Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Canadian Solar Inc. Surged in December

By Travis Hoium - Jan 4, 2016 at 5:20PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A subsidy extension could lead to years of growing demand for Canadian Solar Inc.

What: Shares of Canadian Solar (CSIQ -2.31%) ended 2015 on a high note, climbing 25.7% in the month of December to end the year with a 19.7% gain.

So what: One positive step Canadian Solar made was the sale of a majority stake in the 200 MW Garland Solar Power Project to Southern Company. The utility will own 51% of the project and Canadian Solar will own the remaining 49%, which could be held on the balance sheet or eventually sold to a yieldco.  

The month's bigger news was the extension of the solar investment tax credit in the U.S. The subsidy is worth 30% of the value of solar projects and was due to fall to 10% in 2017. Utility-scale projects were expected to drop next year as the subsidy expired but this should keep the industry in growth mode, which is great for Canadian Solar long term.

Now what: With solar energy now cost competitive in many large markets around the world and the U.S. keeping important subsidies in place, the solar industry should be in for a new phase of growth. Industry analysts expect annual installations in the U.S. to nearly triple between 2015 and 2020, which will lead to value for project developers as well as solar panel manufacturers. That's a double whammy for Canadian Solar and why shares surged near the end of 2015 and could continue in 2016 as well.

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Canadian Solar Inc. Stock Quote
Canadian Solar Inc.
$40.95 (-2.31%) $0.97

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/11/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.