Headquartered in Stamford, Connecticut, Renesola Ltd. (SOL) is a leading solar project developer and operator. The company develops, owns and operates solar power generators and sells the electricity generated. With professional teams in more than 10 countries, SOL’s strategy is to pursue high-margin project development opportunities in profitable and growing markets such as the U.S. and Europe. SOL has a market-leading position in several countries and locals, including Poland, Hungary, Minnesota, and New York.
With the company’s accelerating business momentum, its stock has gained 1782.2% over the past nine months. This can be attributed to SOL’s increase in project pipelines, particularly in the number of late-stage project pipelines, which increased 46.4% sequentially. Moreover, SOL has formed several joint ventures in Europe to expand its reach; Europe is expected to be one of the key markets driving the growth of renewables in the next several years.
SOL closed yesterday’s trading session at $20.14. As the demand for solar energy is on the rise with the cost of storing solar energy on the decline, SOL is expected to generate good returns based on its consistent performance. Its impressive performance and potential upside based on several factors have helped the stock earn a “Strong Buy” rating in our proprietary rating system.
Here is how our proprietary POWR Ratings system evaluates SOL:
Trade Grade: A
SOL is currently trading significantly above its 50-day and 200-day moving averages of $9.61 and $4.12, respectively, indicating an uptrend. Moreover, SOL has gained 263.5% over the past month, reflecting a solid short-term bullishness.
For the third quarter ended September 30, 2020, the company reported revenue of $9.7 million, which was at the high end of its guidance range. Its gross margin of 61% exceeded expectations. SOL reported its second consecutive quarter of profitability with non-GAAP net income of $2.5 million, yielding EPS of $0.04. As of November 30, 2020, SOL’s project pipeline was at around 800 MW, of which more than 730 MW are late-stage projects and some 23 MW are under construction.
SOL announced the closing of a $40 million registered financing odder on January 11, the net proceeds of which it intends to use to expand new solar project pipelines and for general working capital needs. On January 8, SOL announced that it has entered into an agreement to sell a portfolio of projects located in Hungary to Obton, which is a leading international solar investment company.
Earlier this month, SOL signed a memorandum of understanding (MOU) with Eiffel Investment Group to establish a joint venture to develop up to 1 GW of solar projects in the next few years across Europe.
Buy & Hold Grade: B
In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade considers , SOL is moderately positioned. The stock is currently trading 13.2% below its 52-week high of $23.20, which it hit on January 7.
SOL has been focused on the development of power station projects since 2015 and has successfully run several competitive sale processes. The company is also focused on opportunistic acquisitions, and greenfield development.
Peer Grade: A
With a 1380.9% gain, SOL has comfortably beaten the returns of these popular industry participants over the past year. RUN, SEDG, and FSLR have gained 541.3%, 236.8%, and 83.7%, respectively, over the same period.
Industry Rank: C
The Solar industry is ranked #95 out of the 123 StockNews.com industries. The companies in this industry design, manufacture, install, maintain, monitor, lease, and sell solar energy systems to residential, commercial, government, and other customers worldwide.
There is no doubt that solar energy is expected to lead the way for the renewable-energy- driven future. However, even with falling costs, solar energy is yet to become a common place. So, as the technology gradually improves, and using solar energy becomes easier, the companies in this industry are expected to witness greater demand.
Overall POWR Rating: A (Strong Buy)
SOL is rated “Strong Buy” due to its short- and long-term bullishness, solid growth prospects, and strong financials as determined by the four components of our overall POWR Rating.
SOL has the potential to soar in the near term despite gaining 76.2% so far this year, based on its strategic market expansion, favorable earnings and revenue outlook, and strong balance sheet.
The consensus revenue estimate of $185.15 million for 2021 represents a 126.7% increase year-over-year. Its EPS is expected to grow 3000% in 2021, and at a rate of 15% per annum over the next five years.
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SOL shares were trading at $23.09 per share on Tuesday afternoon, up $2.95 (+14.65%). Year-to-date, SOL has gained 102.01%, versus a 1.35% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...
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