Russia’s invasion of Ukraine sent fuel prices skyrocketing, with oil surging above $100 a barrel. Americans are paying more than $4 a gallon at the pump, and states like Maryland and Georgia have temporarily lowered gasoline taxes to ease the strain on the consumer. Meanwhile, California is considering offering a $400 rebate to drivers, and other states are expected to follow suit.
At times like these, the importance of renewables and clean energy increases, encouraging people to turn to cheaper carbon-free alternatives. The solar energy sector, which mitigates the high electricity costs faced by consumers in the residential and commercial markets, is one such sector that is poised to benefit from rising fuel prices. and increased awareness of decarbonization.
As the graphs above show, the solar energy sector produced a mere 2.8% of total energy production in the United States in 2021. Over the years, in pursuit of an environmental secure without carbon, the installation of solar panels has seen a dramatic increase. in the USA
According to the Solar Energy Industries Association (SEIA), despite the pandemic triggering supply chain disruptions and labor issues, solar photovoltaic (PV) installations in the United States peaked at 23, 6 GW in 2021, bringing the total to around 171 GW.
Strong underlying demand from utilities, states, enterprises and distributed solar customers continues to drive sector growth, although the solar industry has seen rising prices due to pandemic-related challenges.
A report produced by the National Renewable Energy Laboratory (NREL) predicts 209 GW of PV installations in 2022 and 231 GW in 2023. This just shows the exponential growth the industry is expected to experience over the next few years.
Additionally, the Biden administration has proposed 100% carbon-free electricity in the United States by 2035, further bolstering prospects for growth in solar power stocks.
We’ve identified two solar microinverter companies that expect explosive growth in the coming years. These inverters are used to convert direct current (DC) generated from the power of the sun in the PV module into alternating current (AC), which is fed into the power grid.
Let’s take a closer look at the performance and future growth prospects of these stocks.
SolarEdge Technologies (SEDG)
Israel-based SolarEdge is involved in solar power generation with offerings including power optimizers, inverters and monitoring gates. The company’s products are used in a wide range of energy market segments, including residential, commercial and utility-scale PV, energy storage and backup solutions, electric vehicle (EV) charging , network services and virtual power plants, batteries and uninterrupted power supply. (UPS).
The product that differentiates SolarEdge from its competitors is its power optimizers, which provide increased cost savings by maximizing the power produced by the solar panels.
SolarEdge is a true global player with operations in over 133 countries. To date, SEDG has over 3.5 million inverters and over 83.9 million power optimizers shipped worldwide.
The company debuted on NASDAQ in 2015, and yesterday SEDG completed its underwritten public offering of 2.3 million shares and raised approximately $678.5 million.
SolarEdge has a strong balance sheet with $530 million in cash. With additional cash raised, it is well positioned for future growth prospects, both organically and through acquisitions.
As investors flock to renewables amid rising gas prices, SEDG stock has risen more than 20% in the past month, compared to a 22.3% gain in the past year.
According to a Needham report, SolarEdge is expected to post a revenue gain of more than 35% for FY22. Non-GAAP earnings of $6.28 per share for FY22 are expected, reflecting more than 30% year-over-year growth.
Street analysts are cautiously bullish on SEDG stock with a Moderate Buy consensus rating based on 12 buys, five holds and one sell. SolarEdge’s average price target of $329.06 implies, which the stock is almost fully priced at current levels.
Enphase Energy (ENPH)
American energy technology company, Enphase Energy offers software-driven home energy solutions, which cover solar generation, home energy storage, and web-based monitoring and control. The focus remains on residential and commercial markets in North America, Europe and Australia. The company has installed more than 42 million solar microinverters in more than 1.9 million homes to date.
ENPH stock has gained more than 29% in the past month as investors seek refuge in clean energy stocks to hedge against the looming threat of high oil prices due to the ongoing war in Ukraine. Over the past year, the stock has gained 28.5%.
Needham forecasts Enphase to post revenue growth of more than 44% for FY22. Non-GAAP earnings of $3.18 per share are expected for FY22, reflecting a jump of 33% per year.
Wall Street analysts gave ENPH stock a consensus strong buy rating. This is based on 17 buys and four catches. Enphase’s average price target of $218.79 implies 15% upside potential from current levels.
A comparative analysis of the two companies shows that currently, SEDG and ENPH are trending extremely higher than industry averages.
However, based on analysts’ consensus price targets, SEDG appears to be almost fully priced at current levels, while ENPH stock still has room to grow over the next twelve months.
However, the growth does not stop there! Given the vast growth prospects for the solar energy industry as a whole, each company is sure to win a significant slice of the pie. The benefits of the accelerated transition to decarbonization reflect huge upside potential for both companies.
To achieve the aggressive goal of ensuring a carbon-free world, private sector companies and public sector policies must work hand in hand, resulting in greater growth for all companies in the renewable energy sector.
Download TipRanks mobile app now
To find great stock trading ideas at attractive valuations, visit TipRanks’ Best Stocks to Buy, a recently launched tool that brings together all of TipRanks’ stock information.
Read the full disclaimer and disclosure