The solar industry is struggling with rising raw material prices and declining installations. So it might be wise to avoid the fundamentally weak solar stocks Polar Power (POLA), iSun (ISUN) and Ascent Solar Technologies (ASTI) for now. Read more.
The solar industry is currently struggling with a sharp rise in raw material prices. In addition, investors should exercise caution when investing in penny stocks during times of high market volatility due to the heightened risks involved.
That’s why I think Polar Power, Inc. (POLA), iSun, Inc. (ISUN), and Ascent Solar Technologies, Inc. (ASTI) could be a wise decision.
Last year was one difficult for many industries, including solar energy. The price increases of raw materials, production and shipping affected the solar energy supply chain.
In addition, the industry is facing unprecedented volatility as the battle for profit heats up. This is illustrated by the fluctuation in the price of polysilicon, the primary material used in the production of solar panels, which experienced a sudden drop of more than 40% in just a few weeks in December.
Additionally, according to the 2022 US Solar Market Insight released by the Solar Energy Industries Association and Wood Mackenzie, utility-scale installations decreased by 31% year-on-year to 11.8 GW, the lowest total in the industry since before the COVID-19 pandemic. Commercial and municipal solar installations also fell 6% and 16% respectively.
Check out the stocks listed above:
Polar Power Inc. (POLA)
POLA designs, manufactures and markets direct current (DC) power generators, renewable energy and refrigeration systems in the United States and internationally. The company offers basic DC power systems, DC hybrid power systems, DC solar hybrid power systems and mobile power systems.
The 12-month asset turnover rate of 0.63x is 22% lower than the industry average of 0.80x. The 12-month gross profit margin of 13.23% is 55.8% lower than the industry average of 29.94%.
POLA’s net sales declined 58.7% year over year to $1.71 million during the fiscal third quarter ended September 30, 2022. Gross loss was $247 thousand, compared to a gross profit of $966k in the prior year quarter, while net loss was $2.38m compared to net profit of $942k.
Also, net loss per share was $0.19, compared to net earnings per share of $0.07 in the same quarter last year.
The stock failed to beat revenue estimates in each of the next four quarters, which is disappointing.
The stock is down 61.2% over the past year to close out the last trading session at $1.22. The 24 month beta version is 1.08.
POLAs POWR ratings reflect this bleak outlook. The stock has an overall D rating, which equates to a sell in our proprietary rating system. The POWR ratings are calculated by considering 118 different factors, with each factor optimally weighted.
POLA has also been rated an F in growth and a D in quality and stability. It ranks 13 out of 21 stocks in the D rating Solar industry.
In addition to the POWR ratings listed above, POLA’s rating for value, sentiment, and momentum can be seen here.
iSun, Inc. (ISUN)
ISUN operates as a solar engineering, construction and procurement contractor for commercial and industrial customers in the Northeastern United States.
The 12-month asset turnover rate of 0.73x is 8.4% lower than the industry average of 0.80x. The 12-month gross profit margin of 20.89% is 30.2% lower than the industry average of 29.94%.
ISUN’s operating loss increased 72% year over year to $18.26 million during the fiscal year ended December 31, 2022. The company’s adjusted EBITDA came in at negative $3.90 billion, compared to a positive $396, 73 million in the prior year, while net loss increased 166.4% year-over-year to $16.63 million.
Also, adjusted earnings per share came in at $0.42 negative compared to a positive $0.07 in the prior year.
ISUN’s revenue is expected to be $21.30 million for the fiscal first quarter ending March 2023. Earnings per share are expected to be negative $0.11 for the same quarter. Also, the stock failed to beat revenue and EPS estimates in three of the last four quarters.
The stock is down 80.3% over the past year to close out the last trading session at $0.72. The 24 month beta version is 2.17.
It’s no surprise that ISUN has an overall rating of D, which translates to a Sell in our POWR rating system.
ISUN also has a D class for growth and stability. It ranks #9 in the same industry.
click here to see ISUN’s POWR (Value, Sentiment, Quality, and Momentum) ratings.
Ascent Solar Technologies, Inc. (ASTI)
ASTI designs, manufactures and markets copper-indium-gallium-diselenide photovoltaic products for agrivoltaics, aerospace, satellites, orbiting vehicles and fixed-wing unmanned aerial vehicle applications.
The 12-month asset turnover rate of 0.08x is 87.2% lower than the industry average of 0.61x.
During the fiscal third quarter ended September 30, 2022, ASTI’s total revenue declined 45.9% year over year to $6.34k. The company’s net loss increased 208.4% year over year to $7.91 million. In addition, operating loss increased 187.6% year-over-year to $7.65 million, while net loss per share was $0.24.
The stock lost 90.7% over the past six months to finish its last trading session at $0.30. The 24 month beta version is 1.14.
ASTI’s weak fundamentals are reflected in its POWR ratings. The stock has an overall D rating, which equates to a sell in our proprietary rating system.
It also ranks D in quality, value and stability. ASTI ranks number 15 in the same industry.
Click for additional ASTI (Growth, Sentiment, and Momentum) POWR ratings. here.
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POLA shares fell $0.02 (-1.64%) during premarket trading on Thursday. Year-to-date, POLA is down -6.98%, versus a 7.95% increase in the benchmark S&P 500 index over the same period.
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About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor’s degree in finance and marketing and attends the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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