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Actionable news in SCTY: SolarCity Corporation,

The Future Looks Bright For SolarCity

Summary

SolarCity owns 36% of residential solar panel market share in the U.S.

Recent falling stock prices have provided an opportunity for investors to take advantage of an undervalued stock at a low price.

The shift in company focus to increase cash flow will provide a strong financial base to promote future growth.

Future of Energy Consumption

Energy trends dictate that the current forms of energy usage will soon be overtaken by new and cleaner energy alternatives - the most promising being solar. Solar energy is an unlimited source of renewable energy that appeals to the continuously increasing, environmentally conscious, majority concerned with clean energy while still powering industry and home at an affordable price. A major player in the emerging market of solar energy is SolarCity (NASDAQ: SCTY): a California-based company, heavily supported by visionary Elon Musk, that is hoping to power residential and commercial properties.

SolarCity in the Modern Industry

SolarCity is a relatively new company with large amounts of market capital that is looking to expand their national market. SCTY is a vertically integrated provider of residential solar that takes part in all stages of the solar energy providing process from solar module production to the installation, maintenance, and ultimately the energy production. With hopes of reaching a consumer base of 1 million by 2018, SolarCity gained large investor attention initially; however they have since dropped off which can be partially attributed to a reduction in guidance and a miss in expected EPS. With a stock price currently hovering around $30 per share, after falling from $50/sh at the beginning of October, SolarCity has pivoted toward reducing total sales costs and increasing cash flow. Total market cap for the company is ~$2.9 billion, reflecting a market that still perceives a decent consumer base in a growing industry; albeit this figure still underplays the potential growth for SCTY given the booming industry. SolarCity has roughly 36% of the market share in the residential solar market, with their closest competitor, Vivint Solar (NYSE: VSLR), owning around 15%; together both control the majority of the solar residential market.

Investment Positives (Catalysts):

SolarCity, despite taking a hit from poor recent performance and lacking investor confidence, still shows promise because of new company strategies to increase its presence in the market domestically and abroad, proven management experience, and future visible cash flow consistency.

Long-Term Trend of Increasing U.S. Solar Use

Overviews of the solar residential market point toward SolarCity as being the main provider of solar power capabilities to willing consumers with a secular trend of increasing residential use. The environmentally-conscious populace has begun to shift energy consumption methods to more green alternatives, which can have positive returns in terms of money saved on monthly utility rates from standard electricity providers. Recent reports show that utility rates are up 47% in the energy market, meaning SolarCity has a competitive advantage over standard power companies through an increased benefit in the usage of its power over the common utility.

Solar energy presents a positive change in how people power their properties, which state governments have picked up on and incentivized for consumers: California, the biggest residential market for SCTY, has extended property tax exclusion for solar by eight years. 44 states have present Net Energy Metering policies (NEM), allowing accreditation to consumers who can produce excess energy, all of which will be taken into account following the monthly billing...


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