Is iSun Stock A Buy?

Is iSun Stock A Buy? The merger of The Peck Company Holdings, Inc. and iSun Energy LLC into iSun Inc (NASDAQ:ISUN) represents a dominant force in the solar industry. The United States alone has over 88.9 GW of solar generation capacity at the start of 2021.

The combined company is a vertically integrated solar construction company that can work with residential, industrial, and commercial customers. Industry analysts anticipate another 100 GWs of solar infrastructure to be built over the next five years.

A Democrat-led White House and Senate makes these numbers even more realistic. But there’s still an 800-pound industry gorilla named Tesla Inc (NASDAQ:TSLA) in the mix, along with choppy waters to come.

Let’s shine a light on iSun to determine if it will bring hot profits to investors.

iSun Smart Connectivity Is A Big Customer Win

iSun makes solar panels, but these aren’t your average panels. The company builds smart and automated solutions that are used in a variety of real-world applications. Its iSun OS software enables smart connectivity via mobile phone to fully optimize your installation.

On top of that, it creates and installs smart EV chargers, energy conversion and backup systems, and more for both grid-tied and off-grid solutions.

These are the types of solar panels you’ll see at retailers like Walmart Inc (NYSE:WMT). In fact, the company was involved in those exact solar installations through the 2010s. The solar panels generate lighting in the parking lots, along with contributing to the power within each store.

Going green and building a sustainable future is certainly a win for environmentalists. And winning major contracts like that are the bread-and-butter of iSun’s continued profitability. This positions iSun to compete and even grow over the next decade as more municipalities and businesses go solar.

This has some bullish investors wondering if now is a good time to invest in the solar revolution through iSun.

Is iSun Stock A Buy?

iSun started 2021 with a market capitalization comfortably over $100 million. Share prices plummeted to a low of $1.49 during the 2020 stock crash but quickly rebounded back to the $5.00 to $10.00 trading range.

The company held less cash during its last quarterly earnings that might thrill investors, and this is after the expenditures on the merger. Nevertheless, it seems to be capitalizing on the push for sustainable technologies in the wake of Tesla’s meteoric rise.

Renewable energy spending in the U.S. alone will surely change with the new administration. The past four years saw a lot of aggressive opposition to the Environmental Protection Agency (EPA) and other government-funded sustainability efforts.

A new administration means a new opportunity for the company to grow its revenues and find tax breaks for helping major corporations shift to solar.

The iSun acquisition is expected to add another $2 million in revenue to the $5 million earned by Peck’s business. But some analysts wonder if this solar relation inflated the company beyond its means to pay investors back.

 iSun Valuation Is Sky High

The biggest risk for anyone investing in iSun is the company’s lofty valuation in relation to its earnings. Although the solar industry is growing, it’s a slow growth – a new administration won’t automatically force more solar energy into the world.

When it does, companies are going to fight back and try to keep costs down. Even traditional electric companies are worried about overhead costs when converting to solar energy.

And investors are paying a hefty premium for a company that actually lost money last year. This isn’t a media darling like Uber (UBER) or Tesla, although it’s clearly benefitting from the association.

Solar power may be a good thing for the environment, but it may not be the best play for investors.

The entire energy industry suffered from restricted travel mandates. Power needs shifted from big office buildings to residential buildings.

This created a lot of associated costs on the grid. On top of that, shutdowns of major venues slowed travel to a crawl. Everything from natural gas to solar has associated pandemic costs.

Not to mention there is no guarantee of how the world will recover from global travel restrictions. A recovery economy can cause further strain that utility companies need to be prepared to handle.

And don’t forget that utility companies in general can have rocky growth potential. Plus, iSun has its fair share of competitors.

iSun Competitors Are Large And Well Capitalized

Besides Tesla, which largely focuses on roof panels for residential and commercial uses, iSun faces competition from the likes of Allied Motion Technologies, VOXX International, and Waitr.

The company does have a full manufacturing facility, and it could and up a supplier for these rivals in tough times. Solar is a symbiotic industry like this, and even if iSun doesn’t win contracts, it could still sell its inventory to whomever does.

However, solar is a tough business, and many other innovators in this space merged or got swallowed by the competition over the decades. This leaves bearish investors believing there are better ways to invest in the solar revolution.

Besides solar panel installations, there are the materials used in the components, batteries, and electric vehicles. Until these become more prolific, solar could see limited growth potential.

Is iSun Stock A Buy? The Bottom Line

Solar power gets a lot of buzz, and The Peck Company is hoping to capitalize on that by rebranding into iSun.

The combined company is a vertically integrated solar shop that adds aftermarket value through its connected app. This could bring it recurring revenue if it finds a way to monetize that aspect of its business.

However, iSun still hasn’t turned a profit, and solar installations have been surging the past decade. They are expected to more than double over the next five years. If iSun can earn some of these lucrative solar contracts, it could be a bright star in investor portfolios.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.