The energy sector has been featured in constant headlines since President Donald Trump took office. Tumultuous speculation surrounding the industry’s viability in the U.S. continues to swirl, especially regarding the budding renewable energy sector—which ramped up after the U.S. pulled out of the Paris climate agreement. But now, a Trump administration shift on Paris is possible.
Over the last few days, news broke that President Trump, who pulled out of the accord that hopes to reduce carbon emissions on a global scale, might not back out of the Paris climate agreement after all. White House officials recently indicated that instead of pulling out of the global pact outright, the Trump administration will try to reach a different deal, with less strict requirements.
What might give solar energy investors even more hope for a renewed push is the fact that former Vice President Al Gore stated confidently on Monday that the U.S. will still meet the Paris climate agreement’s environmental goals, with or without the Trump administration’s help.
While speaking at the United Nations Private Sector Forum on Monday, Gore said that he hopes the Trump administration "will lower its ambitions stated in Paris but remain in the Paris agreement."
"But whether that happens or not, U.S. states and cities and businesses and industries are moving forward," Gore continued. "The projections now indicate that the United States will meet the commitments made at Paris whether it is affirmed by the federal government or not."
Gore’s vote of confidence in the U.S. clean energy push, no matter what course of action Trump decides to take next, should help lift the spirits of renewable power investors.
Now, let’s take a look at some of solar energy stocks and their fundamentals to see if investors have reason to buy amid the industry’s recent up-and-down run.
1. SolarEdge Technologies, Inc. (SEDG - Free Report)
SolarEdge provides power optimizers, inverters, and a cloud-based monitoring platform. The company has received two positive earnings estimate revisions for this quarter and next quarter within the last 60 days. SolarEdge has also earned two full-year upward revisions, as well as two positive revisions for 2018, in that same time frame.
SolarEdge is currently a Zacks Rank #1 (Strong Buy) and scores a “B” for Value and an “A” for Momentum in our Style Scores system.
The company’s revenues are projected to pop 23.28% this quarter and jump 9.70% for the year, hitting $560.50 million in total sales. SolarEdge’s 117.34% year-to-date price change blows out the “Solar” industry’s 10% decline. The company’s cash flow per share of $0.70 comes in far above the industry’s flat rate. SolarEdge’s forward PE ratio of 14.35 also beat out the “Solar” average.
2. JA Solar Holdings Co., Ltd.
This fast-growing manufacturer of high-performance solar cells earned both an “A” for Value and Momentum in our Zacks Style Scores system. JA Solar also scored a “C” for Growth to boast an overall VGM score of “A.” The company is currently a Zacks Rank #1 (Strong Buy), and shares of the small-cap company rest just below their 52-week high.
JA Solar seems like it could be a solid choice for value investors interested in the company’s cash position, as its Cash/Price ratio is 1.75, which is far above the industry average of 0.29. The company’s current cash flow of $4.78 per share also blows the industry average of $0 out of the water. Finally, JA Solar’s Price/Cash Flow of 1.65 marks a big upside against Solar’s 3.55 average.
3. SunPower Corporation (SPWR - Free Report)
SunPower, which designs and manufactures highly efficient silicon solar cells and panels, boasts a Zacks Rank #2 (Buy). SunPower’s “B” grade for both Growth and Momentum in our Style Scores system helped the company post an overall VGM score of “B.”
Within the last 60 days, SunPower received one upward earnings estimate revision for this quarter and next quarter, as well for the current full-year and the following year. The company’s current ratio, which is defined as its current assets divided by current liabilities, rests well above the industry average of 1.05 at 1.45, meaning that the company might be in a more stable financial position than its industry peers.
Furthermore, SunPower has experienced a 29.65% year-to-date price change. However, even with the big increase in its price per share, SunPower has a ton of room to climb before it nears its 52-week high-water mark again.
The Solar energy industry currently ranks in the top 12% of the 265 different industries tracked and ranked by Zacks, and the possibility of a renewed U.S. commitment to the Paris climate deal could spur growth. But as Gore noted, the nation as a whole and its businesses are on track to meet the accord’s goals no matter what course of action Trump takes.
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