Cost Up Your Portfolio With SolarEdge Inventory

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Solar stocks are heating up as it became clear on Wall Street that solar is the backbone of tomorrow’s clean energy world. To play this emerging solar megatrend, investors should consider topping up their portfolio SolarEdge (NASDAQ:SEDG) Camp.

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In a nutshell, SolarEdge is a leading solar company providing bolt and nut hardware that optimizes solar panel performance. They are the best in the world at it and have solid visibility as one of the largest and brightest solar technology providers over the next decade, as this niche industry will take over the multi-trillion dollar global energy market.

If so, SolarEdge will see tremendous sales and earnings growth, as will be the case with SEDG stocks.

Sure, the stock saw a huge surge in 2020. Shares are up 150% this year alone. It’s a big rally. But it’s just the beginning of a much longer, much bigger rally in a leading solar asset with hypergrowth and tons of potential.

Here’s a deeper look.

Power Optimizer for the Win

What exactly is SolarEdge hardware technology that is improving solar panel performance?

It’s a wide range of smart energy products. However, the focus is on SolarEdge power optimizers.

In short, traditional solar systems include string and central inverter technologies, which suffer from the “weakest link” problem. Since these systems all run through an inverter, they are set up so that if one module fails, the entire system fails. Perhaps worse, solar systems with central inverters will typically have system-wide performance that matches the performance of the worst performing module in the system, meaning that almost none of the modules in that system are operating at full capacity.

Basically, conventional solar systems with central inverter technology have an extraordinarily suboptimal performance.

Performance optimizers are designed to address this “weakest link” problem.

Power optimizers are basically intelligent electronic chips that are placed separately on each module to monitor, track and, if necessary, adjust the power output of each individual module. In this way, power optimizers separate the system from the module and ensure that each module runs at its unique MPP or maximum output power.

Power optimizers are the future technological backbone of solar. Almost every scale solar panel is fitted with solar panels to improve performance. But most panels don’t have optimizers today. Therefore, there is enough space for optimizer sellers – like SolarEdge – to increase their share of the booming solar market over the next ten years.

That, of course, is a bullish roster for SEDG stock.

The leader in his room

Of course, they are several sellers of microinverters and power optimizers in the solar industry.

But SolarEdge has priority.

According to IHS Market, SolarEdge is the world’s leading provider of solar inverters in terms of sales and performance. The company’s dominance is not diminishing. Check out this table by Wood Mackenzie. SolarEdge has grown its share of the US home solar inverter market from near zero in 2013 to over 60% in 2019 – from fifth largest player in space to largest single player by a mile.

Why?

Because SolarEdge has the best micro-inverter and power optimization technology in the game and is setting the gold standard for solar panel performance in the US

SolarEdge should be able to combine the advantage of its first mover with market-leading resources – the company has more than $ 1 billion on balance sheet, around 400 full-time employees, and a market capitalization of over $ 10 billion – to its technology will maintain its advantage for the foreseeable future.

As long as the company holds on to this advantage, the future will remain a very good SEDG share.

Huge uptrend for SolarEdge Stock

Thanks to falling costs, improved technology, increasing legal support and changing consumer demand, the solar industry is facing tremendous growth in the next few years.

The IEA assumes that the solar capacity installed worldwide will increase by more than 150% by 2025. At some point in this decade, solar will become the largest source of energy in the world. From there, it is only a matter of time before solar energy becomes ubiquitous around the world.

In other words, solar is an industry where installation capacity will consistently grow by 10% or more over the next 10 to 15 years.

As the technology backbone of this industry, SolarEdge should be able to achieve this growth of more than 10% for the next 10 to 15 years (at least) and it should do it best thanks to international growth with growth of more than 15% and market share expansion.

With that in mind, it was easy to see SolarEdge grow into a $ 10 billion company with an operating margin of more than 20% and net income of more than $ 2 billion.

A market average 20 times multiple implies a future market capitalization of potentially more than $ 40 billion for SolarEdge – and this could prove conservative considering that many of today’s largest electricity utilities have market caps in excess of $ 70 billion.

In both cases, the SEDG share has great long-term upside potential.

Conclusion at SEDG Stock

SolarEdge stock is a long-term winner that makes a worthy addition to any investor’s portfolio.

Fair warning: things can get restless in the short term. The SEDG share has already had quite a run-up. But that turmoil will calm down, and in the long run the stock is a potential multi-dredger.

At the time of writing, Luke Lango held positions (neither directly nor indirectly) in the securities identified in this article.

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The post Topping Up Your Portfolio With SolarEdge Stocks was first published on InvestorPlace.

The views and opinions expressed here are those of the author and do not necessarily reflect those of Nasdaq, Inc.

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