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Bull Of The Day: SolarEdge Technologies (SEDG)

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SolarEdge (SEDG - Free Report) has been on a tear since the beginning of the year yielding investors over 120% returns. Sell-side analysts are becoming increasingly optimistic about this stock, substantially raising their EPS estimates, and propelling SEDG in Zacks Rank #1 (Strong Buy).

The Business

SolarEdge produces solar optimizers, which maximizes the amount of energy that each solar module (panel) can harvest. The company also makes inverters for solar modules that convert the direct electric current from the panel to an alternative current for residential and commercial use. These two segments make up roughly 90% of SolarEdge’s revenue.

The firm has been investing more and more into its monitoring software and solutions segments. According to the most recent annual report, “Our cloud???based monitoring platform collects power, voltage, current and system data sent from our inverters and power optimizers and allows users to view the data at the module level, string level, inverter level and system level from any browser or from most smart phones and tablets.”

This cloud-based segment has been making up an increasing percentage of the SolarEdge’s business as more and more firms see the utility in this novel technology.

SolarEdge’s innovative drive has paved the way for the firm to be one of the most utilized in the solar business.

Performance

Renewable energy is the future of energy and the costs associated with producing this type of energy continue to fall. As solar panels and related costs drop the demand will increase.

SolarEdge has already benefited from this expansion in recent years with topline growth figures beginning to proliferate. Its dedicated research team ensures that their products are the ahead of the curve.

SolarEdge has demonstrated consistent, strong double-digit year-over-year revenue growth and relentless quarter-over-quarter expansions. In 2018 alone SolarEdge experienced 54% topline appreciation. Analysts are anticipating another 49% revenue growth for 2019.

This past quarter the firm illustrated 19.5% quarter-over-quarter sales growth on top of 43.1% year-over-year growth further proving the firm’s ability to beat expectations.

Currently, about 60% of the firm’s sales are done outside the United States but this figure could reverse soon as more people transition to renewable energy.

According to Solar Energy Industries Association, the US is expected to add 25% more solar capacity in 2019 and expecting to accelerate as the costs of this technology comes down. The capacity is expected to more than double in the next 5 years, which should open the US market right up for SolarEdge to take advantage of.

Recent News

The CEO of SolarEdge, Guy Sella, died this past weekend after reporting last Thursday that he would be taking a leave of absence due to health conditions. SolarEdge shares fell 8% Thursday (8/22) following Guy Sella’s announced leave.

Sella was diagnosed with colon cancer back in fall of 2017, but it was said to be at a treatable stage. Sella’s condition deteriorated quickly this weekend and he passed away on Sunday. Expect the share price to fall even further in trading this next week.

This could create a buying opportunity when the stock price levels out. The infrastructure of the business is still fully intact as well as the innovative moral that Sella instilled into SolarEdge from the beginning.

Take Away

There is a global push to make 50% of the world’s total energy production originate from a renewable source by 2050. These sources being primarily wind and solar energy. The project is going to cost the world more than $10 trillion to complete in that time frame and will give firms like SolarEdge the momentum they to drive a thriving business.

If SolarEdge doesn’t lose its innovative leadership with the untimely death of its inspiring CEO, I think the future is very bright for this solar energy company.

 

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