Forget about SolarEdge technologies, buy these 3 solar stocks instead

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Shares of the main supplier of solar photovoltaic inverters SolarEdge Technologies (SEDG) decreased as the the company’s financial performance disappointed in the third quarter. Third quarter results were weak, primarily due to the company’s business difficulties, which include large-scale solutions for roofs, floors, carports and floating solutions. These segments are not performing well given the current economic scenario. SEDG reported a slower than expected commercial deployment rate in Europe as a reason for the inventory build-up. SEDG revenue was down 17.7% year-on-year for $ 338.10 million in the third quarter closed in September 2020, while operating profit fell 54% from a year ago to $ 30.39 million.

However, many companies such as Enphase Energy, Inc. (ENPH), First Solar, Inc. (FSLR) and SunPower Corporation (SPWR) has managed to generate profits over the past two months despite the disruption due to the pandemic, mainly through strong fundamentals and strategic partnerships formed to counter the crisis.

As the new Biden administration is expected to support the green energy industry, these companies are well positioned to overtake SEDG and become industry leaders.

Enphase Energy, Inc. (ENPH)

ENPH is an energy technology company that designs, manufactures and sells software-driven solar photovoltaic energy solutions around the world. The company manufactures semiconductor-based microinverters that efficiently convert energy at the level of an individual solar module and facilitate energy monitoring and control services.

November 9e, ENPH announced that Cutler Bay Solar Solutions has installed 1.5 MWh of its storage systems in Florida homes. On October 20, ENPH announced a similar strategic partnership with SunCool Energy to deliver Enphase storage systems to South Florida. This will greatly increase the market reach of the ENPH as well as its revenue.

ENPH revenue increased 42.2% sequentially to $ 178.50 million in the third quarter ended September 2020. Operating profit increased 53.5% year-on-year to reach $ 51.76 million, while EPS was up 24% from last year’s value at $ 0.31. Non-GAAP gross margin increased 104 basis points to 41% during this period.

The consensus EPS estimate of $ 0.42 for the fourth quarter ending December 2020 shows a 7.7% year-over-year improvement. ENPH also has an impressive track record of earnings surprises, as it has beaten street EPS estimates in each of the past four quarters. The consensus estimate of revenue of $ 255.23 million for the fourth quarter indicates a 21.5% year-over-year increase. The title has gained 348.6% since the start of the year.

How does ENPH compare to POWR odds?

A for trade

A for peers

B for Buy and keep note

B for the overall POWR rating.

The action is ranked n ° 1 out of the 16 actions of the Solar industry.

First Solar, Inc. (FSLR)

FSLR is a manufacturer and supplier of photovoltaic solar panels and large scale photovoltaic power plants. It operates globally in two segments: Modules and Systems. The Module segment is responsible for the development of cadmium telluride solar modules to convert sunlight into electricity, while the Systems segment is responsible for providing solutions for power plants.

September 23e, FSLR announced that JP Energie Environment has selected its photovoltaic solar modules to power the Labrade solar power plant in Europe. Supplying more than 400 projects in France alone would make FSLR one of the world’s leading providers of solar solutions.

FSLR also recently entered into an agreement with Vistra Corp. under which it will supply its solar photovoltaic modules to power Vistra’s five solar projects across Texas. This allows FSLR to stand out in the solar industry as a reliable PV manufacturer and significantly increase its revenue.

FSLR’s net sales for the third quarter ended September 2020 increased 69.6% year-on-year to $ 927.57 million. Net profit increased 406.3% from the previous year quarter to $ 155.04 million, while gross profit increased 111.8% from the same period last year to $ 293.02 million. EPS rose 403.4% from a year ago to $ 1.46.

The consensus estimate of EPS of $ 3.71 for the current year indicates a 150.7% year-over-year improvement. Plus, FSLR has beaten street EPS estimates in three of the past four quarters, which is impressive. The consensus estimate of revenue of $ 3.02 billion for next year indicates growth of 6.6% over the same period last year. The title has gained 45.5% since the start of the year.

FSLR’s strong fundamentals are reflected in its POWR ratings. It has a “Buy” rating with a “B” for commercial quality and quality of purchase and hold. It is ranked # 2 in the same industry.

SunPower Corporation (SPWR)

SPWR is an American energy company providing solar solutions around the world. The company operates through two segments – SunPower Energy Services and SunPower Technologies. It supplies panels and system components, commercial rooftop and ground solar power systems. Direct and third-party distributors.

September 22sd, SPWR announced that it has secured funding commitments from Hannon Armstrong Sustainable Infrastructure Capital, Inc. for its residential solar lease and new solar storage plus program. The company expects this new fund to help meet growing customer demand soon.

SPWR recently announced Low Annual Percentage Rate (APR) loans for US residential solar consumers. This affordable financing solution is expected to reduce monthly consumer payments and, consequently, increase the demand for SPWR products for residential use.

SPWR’s revenue from solar services grew 12.7% year-on-year to $ 5.90 billion. Net profit increased 197.1% from the value of the previous year to $ 44.63 billion, while EPS rose 136.3% from the previous year’s quarter to 0 , $ 26.

The consensus estimate of EPS of $ 0.36 for next year indicates a 256.5% improvement year over year. Plus, SPWR has beaten street EPS estimates in three of the past four quarters, which is impressive. The consensus estimate of revenue of $ 1.42 billion for next year indicates growth of 19% from the same period last year. The stock has gained 140.1% year-to-date.

SPWR’s promising outlook is reflected in its POWR ratings. It is rated “Buy” with an “A” for the Trade and Peer category and a “B” for the Buy and Hold category. Among the 16 stocks in the solar industry, it is ranked No. 3.

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ENPH shares were trading at $ 116.59 per share on Friday afternoon, down $ 0.62 (-0.53%). Year-to-date, ENPH has gained 346.19%, compared to a 12.86% increase for the benchmark S&P 500 during the same period.

About the Author: Imon Ghosh

Imon is an investment analyst and journalist with a passion for financial research and writing. She started her career with Kantar IMRB, a leading market research and consumer advisory organization. Following…

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