Active Solar - news of the month

Negative: In December, Active Solar did not follow up on the rebound of the second half of November. Performance for the month was negative, largely due to a pre-Christmas sell-off (window dressing? capitulation?).

Positive: Since December 19, Active Solar has been recovering +10.5% to January 8. This rebound could be the beginning of a trend reversal potentially driven by investment flows: investors taking profits from some 2024 successful sectors and reinvesting to “forgotten” sectors such as solar.

As highlighted last month, there’s a good chance Active Solar has passed or is close to its turnaround point. This is supported by historic lows on three fronts:

• Expectations: They are extremely low as many unfavorable news and worst-case scenarios are already priced in the stocks; any news that is not clearly bad is deemed very positive for the sector or a company.
• Valuations: Active Solar’s portfolio is valued at 13X 2025 profits, nearly half the valuation of the S&P500.
• Investors' sentiment: Morale on solar is extremely low and the post-election sell-off may mark the last leg of the capitulation phase.

2024 summary and 2025 expectations

There’s little need to expand on the extremely disappointing 2024. The year’s poor performance was mainly driven by the US election and the lack of investor interest in the solar sector.

Our 2025 expectations are the following :

• Healthy growth in the solar market with ca. 700 GW of new installations (+15-20%);
• Revenues and profits of the companies will grow double digits, supported by higher sales prices and higher margins;
• Positive performance of solar stocks after 2 negative years.

Counterintuitively, the second Trump term could prove favorable for solar stocks. Please see our November comments for more details.

Below, you’ll find the Bloomberg consensus on Active Solar’s portfolio as of 31.12.2024.

Many investors are looking at the PEG ratio as a key metric. Active Solar’s current PE for 2025 is half its EPS growth, which means an extremely attractive 0.5 PEG.