The solar industry is currently struggling with a surge in raw material prices. Moreover, investors should use caution while investing in penny stocks during times of high market volatility due to the increased risks.
Therefore, I think getting rid of struggling penny solar stocks Polar Power, Inc. (POLA), iSun, Inc. (ISUN), and Ascent Solar Technologies, Inc. (ASTI) might be a wise decision.
Last year was a difficult for many industries, including solar. The price increases in raw materials, production, and shipping impacted the solar supply chain.
Moreover, the industry faces unprecedented volatility as the battle for profits intensifies. This is exemplified by the fluctuation in the pricing of polysilicon, the primary material used in solar panel production, which experienced a sudden drop of over 40% in just a few weeks in December.
Additionally, according to the U.S. Solar Market Insight 2022 released by the Solar Energy Industries Association and Wood Mackenzie, utility-scale installations fell by 31% year-over-year to 11.8 GW, the sector’s lowest total since before the COVID-19 pandemic. Commercial and community solar installations also fell by 6% and 16%, respectively.
Take a look at the stocks mentioned above:
Polar Power, Inc. (POLA)
POLA designs, manufactures, and sells direct current (DC) power generators, renewable energy, and cooling systems in the United States and internationally. The company offers DC base power systems, DC hybrid power systems, DC solar hybrid power systems, and mobile power systems.
Its trailing-12-month asset turnover ratio of 0.63x is 22% lower than the 0.80x industry average. Its trailing-12-month gross profit margin of 13.23% is 55.8% lower than the 29.94% industry average.
POLA’s net sales decreased 58.7% year-over-year to $1.71 million during the fiscal third quarter that ended September 30, 2022. Its gross loss came in at $247 thousand, compared to a gross profit of $966 thousand in the previous-year quarter, while its net loss came in at $ 2.38 million compared to a net income of 942 thousand.
Also, its net loss per share came in at $0.19, compared to net income per share of $0.07 in the previous-year quarter.
The stock failed to surpass the revenue estimates in each of the trailing four quarters, which is disappointing.
The stock has declined 61.2% over the past year to close its last trading session at $1.22. Its 24-month beta is 1.08.
POLA’s POWR Ratings reflect this bleak outlook. The stock has an overall D rating, equating to a Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
POLA is also graded an F in Growth and a D in Quality and Stability. It is ranked #13 among 21 stocks in the D-rated Solar industry.
In addition to the POWR Ratings stated above, POLA’s rating for Value, Sentiment, and Momentum can be seen here.
iSun, Inc. (ISUN)
ISUN operates as a solar engineering, construction, and procurement contractor for commercial and industrial customers in the Northeastern United States.
Its trailing-12-month asset turnover ratio of 0.73x is 8.4% lower than the 0.80x industry average. Its trailing-12-month gross profit margin of 20.89% is 30.2% lower than the 29.94% industry average.
ISUN’s operating loss increased 72% year-over-year to $18.26 million during the fiscal year that ended December 31, 2022. The company’s adjusted EBITDA came in at negative $3.90 billion, compared to a positive $396.73 million in the previous year, whereas its net loss increased 166.4% year-over-year to $16.63 million.
Also, its adjusted EPS came in at negative $0.42 compared to a positive $0.07 in the previous year.
ISUN’s revenue is expected to come in at $21.30 million for the fiscal first quarter ended March 2023. Its EPS is expected to be negative $0.11 for the same quarter. Also, the stock failed to surpass the revenue and EPS estimates in three of the trailing four quarters.
The stock has plunged 80.3% over the past year to close the last trading session at $0.72. Its 24-month beta is 2.17.
It’s no surprise that ISUN has an overall rating of D, which translates to a Sell in our POWR Ratings system.
ISUN also has a D grade for Growth and Stability. It is ranked #9 in the same industry.
Click here to see the POWR Ratings of ISUN (Value, Sentiment, Quality, and Momentum).
Ascent Solar Technologies, Inc. (ASTI)
ASTI designs, manufactures, and sells copper-indium-gallium-diselenide photovoltaic products for agrivoltaics, aerospace, satellites, near earth orbiting vehicles, and fixed-wing unmanned aerial vehicles applications.
Its trailing-12-month asset turnover ratio of 0.08x is 87.2% lower than the 0.61x industry average.
During the fiscal third quarter that ended September 30, 2022, ASTI’s total revenue decreased 45.9% year-over-year to $6.34 thousand. The company’s net loss increased 208.4% year-over-year to $7.91 million. Moreover, its loss from operations increased 187.6% year-over-year to $7.65 million, while its net loss per share came in at $0.24.
The stock has lost 90.7% over the past six months to close the last trading session at $0.30. Its 24-month beta is 1.14.
ASTI’s weak fundamentals are reflected in its POWR Ratings. The stock has an overall D rating, which equates to a Sell in our proprietary rating system.
It also has a D grade in Quality, Value, and Stability. ASTI is ranked #15 in the same industry.
For additional POWR Ratings of ASTI (Growth, Sentiment, and Momentum), click here.
Discover 10 widely held stocks that our proprietary model shows have tremendous downside potential. Please make sure none of these “death trap” stocks are lurking in your portfolio:
POLA shares fell $0.02 (-1.64%) in premarket trading Thursday. Year-to-date, POLA has declined -6.98%, versus a 7.95% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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