The "Stocks That Funds Are Buying" screen searches for stocks that top-performing mutual funds are adding to their portfolios. Canadian Solar is a top dog in the highly ranked solar industry group, sporting solid fundamentals and impressive institutional sponsorship. CSIQ is Wednesday's IBD Screen Of The Day stock pick.
Solar Energy Stock Has Strong Institutional Ownership
Canadian Solar is the leading provider of solar panels in North America, with 2,250 patents worldwide. They have subsidiaries in 23 countries, with 20 manufacturing facilities in Asia and America and active customers in more than 160 countries. Their product line includes solar panels, inverters and energy storage solutions.
Mutual funds control 54% of shares, with 219 funds owning shares in June, up from 216 in March and 213 in December. The A-rated Vanguard Growth and Income Admiral Fund (VGIAX) holds shares.
In addition, management has an incentive for exceptional stock performance, owning a significant 23% of shares.
Take Our Anonymous Survey And Tell Us What You Like (And Don't Like) About Your Online Broker
Ten Participants Will Win A $50 Amazon Gift Card
Canadian Solar In A Consolidating Base
CSIQ stock is in a deep, 41-week-long consolidating base with a 43.24 buy point, according to the MarketSmith chart. Shares gapped up more than 15% on Aug. 18 in very heavy volume after the company's positive Q2 earnings release.
The rally held its gains until Goldman Sachs downgraded the stock to sell and cut the price target to 38 on Sept. 8. The stock plummeted 6.9% in heavy volume in reaction to the downgrade.
Unfortunately, CSIQ continued to lose ground, dropping below its 21- and 50-day moving averages in a 20%-plus sell-off. Note that the share price dropping below the 50-day line is a key indicator to watch as it can signify a new resistance level.
The solar energy group is basing with the broad market on Wednesday, posting lighter-than-average daily volume. CSIQ shares are currently about 18% off their 52-week high.
Solar Energy Stock Is A Leader Among Leaders
Canadian Solar holds the fourth spot out of 22 companies in the Energy-Solar group. It has earned an impressive 97 Composite Rating and a high 95 Relative Strength Rating.
The solar group has held the No. 1 spot of all 197 IBD industry groups for more than four weeks, moving up from 21st three months ago and 78th six months ago. The group has a perfect 99 RS Rating in accordance with its elite ranking.
Management Raises Guidance
The Q1 March-ended quarter noted a drop in EPS growth, weighing down the EPS Rating to an unimpressive 70.
However, the company beat Q2 2022 earnings-per-share and sales estimates on Aug. 18, posting a profit of $1.07 per share, double the expected 53 cents. Management also raised full-year 2022 sales guidance in the release.
Sales growth has been strong as well, with the exception of the March-ended quarter. Analysts now expect 127% annual EPS growth in 2022, following a sharp drop last year, and a 60% pop in 2023.
The company has a three-year sales growth rate of 26%, according to the IBD Stock Checkup.
