In today’s Daily Alert The Complete Investor Editor Stephen Leeb introduces a stock with a unique business model in the resurgent solar power industry. A recent IPO, the stock doesn’t have much history, but it has done well in its seven-and-a-half months as a public company. This stock is appropriate...
In today’s Daily Alert The Complete Investor Editor Stephen Leeb introduces a stock with a unique business model in the resurgent solar power industry. A recent IPO, the stock doesn’t have much history, but it has done well in its seven-and-a-half months as a public company. This stock is appropriate for speculative investors.
SolarCity’s clever and unique business plan and heavyweight backing have resulted in a more than fourfold gain since its public debut in December 2012. The company develops energy solutions for a large and diverse array of clients ranging from government agencies to Fortune 500 companies such as Wal-Mart (WMT) to individual homeowners.
Though some of its revenues are in the form of consulting fees, the bulk come from leasing solar arrays to its customers. This means that in contrast to other solar companies, SolarCity isn’t competing on price with solar panel producers, but instead buys from the cheapest, serving as a conduit between the most efficient solar producers and consumers.
While the payback from the leases is very slow—solar takes a long time to pay for itself—they also are very sure. SolarCity’s growth prospects come from its ability to add new customers together with the growing likelihood that solar will become increasingly competitive with other forms of energy. While the company will not likely produce a profit until well after 2015, we expect sales growth of at least 50% a year over the next three to five years, with sales topping $325 million by 2015.
Adding both cachet and potential monetary resources to the company is Elon Musk. Over the past five years Musk has distinguished himself as one of the country’s most successful entrepreneurs. He is the biggest shareholder of Tesla Motors (TSLA), which has become the leading U.S. electric car company, and of privately held Space Exploration Technologies, which made history as the first private company to launch cargo to the International Space Station. Musk recently filed plans to increase his ownership percentage in SolarCity. We think the stock is an exciting speculation with a lot more potential upside.
Stephen Leeb, PhD., The Complete Investor, www.completeinvestor.com, 866-833-2070, August 2013