(This is an excerpt from an article I published on Seeking Alpha. Click here to read the entire piece)
Perhaps it is not a good idea to use the term “watershed” twice in a year when referring to solar stocks, but it seems to me that Total Group’s acquisition of a 60% controlling stake in SunPower Corporation (SPWRA) will shine a spotlight on the values available in the solar sector. If nothing else, it could help direct some attention away from a potential slowdown in the second half of the year to the longer-term, upside potential in solar.
On the flip side, this deal caught me flat-footed. When I wrote about SunPower’s breakout in February, I had a long position in play ahead of an earnings announcement that I concluded held high upside potential. When SunPower delivered, I took profits (as usual, I reported the trade in twitter using the #120trade hashtag)…anticipating a pullback from such a sharp move. The stock did indeed come back down, but I failed to reload even as the stock floated near support at the 200-day moving average (DMA). It was neglect on my part, not a lack of interest! Fortunately, Total Group and SunPower structured a a deal that leaves some common shares available to the market. This will allow traders and investors to continue to participate in the remaining upside potential that both companies see in the business.
*Chart created using TeleChart:
I decided to listen to SunPower’s conference call announcing and explaining this deal because I wanted to learn more about the history, background, rationale, and benefits of the deal. I was not disappointed…
(Click here to read the rest of this piece, including my notes from the conference call, on Seeking Alpha.)
(Click here for archived commentary on SunPower)
Be careful out there!
Full disclosure: long LDK calls, FSLR