Canadian Solar: An Undervalued Canadian Company With International Operations

Core Insights - Canadian Solar has experienced significant growth, with revenues increasing by 475% and earnings per share by 800% since 2013, establishing itself as a major player in the solar industry [1][12] - The company is perceived as undervalued due to its association with China, despite being a Canadian corporation founded by Dr. Shawn Qu, who has spent most of his career in Canada [1][3][9] - Canadian Solar has diversified its manufacturing operations globally, including a 5 GW solar module production facility in Texas and PV cell manufacturing in Indiana, reducing its reliance on China [6][12] Company Background - Canadian Solar was founded in 2001 by Dr. Shawn Qu, who has a strong academic background in physics and material science, and has worked in Canada for most of his life [2][3] - The company went public on Nasdaq in 2006 and has since grown to become one of the tier 1 solar manufacturers globally [1][3] Manufacturing Strategy - Initially, Canadian Solar established its manufacturing base in China due to the country's large-scale solar installations and demand [4][5] - As of 2024, the company has expanded its manufacturing footprint to include over 26 facilities across Asia and the Americas, with significant production capabilities in the USA [6][12] Revenue Streams - Canadian Solar generates revenue from three main streams: solar module sales, battery storage sales, and project development through its subsidiary Recurrent Energy [8][12] - The project development business focuses on large-scale renewable energy solutions, serving utility companies and large industrial consumers [8] Valuation Metrics - Canadian Solar's current P/E ratio is around 5, significantly lower than peers like SolarEdge, which has a P/E ratio over 20 [11][22] - The price-to-book ratio for Canadian Solar is approximately 0.6, indicating it is trading at a discount compared to its book value of $38 per share [24] Recent Developments - The company has secured substantial contracts for energy storage solutions, including a 480 MWh project in Australia and a 1,170 MWh project in the UK, which are expected to enhance earnings in 2024 [13][15] - Canadian Solar's e-STORAGE division has a contracted backlog of $2.6 billion, with expectations for significant growth in utility-scale energy storage shipments [17][18] Competitive Position - Canadian Solar has been recognized with the "Top Brand PV Award USA 2024," highlighting its reputation for quality and reliability in the photovoltaic industry [16] - The company is positioned as a leading solar project developer, attracting investments from major firms like BlackRock and securing partnerships with companies such as Microsoft [13][15]