Real Goods Solar, Inc. (OTCMKTS: RGSE) is one of our top picks, in the renewable energy segment, that continues to generate significant returns to our subscribers. The stock rallying by more than 80% from our previous update, underscores why it is a potential break out play after bottoming out from a 2018 harrowing plunge.
Real Goods Solar Price Analysis
A 200% plus rally from all-time lows signals a potential change in the direction of trade on underlying developments triggering renewed investor interest. Management exploring strategic initiatives geared towards maximizing shareholder value is one of the catalysts fuelling the stock’s price action activity.
Real Goods Solar Energy exit from the unprofitable legacy solar business is another development that continues to strengthen investor confidence in the stock. A reduction in cash outflow is another catalyst that continues to fuel, price action activity.
Real Goods Solar has since bottomed out from all-time lows and showing signs of powering high as the upward momentum continues to gather pace. A 200% plus rally has since exposed the stock to a critical resistance level. A rally followed by a close above the $0.30 level should pave the way for further upside action.
Above the $0.30 resistance level, Real Goods Solar could make a run for the $0.50 mark, the next resistance level that could stand in the way for further upside action. Failure to take out the $0.30 level would leave the stock exposed to further short selling pressure given the underlying bearish trend.
What Does Real Goods Solar Do?
Real Goods Solar bills itself as a business commercial, solar energy-engineering firm. The Company’s core business revolves around the installation of solar energy systems for homeowners. It also operates the POWERHOUSE segment that specializes in the manufacture and sale of solar shingles.
Strategic Initiatives On Focus
Real Goods Solar is on its way from all-time lows having shifted focus to strategic initiatives geared towards growing the core business and enhancing shareholder value. The management team has already commenced the process of exploring strategic alternatives as part of an effort of reinvigorating growth prospects.
The management has already achieved significant progress in reinventing the POWERHOUSE solar shingle, expected to accelerate underlying growth. Some of the strategic initiatives on the table include a potential sale of RGS Energy. The management is also eyeing potential mergers that have the potential to revitalize growth.
Real Goods Solar is also eyeing strategic investment financing that would accelerate the commercialization of the POWERHOUSE solar shingles. The commercialization drive has already commenced following the successful UL product certification.
”Acknowledging our previously stated view that it will require time, years, to grow the POWERHOUSE™ brand and revenue streams, to ensure we are best positioned to address this opportunity with increased television advertising, services, access to customer bases, access to capital and the like. We believe now is an opportune time to consider whether pursuing complementary paths may enhance shareholder value,” said Dennis Lacey, RGS Energy’s CEO.
Unprofitable Business Exit
The pursuit of strategic initiatives follows the confirmation that Real Goods Solar has exited its unprofitable legacy solar business as part of the ongoing restructuring. Exit from the legacy solar business should reduce Real Goods Solar overall cash outflow as focus shifts towards maximizing shareholder value.
The exit will allow the Company to focus on the POWERHOUSE in-roof shingle market that has the potential to strengthen the Company’s long-term prospects. For starters, California will require all newly built homes in the state to include solar installation starting in 2020. The proclamation creates a window of opportunity that Real Goods Solar will be able to target with its POWERHOUSE solar shingle.
The POWERHOUSE solar shingle boasts of competitive advantages, including low profile as well as power efficiency and cost advantages that would make it appealing in the solar market.
The ongoing restructuring drive has positioned Real Good Solar for accelerated growth in 2019. The commercialization of the POWERHOUSE solar shingle should continue to strengthen the bottom line ideal for reinvigorating the stock’s sentiments in the market.
An exit from the loss-making legacy solar business is another development that underscores management focus in focusing only on business that has the potential to generate long-term value. The stock bottoming out on huge turnover of traded shares signals strengthening investor interest that should continue to fuel the upswing.
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Disclosure: We have no position in RGSE and have not been compensated for this article.