We have maintained our Neutral recommendation on
Canadian Solar Inc.
) on Aug 27, 2013 on the back of global sales network and brand
reputation, partially tempered by the uncertainty in trade and
solar energy feed-in-tariff policy in Europe.
Why the Reiteration?
Canadian Solar caters to a geographically-diverse customer base
spread across its key markets in Germany, Spain and the U.S., as
well as emerging market opportunities in France, the Czech
Republic, Italy, South Korea, Canada, Japan and China. The
company's focus on preserving cost leadership while ensuring the
high quality of solar products and solutions, expanding the
customer base as well as global footprint, enable it to emerge as
a strong player with opportunities for growth.
Currently, Canadian Solar's main objective is to return to
profitability. Indeed, the company has reduced its reliance on
the European market to minimize the risk associated with the
trade dispute between EU and China, as well as to focus on more
profitable opportunities in other markets.
The company's other major source of revenue is the implementation
of solar power development projects throughout the world. The
company is focused on expanding its engineering, procurement and
construction and solar systems kits business.
Despite these positives, we expect the company's position to be
impacted by the industry-wide oversupply and rising competition
in the market. Given the industry-wide high inventory level, we
do not see any short-term improvement in the company's margins.
Other Stocks to Consider
Canadian Solar presently retains a Zacks Rank #3 (Hold). However,
other stocks that are worth considering in the solar space are
JinkoSolar Holding Co., Ltd.
). While SunPower Corp. carries a Zacks Rank #1 (Strong Buy),
JinkoSolar Holding and ReneSola Ltd. hold a Zacks Rank #2
CANADIAN SOLAR (CSIQ): Free Stock Analysis
JINKOSOLAR HLDG (JKS): Free Stock Analysis
RENESOLA LT-ADR (SOL): Free Stock Analysis
SUNPOWER CORP-A (SPWR): Free Stock Analysis
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