New Trade for October 27th, 2020

Futures are green this morning after yesterday’s tumble.  The Dow sank 650 points, closing below 28,000 in its biggest one day drop since Sept. 3.  Will stocks be able to recover some of yesterday’s losses?  Only time will tell.  

Congratulations to our readers who acted on our October 22nd trade alert and went long NextEra Energy.  After yesterday’s close, NextEra announced a four-for-one split and also increased its guidance.  NextEra’s announcement comes hot on the tailwinds of Apple and Tesla, which both announced splits in Late August — and subsequently saw their shares soar.  NEE share price is rising in pre-market trading on the news.

This morning we are looking at another company set to soar as the transition to renewable energy takes hold.  

Despite the growing competitive landscape, Sunrun Inc. (RUN) is still arguably the most dominant solar pure play in residential solar.   Sunrun is currently valued at $11.3 billion and a P/S ratio of ~8.3%, making it one of the largest solar companies in the industry.  The company recently completed its acquisition of Vivint Solar (VSLR), further cementing Sunrun as a leader in the fast-growing industry.  By acquiring Vivint, Sunrun ensures that its direct-to-home sales method will play a larger role in its business.

With only ~3% American households currently utilizing solar, the growth case for RUN is promising.  Especially considering that Sunrun and Vivant held a combined 17.5% share of U.S. residential solar market in 2019. The No. 3 player, Tesla, had a 4.6% market share.  

The consensus among analysts is that Sunrun Inc. is an overweight stock at the moment.  None of the analysts rate the stock as Sell, 3 out of 11 have rated it as Hold with 8 advising it as Buy


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