SunEdison (SUNE) Stock: Is It Time To Buy?

2

SunEdison Inc (NYSE: SUNE)

SunEdison has been a big topic of conversation among investors as of late – and for good reason! While there are strong reasons to be excited about renewable energy stocks, there’s also a valid reason to be concerned about SUNE. Today, we’ll talk about the concerns revolving around SunEdison, signs that the stock is headed for positive movement, and whether or not now is the time to buy SUNE.

The Big Concern Revolving Around SUNE

The concern investors have with regard to SunEdison is financial data. In fact, this concern recently led to legal action. Currently, there is a class action case against SUNE that states that the company misled investors. The suit claims that the company released several positive earnings reports portraying strong financial data in the years 2014 and 2015. However, following the earnings reports, the company spent massive amounts of money on acquisitions leading to a poor financial position. While I will gladly argue against this case, and that will happen later, it is a very valid concern.

Following the news of the lawsuit, we’ve seen several pieces of news from SUNE. Most of this news revolves around the company’s attempts to pay off or restructure large amounts of debt. As a result, some investors see the moves to pay off debt as a desperate attempt, leading to further concerns. All in all, financial data is the primary cause of concern revolving around SUNE.

News That Points To Positive Movement

While there is a valid reason to be concerned about what’s going on with SUNE, there has also been a slew of positive news surrounding the renewable energy market as a whole. The recent news surrounding the renewable energy market suggests that SunEdison will enjoy a higher sales volume. The news includes:

  • Paris Climate Change Deal – In December, Paris reached a landmark climate change deal. Under the deal, 195 countries have agreed to work to reduce greenhouse gas emissions. As a result, these countries will have to work to reduce reliance on fossil fuels. The best way to do so is to focus on renewable energy. Because the US is one of the countries involved, SUNE is likely to see higher sales volume as a result of the deal.
  • US Extends Tax Credit – For quite some time, there has been a 30% federal tax credit in place for consumers and businesses that install renewable energy systems. This tax credit was set to expire at the beginning of 2016. However, in December, we learned that this federal tax credit had been extended.

Ultimately, the world is shifting to a more environmentally friendly mindset. This is likely to lead to a stronger sales volume for SUNE and other renewable energy companies.

What We Can Expect To See Moving Forward

Moving forward, I’m expecting to see positive news from SUNE. First and foremost, in my opinion, the lawsuit the company is facing is baseless. The reality is that yes, acquisitions can be expensive, and yes, this can tilt the books. However, the old saying “you have to spend money to make money” is very true. The simple fact is that the acquisitions will position SUNE to take a larger percentage of the market share in renewable energy, which is actually a good thing in the long term! It’s also worth mentioning that the market is going to get larger. After all, the world is experiencing a shift away from fossil fuels and toward renewable energy. While fear may be a strong emotion among SUNE investors, the great Warren Buffet once said something along the lines of you have to buy when fear is high. In my opinion, this statement will likely prove to be true when it comes to SUNE.

What Do You Think?

Where do you think SUNE is headed and why? Let us know your opinion in the comments below!

[Image Courtesy of Wikipedia]

2 COMMENTS

  1. The concerns stated here could also apply to fossil fuel companies who are now being investigated by the DOJ. And, it strikes me that their crime has far more negative repercussions than a buying spree by SUNE. In fact, I think the purchases were needed to diversify into other renewable markets. No one form of renewable energy is going to win the entire market since what’s best for one location is not the best in another. So, I’m buying the dips.

  2. I was and am continuing to buy SUNE on any dips. When you have a technology that allows you to derive energy from the sun and produce electricity to the grid for $0.05 per kilowatt, how can anyone not get excited? This cheap alternative energy is being enhanced for opportunity by the development of new battery storage that will allow power to be stored during cloudy, snowy, rainy, or whatever the conditions and be used over days. This changes the old thinking that the batteries would run out of power if there were no sun for three or four days at a time. Not the case anymore. When some professionals consider that this stock is potentially undervalued by 500%, you have my attention. It just might be time to “back up the truck” as this company has tremendous potential for growth in my opinion.

LEAVE A REPLY

Please enter your comment!
Please enter your name here