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S&P 500   4,026.12
DOW   34,347.03
QQQ   286.92
Considerations When Rolling Over a 401(k) into a Roth IRA
THE BEST BLACK FRIDAY DEAL YET (Ad)
Whole Foods decision to pull lobster divides enviros, pols
Biden eases Venezuela sanctions as opposition talks resume
THE BEST BLACK FRIDAY DEAL YET (Ad)
Airbnb has a plan to fix cleaning fees
Saudi viewers angry over apparent ban on World Cup streaming
See how to make money instead of spending it on Black Friday with this offer (Ad)
Cuba's informal market finds new space on growing internet
Walmart shooting claims teen, young woman, father, mother
S&P 500   4,026.12
DOW   34,347.03
QQQ   286.92
Considerations When Rolling Over a 401(k) into a Roth IRA
THE BEST BLACK FRIDAY DEAL YET (Ad)
Whole Foods decision to pull lobster divides enviros, pols
Biden eases Venezuela sanctions as opposition talks resume
THE BEST BLACK FRIDAY DEAL YET (Ad)
Airbnb has a plan to fix cleaning fees
Saudi viewers angry over apparent ban on World Cup streaming
See how to make money instead of spending it on Black Friday with this offer (Ad)
Cuba's informal market finds new space on growing internet
Walmart shooting claims teen, young woman, father, mother
S&P 500   4,026.12
DOW   34,347.03
QQQ   286.92
Considerations When Rolling Over a 401(k) into a Roth IRA
THE BEST BLACK FRIDAY DEAL YET (Ad)
Whole Foods decision to pull lobster divides enviros, pols
Biden eases Venezuela sanctions as opposition talks resume
THE BEST BLACK FRIDAY DEAL YET (Ad)
Airbnb has a plan to fix cleaning fees
Saudi viewers angry over apparent ban on World Cup streaming
See how to make money instead of spending it on Black Friday with this offer (Ad)
Cuba's informal market finds new space on growing internet
Walmart shooting claims teen, young woman, father, mother

SunPower Is Ready To Power Up Triple-Digit Earnings Gains

Key Points

  • Solar stocks like SunPower are set to benefit from tax credits attached to the Inflation Reduction Act.
  • Analysts see triple-digit earnings gains next year.
  • Will the current sideways chart pattern lead to further price gains? 

SunPower Is Ready To Power Up Triple-Digit Earnings GainsThe sun is shining on solar stocks, such as SunPower (NASDAQ: SPWR) following the passage of the Inflation Reduction Act. During a market downturn, it’s critical to pay attention to companies showing fundamental and technical strength, as these could be among the next big winners in a bull rally. 

That’s where solar stocks come in.

Among other things, the bill offers tax credits and rebates to individuals and businesses that install solar energy gear. 

SunPower is not the only stock from its industry outperforming the broader market. Large-cap names like Enphase Energy (NASDAQ: ENPH) and First Solar (NASDAQ: FSLR) also show unusual strength.

SunPower is a mid-cap and is part of the S&P 400 Mid-Cap index, tracked by the SPDR S&P MIDCAP 400 ETF Trust (NYSEARCA: MDY)

The company manufactures photovoltaic solar systems, as well as battery-storage gear, mainly for home use. 

The stock advanced nearly 29% in July as big investors anticipated passage of the Inflation Reduction Act. It bounced nearly 18% higher in August as the Act was passed, and is up 3% so far in September, holding up much better than its index, which is down nearly 10% for the month. 

Rebounding After Losses

The company, which went public in 2005, limped along with losses from 2016 through 2020. That turned around last year, with net income of $0.21 per share. Analysts expect earnings to come in slightly lower this year, at $0.19 per share, but posting a strong rebound next year, to $0.64 per share, on expected sales due to the Inflation Reduction Act.

That would be a whopping gain of 237%. 

Analysts have a “hold” rating on the stock with a price target of $22.20, which would mark a downside of 9.72%, according to MarketBeat data.
SunPower Is Ready To Power Up Triple-Digit Earnings Gains

So what’s going on there, given that earnings are forecast to grow at a triple-digit rate?

First, we’re in a turbulent market that is seeing even strong earners get whipsawed on a moment’s notice, along with the broader market. Second, analysts are divided about some aspects of the company’s business model that relies on direct sales, rather than a subscription model that generates recurring revenue.


But overall, the trend seems headed in the right direction. When SunPower delivered its second-quarter earnings report early last month, the company said it added more than 19,000 customers, more than double the number from a year earlier. 

In the earnings conference call, CEO Peter Faricy attributed the gain to a boom in new home construction, many of which are using green technologies to appeal to younger buyers. Of course, incentives that existed before the Inflation Reduction Act also play a role. 

In the quarter, SunPower’s revenue climbed 60% to $417.8 million. Adjusted earnings came in at $0.03 per share, topping views of $0.05 per share, according to MarketBeat earnings data

On a non-adjusted basis, the company beat views by a penny. 

SunPower’s chart shows an essentially sideways pattern since mid-August. In a formation that began in April, the stock undercut its previous structure low, which can be a good start for a new rebound when the market eventually turns higher. 

Government Actions That Actually Help Stocks? 

Regulatory and governmental changes are certainly a driver of price growth in certain industries, whether or not some investors approve. One of the great lessons of investing is: Set opinions aside, whether pro or con, and watch what the stock and its industry are doing. 

If you purchase any stock, including SunPower or any other solar name, during a volatile market, be aware that even those with great prospects can get swept lower in a heartbeat. On the one hand, there is certainly an opportunity to scoop up shares at lower valuations right now. On the other, use caution about trying to catch the proverbial “falling knife.” 

Should you invest $1,000 in SunPower right now?

Before you consider SunPower, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and SunPower wasn't on the list.

While SunPower currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
SunPower (SPWR)
1.8802 of 5 stars
$24.13+0.5%N/A73.12Hold$21.79
Enphase Energy (ENPH)
2.2396 of 5 stars
$319.42+1.2%N/A153.57Moderate Buy$295.82
First Solar (FSLR)
2.1878 of 5 stars
$171.43+1.2%N/A194.81Moderate Buy$161.96
Compare These Stocks  Add These Stocks to My Watchlist 

Kate Stalter

About Kate Stalter

Contributing Author: Retirement, Asset Allocation, and Tax Strategies

Kate Stalter is a Series 65-licensed asset manager, with more than two decades of experience in various areas of financial services. As an investment advisor and financial planner, Kate personally manages client portfolios, with a focus on successful retirement, including asset allocation, income generation and tax strategies. Kate also serves as a capital-markets contributor at Forbes.com, and is an expert columnist for the investment advisory channel at U.S. News & World Report.
Contact Kate Stalter via email at stalterkate@gmail.com.