Up 27% YTD, How Much Higher Can This Small-Cap Clean Energy Stock Rise?

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Investing in megatrends can help investors generate outsized gains over time. One megatrend that is gaining momentum globally is the shift towards clean energy solutions. Several governments are investing heavily in renewable energy to fight climate change, making companies such as SolarBank (SUUN) top investment choices right now. 

Valued at $165 million by market cap, SolarBank stock has surged 27% in 2024. Let’s see if you should own this renewable energy stock in your equity portfolio right now. 


An Overview of SolarBank

SolarBank is an independent renewable and clean energy project developer and owner focused on distributed and community solar projects in Canada and the U.S. It develops solar projects that sell electricity to utilities and commercial, industrial, municipal, and residential off-takers. 

The company aims to maximize returns via a diverse portfolio of projects across leading solar markets, including projects with utilities, host off-takers, and community solar. It has a potential development pipeline of over one gigawatt and has developed renewable and clean energy projects with a combined capacity of over 70 megawatts. 

Recent Big-Ticket Projects Have Driven Stock Prices Higher

SolarBank recently announced the completion of a deal worth $41 million with Honeywell (HON) for community solar projects, as well as the construction of a 1.4-megawatt rooftop solar project in Alberta. Moreover, it has entered into an agreement to acquire Solar Flow-Through Funds for $45 million in stock.

SolarBank stated it has completed the construction of three ground-mount solar projects for Honeywell in New York. It completed the sale of the project, totaling 21 megawatts, to Honeywell last September and signed an EPC (engineering, procurement, and construction) agreement to transform the project into a commercial operation. Once the construction is over, SolarBank will retain an operations and maintenance contract, resulting in stable cash flows. 

Earlier this week, SolarBank announced plans to develop a 6.41-megawatt solar power project on a 16.98-acre site located in Bloomfield, New York. This project will be operated as a community solar project, where a group of solar panels will access the local electricity grid. 

Once these panels generate power, clean energy from the site feeds into the local power grid. Depending on the size and the number of panels, renters, and homeowners can save money from the electricity generated by the project. If an owner subscribes to a community project, they would earn credits on monthly electricity bills without actually having to install panels on their home. 

What is the Target Price for SUUN Stock?

In the last nine months, SolarBank reported revenue of $50.4 million and a net income of $5.5 million or $0.20 per share. In the year-ago period, it reported revenue of $9.15 million and earnings of $3.42 million or $0.13 per share. Its operating cash flow more than doubled from $4.65 million to $10.92 million in this period.

The single analyst covering SUUN stock has a “strong buy” rating, which was recently reiterated in a late May report.  


“With the recent acquisition of Solar Flow-through Fund, the company's IPP revenue stream is expected to become meaningful starting from the fiscal year 2024,” wrote Research Capital. “We expect SolarBank's profitability metrics to improve gradually as the portion of revenue from the IPP (independent power producer) segment increases.”

The 12-month target price is $10.88, indicating an upside potential of 82.6% from current levels. 

On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.