SunPower is the IBD Stock Of The Day, as the provider of solar energy systems is showing double-digit growth in several categories. SPWR stock is closing in on a buy point.
The San Jose, Calif.-based company, founded in 1985, has formed a cup-with-handle chart pattern with a buy point of 27.25. SunPower has formed a high handle.
SunPower dropped 1.5% to close at 24.69 on the stock market today.
The company makes photovoltaic solar energy systems and battery storage products, primarily for residential customers. Photovoltaics is the conversion of light into electricity using semiconducting materials.
Investors are piling into solar energy issues like SPWR stock and other green companies, thanks to the recently passed Inflation Reduction Act. The legislation provides nearly $369 billion to bolster energy development and combat climate change.
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It's the largest federal government spending increase on alternative energy in U.S. history. Further, its impact could last over the next decade.
Tripling Domestic Manufacturing Capacity
A White House statement said the U.S. is on track to triple domestic solar manufacturing capacity by 2024. It sees the passage of the inflation act spurring greater interest in clean energy and solar energy stocks.
When SunPower reported second-quarter results in early August, the company said it accumulated 19,700 new customers. That's a 51% increase from the year-ago period and an all-time quarterly high.
"We continue to bring in new homebuilders and their communities that are planned and under construction," SunPower Chief Executive Peter Faricy said in a call with SPWR stock analysts following the quarterly earnings report.
"In Q2, we saw a 46% increase in contracted active construction communities where solar is a standard offer on every home," he continued. "This brings our contracted backlog in new homes to 34,000 customers, with another 40,000 potential customers in the pipeline."
In the second quarter, SunPower reported a 63% surge in revenue to $362 million. Adjusted earnings of 3 cents a share beat estimates of 2 cents. SunPower stock surged 9.4% in reaction to the earnings report.
"This is a clear indication of how higher pricing is working its way into our results without dampening customer appetite," Faricy said.
Solar Industry Ranking For SPWR Stock
SunPower earns the No. 8 rank among its peers in IBD's Energy-Solar industry group. Daqo New Energy, Enphase Energy, Canadian Solar and Jinko Solar make up the top four stocks within the group.
The sector ranks No. 1 of the 197 industry groups tracked by IBD.
According to IBD Stock Checkup, SPWR stock has an IBD Composite Rating of 85 out of 99. IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
Its Relative Strength Rating stood at 95. That means SPWR stock has outperformed 95% of all stocks over the past 12 months. Ideally, look for stocks with a rating of 80 or higher.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
