$ARRY DD- A potential big winner (4-5x) in the solar energy space
Array Technologies is one of the world’s largest manufacturers of specific ground-mounting systems used in solar energy projects. They have a current 1/4 market share in every new solar module being built. Solar panel ground-mounting systems are growing 20% more than the overall solar market. Array’s principal product is an integrated system of steel supports, electric motors, gearboxes and electronic controllers commonly referred to as a single-axis “tracker.” These trackers move solar panels throughout the day to maintain an optimal orientation to the sun, which significantly increases their energy production- resulting in more efficient energy storage.
"Solar accounted for `2.3% of total energy production for the year 2020. Coal, Natural gas, and Nuclear
all combined for 80% of total US electricity production in 2020. Now that solar is the cheapest energy source we can expect it to take a large portion of that pie, maybe 25% or more in the next 10-15 years would be my guess. The only thing holding solar back is that the power grids in the US are build only to directly transport electricity from the source to its destination. So there is no element of the grid designed to store electricity. This has not been an issue in the past bc coal, nuclear, natural gas and even hydro produce energy 24/7. Obviously Solar can only produce in the day. The solution to this issue is large, utility scale electric storage. The exact kind provided by Tesla. These storage systems will provide necessary liquidity and versatility to the grid with solar production. The Lithium Ion batteries in these storage systems are rapidly decreasing in price. Prices of Li-Ion batteries have dropped 90% in the last decade. As it becomes more appealing for Tesla and other companies to construct these storage systems and start providing more utility scale electricity storage, more utility companies will invest in solar rigs. It will be more profitable to produce and won’t be held back by the limitations of old grid infrastructure." From another reddit user (butter2021)
- Has existent 16%+ EBITDA margins
- Potentially triple digit top line growth
- 80% FCF/share growth
- Net income outlook looks amazing for shareholders
Using a three statement model- I wanted to provide a valuation on $ARRY
Below are the existent financials + forecasts based on analysts consensus:
Current Share Price: 14.28$
Target Share Price: 80$
What’s the story with the current S/P might you ask?
Negative sentiment was at an all time high after $ARRY had their first earnings report. Essentially, they barely missed analysts projections, and a shit storm resulted. There were slight concerns with supply chain costs going up, and management wanted to re-assess their current projections. The share price has gone down 72% at the hands of bearish, short term sentiment.
In my opinion, this selling from the short term is way over-exaggerated and needs to be assessed. Politically, this company makes sense to hold with a 6 month-10 year perspective. I believe the share price will rebound very aggressively once this opportunity becomes more widespread to the public.
Could it continue to 13-12$ price range? Yes it is possible, but long term these overly shorted levels are not sustainable.
*this is not financial advise, I am not a financial advisor. Please research on your own*
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July 21, 2021 at 03:58PM