Canadian Solar Inc. (NASDAQ:CSIQ): Among The 10 Oversold Canadian Stocks to Buy Right Now

We recently compiled a list of the 10 Oversold Canadian Stocks to Buy Right Now. In this article, we are going to take a look at where Canadian Solar Inc. (NASDAQ:CSIQ) stands against other oversold Canadian stocks.

Ratings agency S&P Global believes that Canada’s economy has been performing slightly better than it forecasted a quarter ago, but still remains subdued. The company projects GDP growth of 1.2% in 2024 before accelerating to 2.0% in 2025. The firm went on to say that the Bank of Canada (BoC) is expected to cut interest rates to 3.75% by year-end 2024 and 2.50% in 2025.

It expects that the rebound in economic growth should stem from fixed investment–both residential and non-residential—instead of consumer spending. The monetary easing cycle that kicked in June might help flip investment outlays from contraction last year to expansion. TD Economics believes that consumer spending is expected to undergo a period of below-trend growth through 2026, as households in Canada save more amidst increased mortgage debt. Business investment might grow above the trend. The need to establish more homes should result in increased residential investment, and the opportunity to fast-track the clean energy transition might boost investments in structures, machinery, and equipment.

On 4^th September, the BoC decreased the overnight interest rate by 25 bps for a 3^rd consecutive meeting, as was widely anticipated by the broader market. However, the ratings agency believes that the current policy rate remains relatively restrictive in comparison to the longer-run estimate of neutral and against a backdrop of economic growth which is below potential.

Following the September meeting, there were hints at further cuts. This means that the central bank has pivoted its focus to downside risks to the economic growth outlook, with inflation now slowing down. BoC governor highlighted that policymakers are required to safeguard against the risk that the economy is too weak and inflation declines too much. As per the ratings agency, the higher unemployment, together with persistent decreases in per-capita GDP, should help push inflation lower. The company expects core consumer price index (CPI) growth of 2.0%-2.5% over the next 12 months but with risks of undershooting 2.0%. Notably, potential rate cuts are expected to cause mortgage-fueled inflation to decline sharply for the remainder of the year.

The ratings agency believes that the underlying trend since May has been weaker hiring and increased unemployment. The cumulative lagged effect of increased interest rates is expected to continue to weigh on consumers. Despite BoC starting an easing cycle, borrowing costs are expected to remain much higher over the next 2 years than COVID-19 pandemic lows. This is because of the mortgage renewal system in Canada. Several homeowners are expected to see interest payments as a share of income rise in the upcoming 5-year mortgage renewals over 2025 and 2026, relative to 2020-2021 contracts.