Investing in SunEdison (NYSE: SUNE)
This Energy Stock is a Screaming Buy!
Say what you want about China, but when the Middle Kingdom goes big, it goes BIG!
Check out this recently released satellite image of a solar power station in the Gobi Desert:
It’s still in production, but to clarify just how big this is, when completed, it will measure 10 square miles and produce enough electricity to power around one million homes.
Of course, it’s no secret that China is in a mad dash to integrate a massive amount of renewable energy.
Last year, Chinese officials announced a mandate to triple installed solar capacity to 70 gigawatts by 2017. Wind power capacity is also required to grow to 150 gigawatts.
There are a couple of reasons for this...
First, China is choking on its own progress.
Building an industrial powerhouse doesn’t come without side effects. History has proven this time and time again.
From the Great Smog of UK’s industrial revolution (where cows actually choked to death) to the waters of Ohio’s Cuyahoga River, which caught fire in 1969, growth, when pursued in an irresponsible manner, can really foul things up.
We’re seeing this today in China, where the air pollution is so bad that scientists say it resembles a nuclear winter. Photosynthesis in plants has actually slowed.
I’m not sure if you’ve ever been to Beijing, but here’s how it looks on a particularly bad day:
Why I Dumped China
Another reason China has been so aggressive on the solar front is because the country's entire solar industry has been shouldered by the government.
Without significant state support — in the forms of mandates and massive cash infusions — it’s likely that nearly every solar company in China today would be floating downstream in the industrial waste- and sewage-filled waters of the Yellow River.
Earlier this year, as we began to see the cracks form in China’s stock market, I sent out an alert to let readers know it was time to dump China solar stocks. Since that email, all but one have tanked.
Between the fact that most Chinese solar companies live and die by how much the government supports them and that China is just an extremely risky bet right now, it made no sense to hitch our wagon to China solar stocks when there are plenty of U.S. solar stocks that are much more valuable.
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A Buying Opportunity
Right now, there are four U.S. solar stocks and one Israeli solar stock that are primed for massive growth — and all five have been able to compete successfully against a heavily subsidized Chinese solar market.
- SunPower (NASDAQ: SPWR)
- First Solar (NASDAQ: FSLR)
- SolarCity (NASDAQ: SCTY)
- SunEdison (NYSE: SUNE)
- SolarEdge (NASDAQ: SEDG)
A side note about SunEdison...
Last week, the company announced a wider-than-expected loss. The stock fell sharply as investors jumped ship. But rest assured, they’ll soon be swimming in an ocean of regret.
While some were scared off by the loss, others used the dip in share price as a buying opportunity.
The truth is, losses are expected to continue through 2017, but the huge buying spree that the company’s been on lately is setting it up to be the biggest renewable energy player on the planet.
From running wind farm operations in India to consolidating the U.S. installation market with its recent purchase of Vivint Solar (which is a very big deal), SunEdison is quickly becoming a behemoth.
With recent acquisitions, the company should double installations next year, with long-term power purchase agreements allowing for the long-term, steady flow of revenue.
Bottom line: SunEdison is a bargain at current levels.
As Patrick Jobin of Credit Suisse put it:
The company did exactly what it should do, which is demonstrating their ability to execute on profitable project development.
To a new way of life and a new generation of wealth...
@JeffSiegel on Twitter
Jeff is the founder and managing editor of Green Chip Stocks, a private investment community that capitalizes on opportunities in alternative energy, organic food markets, legal cannabis, and socially responsible investing. He has been a featured guest on Fox, CNBC, and Bloomberg Asia, and is the author of the best-selling book, Investing in Renewable Energy: Making Money on Green Chip Stocks. For more on Jeff, go to his editor's page.
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