Opinions
Keith Richards
Canadian Solar Inc.
CSIQ-Q
DON'T BUY
Jul 31, 2024
Stock price when the opinion was issued
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Canadian Solar shipments rose 62% to 8.2 gigawatts of modules in 2Q, reaching the midpoint of guidance, and could rise more than 40% to 30-35 GW for the year due to global demand. Sales were roughly flat in 2Q at $2.4 billion, affected by pricing pressure that could also crimp 3Q sales despite guidance calling for higher volumes. Yet full-year guidance ($9-$9.5 billion) is still probably achievable. Gross margin expanded to 18.6% in 2Q vs. 16% a year earlier, yet was flat sequentially. The company's battery rollout, which has a robust utility-scale pipeline of about $2.1 billion in 2Q, could ramp up further as management expects annual production capacity to grow to 10 gigawatt-hours (GWh) from 2.5 GWh by year-end. For the quarter EPS of $2.39 beat estimates of $152, and sales of $2.36B missed estimates of $2.47B.
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Trading at 5x earnings, under book value and with an 18% ROE, CSIQ is a TOP PICK. The 22 year old Guelph Ontario solar manufacturer recently reported earnings that doubled over year ago levels and a 39% increase in revenues. We recommend a stop-loss at $21, looking to achieve $41 -- upside potential of 49%. Yield 0%
(Analysts’ price target is $41.08)
Lots of news and noise. Solar is not as green or as efficient as everybody thought. Massive demand coming on the power grid as AI, data storage, and population grow. Chart tells him that people are just as enthusiastic about that sector as he is, which is not very. Can't endorse the sector.