Sunedison (SUNE) Stock: Take A Billionaire’s Approach

Sunedison Inc (NASDAQ: SUNE)

Sunedison is an incredible company. However, as we’ve seen time and time again in the market, blind fear is driving the stock down in a big way. Nonetheless, Warren Buffet once said that to make money in the market, you need to become greedy when fear is high and fearful when greed is high. Now, Warren Buffet has proven that his model works, but it’s not all that simple. Of course, it’s only a good idea to become greedy after researching and ensuring that what you become greedy about has a great value proposition. In the case of SUNE, the value is tremendous and the fear is overwhelming. In my opinion, it’s time to buy! Today, we’ll talk about where SUNE holds value, why fear is high, and why this is a great opportunity for those that have the testicular fortitude to get involved.

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Sunedison’s Value Far Outweighs Its Price

After an onslaught of short positions and sales of shares, SUNE is trading incredibly low at the moment. In fact, it’s 10:34 today and the stock is trading at $3.10 per share after falling nearly 7%. While it seems as though the market has made up its mind… the market is often a very confused being. In this particular case, it can’t seem to tell its head from its hindquarters. That’s becomes SUNE is an incredible value.

Let’s take the blinding fear out of the equation for just a minute and take a look at the core assets owned by SUNE. If Sunedison decided that it was tired of being in business and that it would liquidate its assets to pay off debt and be done with it, we would see something incredible. The company would be able to pay off 100% of its debt and then some. In fact, after all debts were paid off, more than four and a half billion dollars would be left over for shareholders. This works out to about $14+ per share. Now that $3.10 price isn’t looking too shabby is it?

Another Reason SUNE Is A Great Investment

Now, let’s take a look at the company’s yieldco business model. While this model is definitely confusing to some, when you understand it, it’s actually brilliant. First Sunedison establishes a solar or wind powered power plant. From there, the company sells the plant to subsidiaries known as yieldcos. In doing so, the company separates the risks associated with construction from the risks associated with operation. The higher valued SUNE handles the higher risk construction while the lower valued yieldco handles the lower risk day-to-day operations. This separation of risk is key to growth for SUNE and will likely lead to quite a bit of it!

Demand For Renewable & Clean Energy

Finally, let’s talk about the end product that SUNE produces – clean, renewable energy. This is a big business, and will likely only get bigger. Have you noticed that the world is getting warmer? The reality is that global warming has been scientifically proven at this point. It has also been scientifically proven that the warming is being caused by greenhouse gasses, which are produced when fossil fuels like oil are burned. As a result, governmental bodies are starting to make very big changes. In fact, in December, Paris reached a landmark climate change deal that will affect 195 countries around the globe. Under the deal, each of these countries has made the decision to reduce their reliance on fossil fuels to help get global warming under control. This will surely increase demand for renewable energy. Not to mention, here in the US, the government has made the decision to extend a large federal tax credit for consumers and businesses that make the decision to install renewable energy systems in their homes or offices. This is going to be another driver of demand.

The Bottom Line

The bottom line here is that SUNE is an incredible company with an incredible product. The only thing that’s not incredible is the stock’s movement in the market. Blind fear has taken over as it does all too often and a great company is caught in the cross fire. Nonetheless, SUNE is going to grow, and those that have it in them to get greedy when fear is high, will soon benefit from their decision.

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What Do You Think?

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

[Image Courtesy of Wikipedia]

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