In light of the Invesco Solar Exchange-Traded Fund (TANNING, Financial) down nearly 30% from its January peak, three solar companies that have good financial strength and solid Piotroski F-scores as of Thursday are First Solar Inc. (FSLR, Financial), Shoals Technologies Group Inc. (SHLS, financial) and Enphase Energy Inc. (ENPH, Financial) according to the all-in-one filter, a premium feature of GuruFocus.
According to CNBC, Katie Stockton, managing partner and technical analyst at Fairlead Strategies, said on the channel’s “Trading Nation” segment that solar stocks “have been under pressure along with growth stocks.” The Invesco Solar ETF was trading Thursday at around $87.61, up around 1.31% from the previous close, but down around 15.84% for the year to date and around 28.85% over the last three months.
Thus, investors can find good value opportunities in solar stocks that have strong balance sheets and a good Piotroski F score. Developed by accounting professor Joseph Piotroski, the F score assesses a company’s business operations on a scale of nine points which takes into account ratios such as return on assets, debt to assets, asset turnover, change in working capital, gross margin and current ratio.
Piotroski’s research found that the higher a company’s F-score, the stronger its business operations and, therefore, the higher the potential return on the stock. GuruFocus defines an F score of 7 or higher as a good score, while F scores of 3 or lower are considered poor.
The Screener listed three solar companies with a GuruFocus financial strength rank of at least 6 and a Piotroski F score of at least 5, meaning the stock meets at least more than half of the nine Piotroski criteria.
First Solar (FSLR, Financial) designs and manufactures solar photovoltaic panels, modules and systems for use in large-scale product development. GuruFocus ranks the Tempe, Arizona-based company’s financial strength 8 out of 10 on several positive investment signs, which include a strong Altman Z score of 4.68 and leverage ratios outperforming competitors more than 65%. global.
First Solar’s Piotroski F-score ranks 6 out of 9, due to factors such as increasing asset returns, declining debt ratios, increasing current ratios and increasing gross margins. one year to the next.
Gurus with large stakes in First Solar include Pioneer Investments (Trades, Portfolio),
Jim Simons (Businesses, Portfolio)’ Renaissance Technologies and
Stanley Druckenmiller (Jobs, Portfolio).
Shoal technologies (SHLS, Financial) provides electrical balance system solutions for solar power projects in the United States. GuruFocus ranks the Portland, Tennessee-based company’s financial strength 6 out of 10: The company has a double-digit Altman Z score despite underperforming interest coverage ratios of more than 60%. of global competitors.
Shoals’ Piotroski F-score ranks 7 out of 9 thanks to increased asset returns, current ratios, gross margin and asset turnover from 2019 to 2020.
Enphase Technology (ENPH, Financial) designs and produces home energy solutions that connect solar generation, storage and energy management into a single smart platform. GuruFocus ranks the Fremont, Calif.-based company’s financial strength 6 out of 10 based on a double-digit Altman Z score despite underperforming debt ratios of more than 59% of its global competitors.
Enphase Technology’s F Piotroski Score Ranks 5 out of 9 on Lower Debt Ratio and Higher Year-over-Year Gross Margins Despite Lower Asset Returns and Asset Turnover from one year to the next.
Disclosure: No position.
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