The renewable energy sector has been booming since the second half of 2020 thanks to investor optimism about political support from governments around the world to achieve net zero carbon emissions. With solar power being one of the most popular renewable energy sources, shares of companies in the sector have risen in the past year. Additionally, President Biden’s interest in vehicle electrification over the next several years is driving various solar companies to find efficient ways to recharge electric vehicles with solar energy.
Given the current favorable industry winds, Wall Street is placing huge bets on the solar industry. This led to a rally in solar stocks, as evidenced by the Invesco Solar Portfolio ETFs (BRONZER) 210.4% returns over the past year vs. 50% gains for the S&P 500.
Based on consensus pricing targets, we believe leading solar stocks Enphase Energy, Inc. (ENPH), SolarEdge Technologies, Inc. (SEDG) and ReneSola Ltd. (GROUND) have the potential to recover by more than 20% over the next 12 months.
Enphase Energy, Inc. (ENPH)
ENPH is a provider of energy management solutions for the solar PV industry in the United States and internationally. The company manufactures and sells semiconductor-based microinverters that convert energy at the individual solar module level, combined with its proprietary grid technologies and software to provide energy monitoring and control services. ENPH sells its solutions to solar distributors, original equipment manufacturers, strategic partners and owners, as well as the DIY market through its product upgrade program or online store.
ENPH extended its network of Enphase Installers (EINs) to the Netherlands and Belgium this month. It hopes to expand its reach to more European countries in 2021. On April 1, ENPH completed the acquisition of the Solar Design Services business from DIN Engineering Services LLP, an India-based company that provides outsourced proposal drawings and sets of permit plans for residential solar energy. installers in North America. And last month, Rubicon Energy agreed to distribute Enphase IQ microinverters for grid-tied photovoltaic (PV) applications to residential and commercial installers in the rapidly growing South African market.
For the fourth quarter ended December 31, 2020, the company’s net revenue increased 26.1% year-over-year to $ 264.84 million. Its non-GAAP gross profit was $ 106.55 million, a 35.9% year-over-year improvement. Its operating profit was $ 72.36 million for the fourth quarter, representing a 38.4% year-over-year increase. ENPH’s non-GAAP net income was $ 71.34 million, up 37.1% year-on-year. And its non-GAAP EPS showed a 30.8% improvement over the prior year period to $ 0.51.
Analysts expect SKYW’s EPS to improve 188.2% year-over-year for the current quarter, ending June 30, 2021, to $ 0.49. It has beaten Street’s consensus EPS estimates in each of the past four quarters. And its consensus estimate of revenue of $ 319.94 million for the current quarter is a 154.9% year-over-year increase.
The stock has gained 305.2% in the past year and 192.6% in the past nine months. ENPH closed yesterday’s trading session at $ 153.09.
Of 13 Wall Street analysts who rated the stock, 9 rated it Buy and 4 rated it Hold. They expect the stock to hit $ 217.82 in the near term, indicating upside potential of 42.3%.
SolarEdge Technologies, Inc. (SEDG)
SEDG offers direct current (DC) optimized inverter systems for solar photovoltaic (PV) installations worldwide. The company’s product line includes inverters, power optimizers, communication devices and smart energy management solutions used in residential, commercial and small-scale solar installations. It also offers a cloud-based monitoring platform that collects and processes information from power optimizers and inverters, as well as monitors and manages the solar PV system. In addition, it offers pre-sales support, continuing education, technical support and post-installation services.
In February, Sunrun Inc. (CLASSES), a leading US provider of residential solar services, battery storage and energy, has agreed to supply SEDG’s next-generation SolarEdge Energy Hub PV inverter to residential customers. Also in February, SEDG’s SolarEdge e-Mobility division was selected to supply fully electric powertrains and batteries to produce the Fiat E-Ducato light commercial vehicle.
SEDG’s revenues were $ 358.11 million for the fourth quarter, ended December 31, 2020, representing a 5.9% improvement sequentially. Its gross margin was $ 116.42 million, up 2.8% from the third quarter of 2020. The company’s total assets increased 63.1% year-over-year to 2.00% year-on-year. $ 44 billion as of December 31, 2020. Its cash and cash equivalents were $ 827.15 million. for the year, up 269.4% over the previous year.
A consensus estimate of EPS of $ 1.16 for the current quarter, ending June 30, 2021, represents a 19.6% year-over-year increase. The stock has beaten consensus EPS estimates in three of the past four quarters. In addition, its consensus estimate of revenue of $ 1.85 billion for its 2021 fiscal year represents a 27% increase over the period the previous year.
The stock has climbed 192.2% in the past year and 74.2% in the past nine months and ended yesterday’s trading session at $ 269.44.
Wall Street analysts expect the stock to hit $ 327.85 in the near term, indicating a upside potential of 21.7%. Out of 16 Wall Street analysts, 7 rated it Buy and 7 rated it Hold.
ReneSola Ltd. (GROUND)
SOL focuses on solar energy project development, construction management and project finance services. The company operates through two segments: project development and IPP activities. It develops and sells solar energy projects (project development activity), and sells the electricity produced by its operated solar power plants (IPP activity). SOL’s project development activity is focused on small scale decentralized generation (DG) projects and community solar gardens in the United States, Poland, Hungary, Spain, France and the United Kingdom.
Last week, SOL closed the sale of a portfolio of approximately 10 MW of solar development projects to Greenbacker Renewable Energy Company. In January, it closed an offering of 10 million U.S. Depository Shares (ADS), bringing in gross proceeds of $ 250 million. In addition, SOL has signed a Memorandum of Understanding with Eiffel Investment Group to establish a joint venture that will provide financing for SOL’s current and future solar projects across Europe.
The company’s non-GAAP net sales increased 66.7% sequentially to $ 16.97 million in the fourth quarter ended December 31, 2020. The company had cash and cash equivalents of cash of $ 40.68 million as of December 31, 2020, representing an improvement of 64.7%. Year after year. SOL’s total assets grew 5.4% year-on-year to $ 337.35 million.
Analysts expect SOL’s EPS for the next quarter, ending September 30, 2021, to be $ 0.06, up 20% year-over-year. In addition, for the next quarter, analysts expect SOL’s revenue to rise to $ 27.18 million, an increase of 178.8% from the period of the last year. The stock’s EPS is expected to grow 15% per year over the next five years.
The stock has gained 856.2% in the past year and 716.3% in the past nine months to close yesterday’s trading session at $ 10.04. It has gained 1,003.3% since hitting its lowest level in 52 weeks at $ 10.04.
Wall Street analysts expect the stock to hit $ 14.75 in the near term, indicating a upside potential of 46.9%. In addition, the two Wall Street analysts covering the stock valued it to buy.
ENPH shares were trading at $ 152.21 per share on Wednesday afternoon, down $ 0.88 (-0.57%). Since the start of the year, the ENPH has fallen -13.26%, compared to a 10.37% increase in the benchmark S&P 500 during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a particular interest in researching market inefficiencies. She is passionate about educating investors so that they can be successful on the stock market. Following…