After sustaining a 50% drop, it looks like shares of Sunrun (NASDAQ: RUN
) is about to start off on the road to recovery. The residential solar panel company was one of the hottest stocks of 2020, and managed to log a 1,000% run, the peak of which came in early January. As interest rates started popping around that time, however, its shares were caught in the overall slide that the tech space experienced for much of Q1, and saw a sharp selloff take them back towards last summer’s levels.
But in recent weeks, there’s been a run of upgrades
with both the fundamentals and technicals starting to align. With the NASDAQ index back to all-time highs, it’s not unreasonable to think a risk-on sentiment will light a fresh rally under Sunrun’s shares.
On Friday, Piper Sandler upgraded Sunrun shares to Overweight from Neutral. The 50% slide in the share price and the long-term growth potential has them thinking there’s a serious buying opportunity to be had at current prices. Their $77 price target suggests upside of close to 50% which is sure to get the right kind of attention from investors.
Analyst Kashy Harrison summed up the gap between the share price and the larger picture when he said "since the middle of February, solar stocks have come under significant duress due to a combination of rising interest rates, regulatory uncertainty associated with net energy metering in California, a lack of imminent catalysts and a remarkable 2020 run, but the recent move lower is somewhat of a head-scratcher."
Harrison believes Biden’s federal infrastructure package will offer some crucial support to solar names that have been struggling to justify their post-2020 valuations. The trickle-down benefits from this $2.2 trillion package were one of the reasons Morgan Stanley saw fit to list Sunrun as one of the most obvious clean-tech winners, with KeyBanc also expecting them to make hay while the sun shines. The thinking here is that extensions to investment tax credits and production tax credits are major tailwinds to solar names that aren’t currently reflected in share prices.
For those who are thinking about getting involved at current levels, or existing investors who can lower their cost basis by adding more, there’s not a lot to dislike about the opportunity right now. Towards the end of March, Goldman Sachs were out with an upgrade based around the recent sell-off being completely out of sync with what are still attractive long-term fundamentals. They echoed the bullish comments of Susquehanna who in the same week initiated coverage on Sunrun stock with a Positive rating and a $75 price target.
Susquehanna analyst Biju Perincheril sees them having a "dominant current market position and ability to increase market share in the U.S.," with favorable federal policy offering a solid reason for there to be a consistent bid found on any future weakness.
Shares have been consolidating last quarter’s fall in the weeks since and closed last week trading towards the bottom of a narrowing range. In Monday’s pre-market session they were up more than 1%, and they look set for a breakout in the coming weeks. With so many sell-side heavyweights behind them and with Biden ready to deploy billions of dollars in investment to their industry, you’d have to be thinking any breakout is going to be to the north.
We saw last year how quickly Sunrun can run once a rally gets going, and it feels like we’re about to see a replay.
Featured Article: How Investors Use a Balance Sheet7 Semiconductor Stocks Set to Gain From the Chip Shortage
Who knew that something so tiny could create such a big problem? However, that’s the case with the semiconductor industry. Chip manufacturers are facing supply chain disruptions due to the Covid-19 pandemic.
Semiconductors are in high demand for the big tech companies who need the chips to power the servers for their data centers. But they are also needed for much of the technology we take for granted including laptops, tablets, mobile phones, gaming consoles, and automobiles – a sector that seems to be at the root of the current crisis.
Any weekend mechanic knows that even traditional internal combustion cars are heavily reliant on electronics. In fact, electronic parts and components account for 40% of a new, internal combustion vehicle. That’s more than doubled since 2000.
However as it turns out, some manufacturers may have overestimated how soon consumers would be ready for an “all-electric” future. And that meant that they didn’t forecast how much demand there would be for the kind of chips needed to do the mundane, but vital tasks of steering, braking, and even powering windows up and down.
Part of the problem is that U.S. businesses are heavily reliant on countries like China and Taiwan for their semiconductors. In fact, only about 12.5% of semiconductor manufacturing is done in the United States.
Of course, this creates a tremendous opportunity for the companies that manufacture these chips. And it comes at a good time. The semiconductor sector is notoriously cyclical and was coming down from the elevated demand for the 5G buildout.
In this special presentation, we’ll give you a list of seven semiconductor companies that you can invest in to take advantage of this opportunity.
View the "7 Semiconductor Stocks Set to Gain From the Chip Shortage"
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