We’ve had a negative view on 8Point3 Energy Partners LP (CAFD) since the initial public offering of the yieldco, notes Roger Conrad, editor of Conrad's Utility Investor.

This negative outlook was due to its exposure to residential solar-power contracts and the weakness of its joint-venture sponsors, SunPower Corp (SPWR) and First Solar (FSLR).

Results for the yieldco’s fiscal first quarter ended Feb. 28, 2017, indicate that the business model continues to work, with management guiding for drop-downs and projects in development to support a 12 percent dividend increase.

However, intense competition in the market for solar-power components has resulted in a race to the bottom that continues to squeeze profit margins. In other words, the same forces contributing the record adoption of solar power in the US has hit SunPower and First Solar hard.

SunPower should be able to survive the down-cycle, thanks to the support of Paris-based Total (TOT). First Solar, however, appears desperate to sell anything that can fetch a reasonable price, including its 43.4 percent interest in 8Point3 Energy Partners.

First Solar reportedly has decided to plow all its resources into its Series 6 panel, which it hopes will be better-positioned to compete for market share in an increasingly commoditized business.

With a dividend yield of 8 percent and potential upside from the addition of a new sponsor, 8Point3 Energy Partners LP rates a buy under $12.

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