TOYO (NasdaqCM:TOYO) is drawing attention after signing two master supply agreements with major U.S. solar developers worth about US$185.6 million, alongside plans for a new 1.5 GW HJT cell facility in Texas.

Those supply deals and the planned Texas HJT facility come after a sharp run in TOYO’s share price, with a 90 day share price return of 40.49% and a year to date share price return of 109.56%. The 1 year total shareholder return of 237.58% points to strong longer term momentum despite the 30 day share price return being down 15.61%.

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With TOYO stock up strongly over the past year, yet trading at a discount to the average analyst price target and intrinsic estimate, the key question now is whether there is still a buying opportunity or if the market is already pricing in future growth.

Most Popular Narrative: 30.6% Undervalued

At a last close of $12.49 versus a narrative fair value of $18.00, the most widely followed view sees TOYO stock trading at a sizeable discount, and ties that gap directly to how fast new capacity and margins could develop over the next few years.

Ramp up to a 4 gigawatt run rate at the Ethiopia facility by October 2025 is set to increase output from a low tariff, lower cost region. This can support higher shipment volumes and potentially lift revenue and gross profit if utilization stays high.

Want to see how this capacity push feeds into the $18.00 fair value? The core of the narrative blends rapid top line expansion with a step up in profitability and a lower earnings multiple than many large peers. Curious which specific revenue and margin paths have to line up for that discount to close?

Result: Fair Value of $18.00 (UNDERVALUED)

However, the TOYO narrative still faces pressure if new Ethiopia and Houston capacity is not absorbed at sensible prices, or if solar trade policies tighten further.

Next Steps

If the mix of risks and rewards around TOYO feels finely balanced, now is a good time to review the underlying data yourself and stress test your assumptions using the 4 key rewards and 1 important warning sign

Looking for more investment ideas beyond TOYO?

If TOYO has caught your attention, do not stop there. Broaden your watchlist with focused stock ideas built from the same data driven approach.

• Target higher income potential by reviewing companies in the 8 dividend fortresses that emphasize sizeable yields along with resilience.
• Hunt for mispriced opportunities using the 47 high quality undervalued stocks to spot stocks where fundamentals and price appear out of sync.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.