The members of the U.S. electoral college formally certified Joe Biden as the next president of the United States on December 14. Climate change is one of the core issues on which Biden based his election bid. As such, stocks in the solar-power industry soared following the election results.
Biden has announced plans to spend $2 trillion over the next four years to build and upgrade solar power plants in the U.S. His aim is to make them more efficient as part of an end goal of net-zero carbon emissions by 2050. He has also pledged to re-join the Paris Climate agreement as part of the nation’s renewed commitment to reducing global warming.
Biden’s victory has given a significant boost to solar energy stocks, as evident in Invesco Solar ETF’s (TAN) 26.3% rally over the past month.
Industry leaders such as Enphase Energy, Inc. (ENPH), SolarEdge Technologies, Inc. (SEDG) and Sunrun Inc. (RUN) have witnessed significant growths in revenue and earnings despite the pandemic-led global economic slowdown. Based on their future growth potential, we think these stocks still have plenty of upside left as the country moves toward a clean energy-based future.
Enphase Energy, Inc. (ENPH)
ENPH is a global solar energy technology company that provides home energy management solutions to the solar photovoltaic industry. It designs, develops, manufactures, and sells energy solutions through four product lines - semiconductor-based Enphase microinverter, Envoy communications gateway, Enlighten cloud-based software, and an AC battery.
ENPH has entered strategic partnerships with various solar technology companies to increase its footprint around the globe. In early November, ENPH partnered with Cutler Bay Solar Solutions, a solar-plus-storage installation company, to deploy more than 1.5 MWh of Enphase Encharge™ storage systems in Florida. During the same period, it entered into an agreement with MSpectrum, a solar energy renewable provider, to distribute its products to residential and commercial installers across the Philippines.
In October, ENPH also joined forces with Natura Living, a residential and commercial solar installer, to install a 60 kW Solar Array on PepsiCo Thailand’s Snack Division Building. It is evident from such partnerships that ENPH has been able to capitalize its high production capacity to achieve economies of scale.
ENPH partnered with DMEGC Solar Energy, in November, to develop high-efficiency AC modules for the European residential solar market. This should allow ENPH to strengthen its position in the highly competitive European solar industry through its quality design, faster installation, and low maintenance costs.
To penetrate further the Australian markets, earlier this month, ENPH announced the launch of Enphase Installer Network (EIN). This will help ENPH attract a large volume of potential customers.
ENPH’s Non-GAAP operating income has increased 8.7% year-over-year to $43.68 million in the third quarter ended September 30, 2020. Its non-GAAP Gross margin rose 480 basis points from the year-ago value to 36.2%.
Analysts expect ENPH’s EPS to rise 5.1% to $0.41 for the current quarter ending December 31, 2020. The company has an impressive earnings surprise history; It beat the Street EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $255.23 million for the fourth quarter indicates a 21.5% rise year-over-year. ENPH has gained 551.8% over the past year.
How does ENPH stack up for the POWR Ratings?
A for Trade Grade
A Buy & Hold Grade
A for Peer Grade
A for Overall POWR Rating.
You cannot ask for better. It is currently ranked #1 of 19 stocks in the Solar industry.
SolarEdge Technologies, Inc. (SEDG)
SEDG is a manufacturer and supplier of DC optimized inverter systems for solar PV installations. It offers smart energy management solutions through its four products - SolarEdge Power Optimizer, SolarEdge Inverter, SolarEdge Solutions and SolarEdge Monitoring Software, along with a cloud-based monitoring platform.
SolarEdge shipped 1.45 Gigawatts (AC) of inverters in the third quarter ended September 30,2020. This indicates a steady recovery from a decline in demand caused by the pandemic. It has raised $618 million through a convertible debt offering. The proceeds of the offering should support the growth of SEDG’s organic and non-organic segments.
SEDG reported revenues of $338.10 million in the fiscal third quarter ended October 31, 2020, up 1.9% sequentially. Non-GAAP gross margin rose 110 basis points sequentially to 33.5%, while its non-GAAP net income increased 3.6% year-over-year to $65.88 million.
Analysts expect SEDG’s EPS to rise 14.5% to $4.58 in the current year (ending December 2021). The company has an impressive earnings surprise history; it beat the Street EPS estimates in three of the trailing four quarters. The consensus revenue estimate of $356.07 million for the current quarter ending December 31, 2020 indicates a 5.3% rise year-over-year. SEDG has gained 248% over the past year.
It is no surprise then that SEDG is rated a “Strong Buy” with an “A” for Trade Grade, Buy & Hold Grade, and Peer Grade. It is currently ranked #2 of 19 stocks in the same industry.
Sunrun Inc. (RUN)
RUN is a home solar panel and battery storage company. It is primarily engaged in providing solar energy products and services to residential homeowners. Its product line includes solar panels, inverters, racking systems and other solar-related equipment.
RUN, earlier in October, completed an acquisition of Vinit Solar in an all-stock deal that involved an exchange of 0.55 shares of RUN for one share of Vinit. This should help RUN to boost the number of households it services by providing them affordable, reliable, and clean electricity. RUN’s order volumes have started to improve from April lows, and they should return to pre-pandemic levels soon, in-part owing to a rising awareness of climate change.
RUN’s EPS has increased 20% year-over-year to $0.30 in the third quarter that ended September 30, 2020. Net Earning Assets increased 15% year-over-year to $1.7 billion. And its total customers increased 20% year-over-year to 326000; its Megawatts Deployed increased 2% year-over-year to 109MW.
Analysts expect RUN’s EPS to rise 10% to $0.11 for the current quarter ending December 31, 2020. The consensus revenue estimate of $298.07 million for the fourth quarter represents a 22.20% rise year-over-year. MELI has gained 353.16% over the past year.
Want More Great Investing Ideas?
9 “MUST OWN” Growth Stocks for 2021
Where is the Santa Claus Stock Rally?
5 WINNING Stocks Chart Patterns
ENPH shares were unchanged in after-hours trading Wednesday. Year-to-date, ENPH has gained 524.99%, versus a 16.64% rise in the benchmark S&P 500 index during the same period.
About the Author: Rishab Dugar
Rishab is a financial journalist and investment analyst. His investment approach is to focus on quality stocks, trading at low prices, with business models that he readily understands.
The post Will Solar Stocks Enphase, SolarEdge, and Sunrun Continue to Shine in 2021? appeared first on StockNews.com