This should be of little concern for longer-term investors looking at solar stocks.įirst, SEDG is sitting on just over $680 million in cash and marketable securities as of June 30, with only a few hundred thousand dollars in debt due this year. Next, cash flow from operations for 2020 was $223 million, almost twice reported net income, and this easily covered $126 million in capital expenditures (capex) with a sizable cushion left over.įinally, about 40% of SEDG sales come from the U.S. The company's earnings release was mum on the precise reason for this, but declines in both gross and operating margins suggests that as the market for microgrids expands, so too do costs, at least at this stage of the game.
Sentiment has likely tempered on the solar stock thanks to a modest 2% rise in 2020 revenues and a 3% drop in net income. However, since hitting an all-time closing high near $365 in December, shares slumped down to around $200 this spring before rebounding to current levels. Shares of SEDG have been on a tear the last two years. Israel-based SolarEdge Technologies ( SEDG, $281.44) makes inverters: a key component of the microgrid that delivers solar energy to where it's needed in homes, schools, businesses, campuses and beyond. Here are five of the best solar stocks that offer a differentiated strategy for profiting from the green energy boom.
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Companies that make components, batteries, the materials to produce panels or the software to manage them are riding the coattails of the inexorable march away from fossil fuels and toward solar power. Like the supply companies that profited during the gold rush selling picks and shovels to eager prospectors, solar energy offers a similar "pick-and-shovel" opportunity. This is evidenced in the bellwether Invesco Solar ETF ( TAN), which is still up more than 50% over the past year even after a sharp cooling-off in early 2021.Īnd the setup for solar stocks still looks good, with climate change firmly atop the Biden administration's agenda. Green energy exchange-traded funds (ETFs) have benefited as investors have piled into solar stocks. And the forecast for 2021 alone is 3 million installations. The solar energy boom is the modern equivalent of the California Gold Rush of 1848.ĭata from Wood Mackenzie Power & Renewables and the Solar Energy Industries Association notes that it took 40 years to reach 1 million solar installations in the U.S., but just three more years to hit 2 million installations.
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