SolarCity Corp (NASDAQ: SCTY)
SolarCity is one of the larger solar power companies out there. Unfortunately however, their stock has been down recently as a result of less than attractive financial data. The reality is that the company is working with less than desirable cash flow. However, for me, it’s relatively easy to look past the cash flow and look at all the good factors that are likely to push SCTY upward. So today, we’ll talk about 3 reasons to be bullish on the stock.
Trade smarter and make more money with Tradespoon!
Smart About Raising Funds
Securing funds is important for just about any publicly traded company. After all, without securing funds, it becomes hard for the company to grow. SCTY is incredibly smart about how it secures funding. Instead of taking out loans with financial institutions, the company securitizes its assets. In fact, SolarCity just announced the securitization of distributed solar PPA and lease assets today. This marks the company’s sixth securitization transaction and provides a glimpse into how they are able to secure funding at an incredibly low cost. In fact, this particular securitization should drive $49.6 million at a rate of $3.13 per watt and a yield rate of 6.25%. In a statement, Radford Small, Executive Vice President of Capital Markets at SCTY had the following to say:
“Securitization continues to be a cost-effective financing mechanism for us, even in a volatile market, which reflects the quality of our distributed solar assets and the reliability of these cash flows… In this transaction, we received $3.13 of financing per watt solar generation capacity in the portfolio, well outpacing the $2.71 per watt installation cost we achieved in Q4 2015…”
Solar Industry Is Going To Get Very Hot
Another reason that it’s worthwhile being bullish on SCTY is the solar industry as a whole. Take a look around, things are changing when it comes to the energy sector, and changing in a big way. The reality is that it has been proven that the burning of fossil fuels leads to greenhouse gas emissions, which then lead to global warming. As a result, consumers, businesses, and governments alike are all working to move to sources of clean energy. In fact, in December of last year, Paris reached a landmark climate change agreement with 195 different countries. Under the agreement, all countries have agreed to work to reduce greenhouse gas emissions. To do so, they will have to reduce reliance on fossil fuels and move to clean energy, which will likely increase demand for companies like SCTY. All in all, the energy industry is making a big shift, and it’s shifting more toward clean energy today than ever before.
Smart Money Invests In SCTY
Finally, sometimes, if you’re unsure, it’s a good idea to look to see what smart money is doing. Well, I’ve got to say, I already checked it out, and they are investing in SolarCity. In fact, within just the past week, we’ve seen two big SEC filings showing that big money is increasing their stake in SCTY. First, Janus Capital Management raised its stake in the company by 29.2%. Also, Tocqueville Asset Management L.P. Increased its stake in the company by 7.7%. The reality is that smart money tends to make strong decisions in the market. Therefore, with smart money proving to love SCTY, it may be time to start following their movements.
The reality is that SCTY is a great company. While the stock has had a rough month, I believe that we’re going to see strong gains from here. In fact, I believe that the rough month has brought the price of SCTY down to a very appealing rate. With great ways to raise funds, a change in tides in the energy sector, and the fact that smart money sees something great in SolarCity, I don’t see any reason to be anything but bullish on this stock at the moment.
Don’t waste your time! Click here to find winning trades in minutes!
What Do You Think?
Where do you think SCTY is headed and why? Let us know your opinion in the comments below!
[Image Courtesy of Wikipedia]