Over the past year, Canadian Solar reported quarterly earnings growth ranging from 167% up to 750% last quarter amid rapid capacity expansion. Sales growth has tracked higher too. On Tuesday the Relative Strength (RS) Rating for Canadian Solar stock topped a milestone, rising from 75 to 82.
The upgraded 82 RS Rating shows that the Guelph, Ontario-based company topped 82% of all stocks, regardless of industry, on price performance this past year. The RS Rating is a 1-99 score of a stock's 12-month performance. Leading stocks tend to have RS Ratings of 80 or higher before big price runs.
Canadian Solar Stock An Outlier
Canadian Solar makes solar cells, modules and other solar systems components. The solar industry has been out of favor with investors, although that may be changing. As a group the industry still ranks a dismal No. 171 on IBD's list of 197 industry groups. But Canadian Solar is an outlier; it's outperforming many of its peers.
Among its other key ratings, Canadian Solar stock has an 87 Composite Rating, putting it in the top 13% of all stocks for a group of the most important technical and fundamental metrics. It also has a healthy 84 EPS Rating, reflecting strong profit growth. Perhaps most tellingly, it boasts a B- Accumulation/Distribution Rating on an A+ to E scale. The B- rating shows that big funds are fairly aggressive buyers of its stock.
Top and bottom line growth moved higher in the company's most recent quarter vs. the prior quarter. Earnings growth has accelerated over the past four quarters from 494% to 167%, 553% and then a whopping 750% jump last quarter, to $1.19 per share. Sales growth during that time ranged from 29% to 62%. Last quarter its revenue grew 36% to $1.7 billion.
Chairman and CEO Shawn Qu commented in the May 18 first quarter earnings news release, "We continue to leverage our premium brand to capture increased solar and battery storage opportunities, while laying the groundwork for future success with strategic capacity expansion."
On June 15, the company announced further expansion. It says it will build a new solar module manufacturing facility in Mesquite, Texas. The plant represents a $250 million investment and will have an estimated 20,000 modules a day capacity when completed, the company says.
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Up About 220% Since Covid Crash
Canadian Solar stock has risen about 220% from a Covid crash intraday low of 12 per share in late March 2020. Since the beginning of this year it's risen about 25% from a 30.86 close on Jan. 5. On Tuesday, CSIQ stock fell more than 6% to 38.64 in sync with market consolidation. Canadian Solar stock is working on a consolidation with a 47.69 entry. See if the stock can break out in heavy volume.
Canadian Solar stock holds the No. 4 rank among its peers in the Energy-Solar industry group. Array Technologies is No. 1 in the group. Nextracker, which makes devices that enable solar systems to track the sun, is No. 2. Shoals Technologies, which makes balance systems for solar arrays, is No. 3.
When looking for the best stocks to buy and watch, one factor to watch closely is relative price strength.
IBD's unique Relative Strength Rating identifies market leadership by showing how a stock's price action over the last 52 weeks compares to that of other stocks on the major indexes.
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