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Saturday, April 21, 2018

SpeculatingStocks.com Stock Pick



Stock Price: $4.05

Vivint Solar, Inc. engages in the provision of residential solar. It also designs and installs solar energy systems, and offers monitoring and maintenance services.

VSLR makes going solar easy for homeowners through the Vivint design team and making sure all the local permits are attained. The company has a goal of helping residential customers shrink their energy bill. Solar roofs are something that will catch on more and more as energy from power plants continues to rise. Solar is also much cleaner, and the majority of Americans support clean energy.


VSLR is a player in the solar installation space with a market cap of only $466 million with $108 million in cash on the balance sheet. The company has grown their profit from $13.0 million in 2015 to $17.9 in 2016 to $209 million in 2017. The $209 million net income number from 2017 should be taken with a grain of salt as it is an outlier. A great sign is that gross profit in 2017 swung to $37.7 million versus a gross profit loss of $38.8 in 2016. VSLR has been trending higher since the fourth quarter and full year report on March 7th. The company will report next on May 8, 2018 after the bell. Watch for guidance for the company's key second quarter, the spring quarter. Vivint Solar has solid momentum that can be continued forward.

Google stated a year ago that 60 million US rooftops are solar viable, taking into account the weather. That’s a huge potential market for Vivint Solar. In February of 2017, VSLR announced that they have installed more than 100,000 solar energy systems for residential customers in less than six years. This is significant traction in a major growth industry. It's also a recurring market as new homes are being built with the option for solar panels to come standard.

The solar market is about to make a strong comeback with oil charging higher. High oil prices inflate the whole energy sector including prices as consumers, governments, and investors look for energy alternatives. The energy sector as a whole could have a strong run the next 5-10 years.

Both short-term and long-term, we could see VSLR ride this wave higher. VSLR has momentum, moving from the $3.00 level through both its 50-day and 200-day to $4.05 currently.

Short sellers (22.8% short interest in VSLR) are banking that the long-term debt situation that VSLR faces is too immense, but the company has survived by funding itself through stock sales and further borrowings. Vivint Solar isn’t going anywhere. In 2010, Goldman Sachs increased VSLR’s credit facility agreement to $565 million. Vivint has made it through the tough times and that has to be respected for gaining over 100k customers in an emerging industry. The sentiment towards solar stocks is about to swing back into their favor again as investors flow back into stocks such as VSLR.

Speculative Score: 4

1 Being the Least Speculative and Most Confident

10 Being the Most Speculative and Possibly the Most Risky

 
     
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