2 Outperforming Solar Companies With High Financial Strength
In light of President Trump's announcement of tariffs on bifacial solar panels, two solar companies that have outperformed the Standard & Poor's benchmark over the past six months and have the financial strength to weather additional headwinds stemming from the U.S.-China trade war are First Solar Inc. (NASDAQ:FSLR) and SolarEdge Technologies Inc. (NASDAQ:SEDG).
Dow trades slightly lower as investors await U.S.-China trade talks
The Dow Jones Industrial Average closed at 26,477.61 on Monday, down 96.11 points from last Friday's close of 26,573.72. Investors looked ahead to the next round of trade talks between the U.S. and China, which are scheduled to resume on Thursday. Despite this, Apple Inc. (NASDAQ:AAPL), the top holding of Warren Buffett (Trades, Portfolio)'s Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B), closed relatively unchanged from the prior close: Shares of the Cupertino, California-based tech giant increased 5 cents from last Friday's close of $227.01.
CNBC columnist Pippa Stevens said on Monday that the Trump administration announced it will add a 25% tariff on bifacial solar panels starting Oct. 28. Goldman Sachs Group Inc.'s (NYSE:GS) Brian Lee added that while the increased tariffs might result in "significant volatility" across the solar industry in the near term, U.S.-based solar manufacturers might benefit from the tariffs over the long term.
GuruFocus' All-in-One Screener, a Premium feature, found two stocks from the solar industry that have a financial strength rank of at least 6 and a six-month relative to the S&P 500 total return of at least 5%.
First Solar
Tempe, Arizona-based First Solar designs and develops photovoltaic solar modules, utility-scale solar systems and operating systems. GuruFocus ranks the company's financial strength 6 out of 10: Even though it has a poor Piotroski F-score of 3 and a Beneish M-score that suggests possible earnings manipulation, First Solar's cash-to-debt ratio and debt-to-equity ratio outperform over 63% of global competitors.
According to the Screener, First Solar has outperformed the S&P 500 benchmark by 5.61% over the past six months. Gurus with large holdings in the company include Pioneer Investments (Trades, Portfolio) and Steven Cohen (Trades, Portfolio).
SolarEdge Technologies
SolarEdge, an Israeli solar company, provides direct-current optimized inverter systems that maximize power generation at the individual solar module level. GuruFocus ranks the company's financial strength 8 out of 10 on several positive indicators, which include solid interest coverage of 14.1, a strong Altman Z-score of 6.71 and debt ratios that outperform over 70% of global competitors.
Disclosure: No positions.
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This article first appeared on GuruFocus.
