Bank of America issued an earnings preview on alternative energy companies Thursday. The firm saw a "prime buying opportunity" heading into earnings and the upcoming Solar Power International trade show.
Analysts Krish Sankar and Andrew Hughes held the view that "solar stocks have been impacted more by de-risking and broader market concerns than by any underlying change in industry fundamentals."
"With a number of industry and company specific catalysts also on the horizon...we see excellent buying opportunities heading into the industry’s biggest trade show (SPI Oct 20-23) as well as 3Q14 earnings season," according to Sankar.
SunPower Corporation (NASDAQ: SPWR) - Buy, $44 price target.
SunPower presented the best risk/reward profile. Sankar saw "upside to the 8GW pipeline, and like the company’s diversified geographic and market segment exposure, YieldCo optionality, and Total-backed balance sheet. The company’s November 13th analyst day could also be a positive catalyst as we think management is likely to articulate its project strategy and deliver FY15 financial targets."
SolarCity Corp (NASDAQ: SCTY) - Buy, $95 price target.
Sankar considered "35 percent Y/Y growth in 3Q14 California rooftop installations (up from 34 percent Y/Y growth in 2Q14) a good indication of strong US residential market fundamentals as the company continues to take market share and innovate."
Sunedison Inc (NYSE: SUNE) - Buy, $28 price target.
The company continued "to execute on pipeline growth. Further details on its distributed generation (DG) build out, and emerging market focused YieldCo could serve as a positive catalyst as well," according to the report.
Trina Solar Limited (NYSE: TSL) - Buy, $20 price target.
"We value Trina at a discount to the group mean (2x 2015E EV/Sales) to reflect its weaker balance sheet and more limited exposure to project development....What matters is Trina's cost leadership, which should allow the company to continue to post improved returns as the solar business fully shakes out," according to Sankar.
**NOTE - THE FOLLOWING HAS BEEN ADDED BY ME:
Mass Megawatts Wind Power Inc. (OTC: MMMW) - Buy, $.90 price target.
The company has entered the high growth solar market with a revolutionary design about to be unveiled later this month. It purports to encompass a significantly superior tracker device enabling cost savings of over 20% while adding stability to the overall solar system. Stock has languished in the .015-.04 range for most of the year. This "analyst" sees current prices as a major buying opportunity with truly unlimited upside. (The risk, of course, and why it is priced so low, is that the company has no revenues on the books.) GLTA
