Shares of solar power company SolarCity (NASDAQ:SCTY) jumped big time yesterday after announcing that it would be acquiring Silevo, a solar-panel maker. With this acquisition SolarCity will be able to manufacture its solar panels rather than leasing them as it currently does, which could be very beneficial for its bottom line.
According to Motley Fool analyst Simon Erickson, SolarCity used to buy their solar panels overseas, ship them to the US, and then install them on rooftops here--a very expensive endeavor. This acquisition will allow SolarCity to cut out the middle man and increase the company's efficiency. And it doesn't hurt that SolarCity will be manufacturing those panels in Buffalo, NY, creating plenty of jobs there.
But is all that enough for investors to jump into SolarCity today? According to Simon, SolarCity is definitely a buy, and has been for a few months on the Motley Fool's Rulebreaker scorecard. The company hopes to reach 1 million customers by 2018, and the acquisition of Silevo brings SolarCity one step closer to reaching that goal.
Mark Reeth has no position in any stocks mentioned. Simon Erickson owns shares of SolarCity. Simon Erickson has the following options: short October 2014 $55 puts on SolarCity and short January 2015 $50 puts on SolarCity. The Motley Fool recommends SolarCity. The Motley Fool owns shares of SolarCity. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.