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SunTech Shines On

By Jack Uldrich – Updated Nov 15, 2016 at 5:11PM

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A deal with SunEdison could illuminate better things to come.

In August, SunTech Power (NYSE:STP) established SunTech America, a wholly owned subsidiary aimed at expanding the company's U.S. market share. It now appears that the subsidiary has just landed its first big victory.

Earlier today, the company announced a multi-year contract to supply solar modules to a division of SunEdison, North America's largest solar-energy service provider.

The contract is reportedly valued between $50 million and $90 million over its life span. The size of the contract, however, is less important than the speed with which SunTech has landed such a major deal.

The deal offers concrete proof that SunTech is now penetrating the rapidly growing U.S. solar market, and it suggests that the company will likely be a long-term player in photovoltaics. According to the release, SunTech anticipates that most of the modules shipped under the contract will go to California.

This is great news for SunTech, because California recently instituted a $3 billion solar initiative, with hopes of installing 3,000 megawatts of solar power throughout the state by 2018. That goal implies that SunTech has plenty of room for future growth.

Combine these facts with the news of company's latest quarterly report, in which it disclosed that it had tripled sequential revenues and profits, as well as the news of the big deal it signed last week in Spain, and a compelling picture of SunTech's future growth prospects begin to emerge.

SunTech is still smaller than BP Solar (NYSE:BP), Sharp, and Kyocera (NYSE:KYO). However, I think this news should serve as a wake-up call to those rivals that SunTech is a legitimate competitor. It should also draw the attention of companies like SunPower (NASDAQ:SPWR) and Evergreen Solar (NASDAQ:ESLR), because it suggests that the cost and efficiency advantages of SunTech's PV modules are drawing the attention of some large buyers.

Further radiant Foolishness:

SunTech Power is a Motley Fool Rule Breakers recommendation. Discover David Gardner's entire roster of stellar stocks with explosive growth potential with a free 30-day trial.

Fool contributor Jack Uldrich owns stock in SunTech Power. The Fool has a strict disclosure policy.

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Stocks Mentioned

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