Stocks worth considering in the alternative energy space are ReneSola Ltd. and STR Holdings, Inc. , both with a Zacks Rank #2 (Buy).

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