Sunedison Inc (NYSE: SUNE)
Sunedison has been having a rough time in the market as of late. However, based on my analysis, there’s really not much of a reason for the declines. Nonetheless, a big question is starting to pop up due to what we’ve been seeing… When will SUNE hit bottom? In my opinion, this is just around the corner. Today, we’ll talk about why I believe SUNE is likely to climb and the current declines are nothing more than a discounted opportunity to get in on gains.
Trade smarter and make more money with Tradespoon!
Sunedison’s Biggest Problem
The biggest problem for SUNE at the moment is debt. After all, there’s no denying that the company has a massive amount of it. Before we got into discussions about the debt, SUNE was flying high. However, in December, the company made a deal that would allow it to pay off outstanding debt by taking on new debt. Investors weren’t a big fan of this deal. So naturally, since the deal took place, we’ve seen declines on the value of Sunedison. However, should investors really be concerned about the debt? In my opinion, the answer is no, here’s why…
Why Investors Shouldn’t Be Worried About SUNE Debt
It’s no secret that debt can be enough to put a company out of business. However, SUNE is nowhere near this point. I understand that from the outside looking in, the nearly $1 billion in debt is a big chunk and a massive concern. However, if investors took the time to read between the lines and perform a real analysis of the debt and the company’s assets, there would be nothing at all to be concerned with. The reality is that investors should be concerned when the amount of debt a business holds grows to about the value of half of the company’s assets. This is when debt becomes a problem. Nonetheless, SUNE is nowhere near this point. In fact, if SUNE decided to sell all of its assets, it could easily pay off its debt with plenty of money left over. In fact, if all assets were sold, after paying off debt, SUNE would have about $4.5 billion to divide between its investors. This works out to be about $14 per share! Considering these facts, is debt really an issue? I think not!
Solar & Renewable Energy Demand
Another kicker here that’s likely to send SUNE up is the growing demand for products within the realm of what the company sells. The reality is that the global perspective on energy is changing, and changing quickly. This is the result of the drastic climate change we’ve seen as the result of global warming. Yes, believe it or not, global warming is a real thing – it’s caused by greenhouse gases. Where do these greenhouse gasses come from? Oil! We all know that. What’s surprising to me is that we are starting to see governments putting their feet down in an attempt to find a solution to the issue. In fact, late last year, Paris signed a landmark climate change deal under which 195 countries agreed to reduce the emissions of greenhouse gasses in their areas of the world. How will this be done? Well, through renewable energy source, of course! If that wasn’t enough to lift demand, the United States government has made the decision to extend a 30% tax credit for businesses and consumers that install renewable energy systems in their homes or offices. That’s a nice incentive and will definitely help to boost demand. So, we can expect demand for renewable energy systems – like the ones offered by SUNE – to climb!
The Bottom Line
The bottom line is that SUNE is a great company. While we’ve seen bearishness on the stock as of late, that bearishness is rooted in sentiment. Looking at the fundamental data surrounding the stock, it’s clear that we’re likely to see long run gains. So, the declines we’re currently seeing are nothing more than an opportunity to get in on future gains from SUNE at an incredible discount.
Don’t waste your time! Click here to find winning trades in minutes!
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]