Sunedison (NYSE:SUNE) at one point was a company that was on top of the world in the solar industry. Trading at well over $30 per share, there were few others in the industry that could even come close. However, for the past several months, we've seen big declines on the stock as the company's accounting was called into question. Today, SUNE is trading just above $2 per share with a loss of about 95% over the past several months. Nonetheless, there are still plenty of bulls, many of whom believe that we're going to see the $30 days again, and relatively soon, but will it ever get there? Personally, I believe that the answer is yes. Today, we'll talk about why.
Understanding The Bearishness On SUNE
It's no secret that at the moment, there are far more bears on Sunedison than there are bulls, but is the bearishness warranted? In my opinion, the answer is no. You see, as investors, analysts, experts, etc... we look at outdated accounting data as a way to analyze any stock that we're interested in. Not to mention, the data that is months old by the time we see it is nothing more than the tip of the ice burg of data that the company's actually have. The big problem for SUNE with regard to this data has been debt. However, is debt really that concerning?
Debt And Business Go Hand In Hand
There are few companies that make it to be massive companies without debt. Even the massive companies take out massive amounts of debt. For example, take a look at Alibaba (NYSE:BABA). The company has $18 billion in cash reserves and just recently, it was announced that they took out a loan for $3 billion. The truth is that the costs associated with running a business, acquiring others to grow, and ensuring that your customers and employees are happy are incredibly high. So, debt is just something that comes along with playing the game in business.
SUNE And Debt
There's no secret that Sunedison has a massive amount of debt. In fact, from the data that we've been provided, we can see that SUNE owes nearly $1 billion in debt. However, I have to say that I'm not in the least concerned about the debt. The truth is that debt only becomes concerning to me when the amount of debt held adds up to a large chunk of the assets owned. That's not even close to the case when it comes to SUNE. In fact, the $1 billion in debt is a drop in the bucket compared to the more than $20 billion in assets owned by the company.
Sunedison Has Money Rolling In
The real gauge of the success of a company is how much money they are making now, and have the ability to make in the future. When it comes to SUNE, they've built a business around building solar power plants and signing 20-year power purchase agreements. Sure, the company needed to take out debt in order to build the plants, but the gains from utility companies buying the energy will pay off the debts and far more. With these power purchase agreements, SUNE has money that is guaranteed to come in for years to come!
What We Can Expect To See
When it comes to SUNE, I have a relatively mixed opinion of what we can expect to see moving forward. In the short term, the bears have a strong hold on the stock, and with the recent announcement that the 10K filing will be delayed further, they're likely to hold onto this grip for at least another month or so. However, this company isn't going out of business any time soon, and they've proven their ability to hop over hurdles. With that said, I'm expecting to see great things from SUNE in the long run. While it may take a few years to get back to $30 per share, I am expecting to see slow and steady growth starting about a month from now as the bears lose their grip on this incredible company.