As the solar space continues to establish itself as a clear candidate for long-term ESG and growth investment flows on a structural, or secular, timeframe (rather than merely a cyclical one), investors seeking to allocate capital to relatively well supported fundamental themes are likely to continue to turn to stocks in the space.
The notion of a “secular” investment time horizon is critical to longer-term investment ideas. A secular trend is generally understood to be a trend that can last for one to three decades. This stands in contrast to a cyclical theme, which is generally measured in single digits of years and refers to investment ideas that are dependent upon the business cycle – a single period of expansion following a recession, or a serious contraction in growth often related to a build-up of leverage or an overhang in the inventory-to-sales ratio in the real economy.
In other words, the economy moves in cycles driven by debt, production, and consumption, with monetary policy often acting as a key causal factor, like a stoplight going from red to green to yellow and back to red.
But secular investment ideas stand outside of that framework, often traversing multiple business cycles. A good example is the information technology secular investment theme that has powered so many big investment successes over the past 30 years. In that time, we have seen several recessions and bear markets. But top performing tech stocks have weathered the downturns and outperformed on the upswings, making shareholders rich over an extended period,
In June 1997, Amazon (NASDAQ:AMZN) was trading at $1.50/share. Now it is at $3,620/share because it has benefited from its leadership position in the secular theme of ecommerce growth. Ecommerce growth is not rooted in cycles. It is a broad historic transition from one way of consumption, to a different one – a more convenient one ultimately rooted in new technological possibilities.
AMZN was on the right side of that dynamic. Sears Holdings (SHLDQ) is its opposite number, along with JCPenney and others. The charts over the past couple decades tell that story rather well.
In 2021, the secular investment themes that stand in the spotlight – the themes that resonate the way ecommerce did in 1997, motorcars did in 1925, oil production did in 1898, and social media did in 2006, to name a few – include electric vehicles, solar energy, and artificial intelligence.
The Solar Opportunity
As a case in point, according to a recent report from the Solar Energy Industries Association and Wood Mackenzie, the US solar industry hit a fresh record 19.2 gigawatts of new capacity last year, during a deep recession.
That suggests one would be wise to start picking out early-stage underappreciated names as potential home-run candidates.
That brings us to Green Stream Holdings Inc (OTCMKTS:GSFI): a small-cap OTC name that has recently started to make some noise with an expanding presence and increasingly commercial catalysts hitting the wires.
Naturally, this macro investment thesis also applies to other vehicles in the space, such as SunPower Corporation (NASDAQ:SPWR), JinkoSolar Holding Co., Ltd (NYSE:JKS), NextEra Energy Inc (NYSE:NEE), ReneSola Ltd. (NYSE:SOL), Invesco Solar ETF (NYSEARCA:TAN), and Solaredge Technologies Inc (NASDAQ:SEDG).
But GSFI is our focus here because it would appear to be moving toward an increasingly commercial phase with a disruptive model that could offer some interesting speculative potential given the broad secular thesis in play in the space.
GSFI on the Move
Green Stream Holdings Inc (OTCMKTS:GSFI) has an interesting approach, targeting commercial property owners with a surplus of rooftop or sky-facing square footage space for installation of photovoltaic systems to harness energy access at prices outcompeting local utility pricing.
GSFI uses solar power purchase agreements (PPAs) or equipment leasing arrangements with the property owners, and benefits from marginal efficiencies as well as various federal or state tax credits, regulatory agency rebates, and long-term revenue streams generated from the sale of the harnessed electricity.
However, the company also recently put out an announcement that amounts to a step into the EV power infrastructure space. Specifically, GSFI most recently announced a new joint venture with Premiere Empire Energy to provide electric charging stations to both company’s clients.
That’s an interesting twist to the GSFI story because it aligns the stock with the EV theme, which is another secular winner.
But GSFI also just announced that it has contracted with a land surveyor to conduct Topographical Surveys and/or Elevation Certificates for five sites in New York. Ramsay Land Surveying is close to completing the surveys, which will allow the company to take the final steps toward getting the required permits to begin operations.
The topographical surveys and elevation certificates are for five properties in New York. CEO James DiPrima said: “The completion of these expedited surveys & elevation certificates will allow us to meet the requirements to obtain the permits which will allow us to begin working on these sites… with more to follow. It’s an exciting time for the Company and we are looking forward to taking the next steps with these properties and others to follow.”
Again, this is in service of its interesting model for democratizing access to solar power, which holds the potential to change the way we think about an individual’s access to affordable renewable energy in their community.
To advance this story, the company also recently announced that it has now signed up its initial Host Site for Its Community Solar Program.
DiPrima said: “This first deal is a 25-year lease, which is projected to generate over $13 million for the project over the term and is our template for other similar deals which are already in progress.”
According to that release, Host Sites serve the unmet customer base of those people/businesses that do not have the rooftop or other area on their property to house the company’s solar technology infrastructure. It also enables owners of large properties to generate revenue by hosting a community solar project on their rooftop, parking lot, or open space.
Community-solar is a New York state shared solar program which offers all utility customers the opportunity to switch to solar at no cost, with nothing on their roof or property, and receive immediate savings on their electric bill and revenues from the leasing of their property.
The Company’s Agreement with the school, according to its recent release, will generate 1.53 megawatts covering all the parking lots on site of Christ the King high school located in Middle Village, Queens, New York. This community solar project not only helps the school, which will receive yearly fees for the 25-year term, for the leasing of the land, but will also help the surrounding community by lowering its energy costs.