|Written by GSCR Staff|
|Friday, 12 August 2016 06:35|
In Monday’s Goldman Guide we referenced the 80’s commercial craze “Where’s The Beef”. Our younger readers may not get the reference, and to be honest, we are not sure if there is anything close to the cultural phenomenon the ads created. The closest thing we could think of was the musings of ‘The Most Interesting Man in the World”, who ran a marathon because it was on the way among other accomplishments. But we digress. The tagline was meant to point out the weakening EPS figures for the S&P. We also pointed out that it may be time to look for down in the dumps consumer discretionary or energy stocks.
One energy stock that caught our eye initially was SunPower Corporation (NASDAQ – SPWR - $10.63). We decided otherwise due to several downgrades. On a side note, the Company conducted its quarterly conference call the other day and it was less that cordial. Here is a very interesting read.
The three-year chart for Canadian Solar, Inc. (NASDAQ – CSIQ - $13.09) is illustrated below. This is one our older Market Monitor picks from way back in November of 2013, and has had many peaks and valleys over that time. The stock is down over 50% since then as well as year-to-date coincidentally.
CSIQ 3-Year Chart
Canadian Solar Inc., together with its subsidiaries, designs, develops, manufactures, and sells solar wafers, cells, and solar power products primarily under the Canadian Solar brand name. The Company operates through Module, Energy Development, and Electricity Generation segments. Its products include various solar modules that are used in residential, commercial, and industrial solar power generation systems. The Company also provides specialty solar products consisting of Andes Solar Home System, an off-grid solar system, designed to provide an economical source of electricity to homes and communities without access to grid; and Maple Solar System, a clean energy solution for families, as well as solar system kits, which are a ready-to-install packages, such as inverters, racking system, and other accessories.
There are two major reasons we like CSIQ. First, EPS reporting which ties into the Company’s operating margin. An operating margin consistently above 7% has been a major contributor for the Company to hit or exceed EPS estimates four consecutive quarters. This is crucial for momentum pops. Secondly, there may be some M&A activity with larger firms looking to add technology and efficiencies by buying small cap firms like Canadian Solar. The all-important metric here is Enterprise Value to EBITDA value, which is a low 8.2
We believe CSIQ will begin an accumulation phase. Look for the stock to climb back to $17 by the end of the year.
Have a great day!
Goldman Small Cap Research is not affiliated in any way with Goldman Sachs & Co.
It is important to note that while we may track performance separately, we utilize the same coverage criteria in determining coverage of all stocks in both research formats. Please view the company’s individual disclosures for each engagement, which can be found in each company-specific report. All information contained in this blog, newsletter and in our reports were provided by the Companies or generated from our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations.
The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Goldman Small Cap Research did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company, or other firms. Goldman Small Cap Research relied solely upon information provided by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Such information and the opinions expressed are subject to change without notice. A Goldman Small Cap Research blog, report, note, or newsletter is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed.
This blog does not take into account the investment objectives, financial situation, or particular needs of any particular person. This blog does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. Neither Goldman Small Cap Research, nor its parent, is registered as a securities broker-dealer or an investment adviser with FINRA or with any state securities regulatory authority.
ALL INFORMATION IN THIS BLOG, REPORT OR NEWSLETTER IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR REPRESENTATIONS OF ANY KIND. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THISÂÂ ÂÂ INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION OF INFORMATION.
For more information, visit our Disclaimer: www.goldmanresearch.com