Sunpower isn’t out of the woods yet, but its prospects are improving. It is producing significant free cash flow and its cash conversion cycle has fallen from above 100 to around 45. Its products are better designed for Japan’s space-constrained markets than First Solar’s. It isn’t saddled with huge debt loads like Suntech or Yingli Green Energy.
It is best to wait for a pullback in Sunpower, as momentum traders have recently driven the stock up to elevated levels. Sunpower’s current price around $20 per share means that it is trading at a 2014 forward price to earnings ratio around 23. The company is in a highly volatile market, but its improving fundamentals make it one stock to be kept on the watchlist.
The article Is the Sun Starting to Shine on SunPower? originally appeared on Fool.com and is written by Joshua Bondy.
Joshua is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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