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Solar stocks are on Fire.
No pun intended.
Since the beginning of the year Invesco Solar ETF (NYSEARCA:TAN) is up a staggering 145% …
To put that in perspective, the absolute best year of S&P 500 For the past 45 years, it was 1995 when the index rose 34%.
In other words, solar stocks are doing four times better in 2020 than the stock market has in the past five decades …
This is wild.
And it’s not a fake head. The big solar stock breakout in 2020 is a sign of the times.
Times when solar is now the cheapest source of energy in the worldaccording to the IEA …
Where more than 200 cities and countries around the world have a goal of “100% clean energy” for 2030, 2040 or 2050 …
Where more than half of US homeowners are considering adding solar panels to their homes …
Where solar can completely supply not only households, but also large commercial properties and company premises with electricity …
It’s a new world.
And in this new world, solar is king. Not coal. No natural gas. Solar.
It’s a one-time disruption … with a huge global impact … and the time to invest now.
Today we’re going to show you a powerful way to play this solar megatrend – not by buying another small cap hypergrowth solar growth, but by buying an already large solar inventory that has the potential to be absolutely huge one day.
Pioneering a breakthrough in solar technology with a game-changing impact
One of the largest and most famous solar companies in the world is SolarEdge (NASDAQ:SEDG).
It is fair to assume that given the company’s market cap of $ 14.1 billion, the big surge in SolarEdge stock has already happened.
But that’s the wrong assumption.
Instead of a small solar company that could one day be big, SolarEdge is a big solar company that one day could be big – and in that light, SolarEdge stock gives you just as many advantages as some of the smaller names in the space.
Here is the story.
Solar systems consist of three main parts: the modules (which generate direct current when exposed to sunlight), the inverter (which converts direct current into alternating current that can be used by the power grid) and associated wiring, fuse boxes and mounting hardware.
Conventional solar systems were built with central inverters or an inverter that connected all the modules of a solar system together.
These systems suffer from a “weakest link” problem where, since all modules in the system are connected through the same inverter, the entire system tends to operate on the output power of the weakest module in the system.
A breakthrough technology called Performance optimizer were made 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 equipped with solar optimizers to improve performance.
Who is selling these performance optimizers?
According to IHS Markit, SolarEdge is the world’s leading provider of solar inverters / optimizers in terms of sales and performance.
The company’s dominance is not diminishing. According to Wood Mackenzie, SolarEdge increased its share of the U.S. 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.
Because SolarEdge has the best micro-inverter and power optimization technology in the game, and it 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 in cash on balance sheet, around 400 full-time employees and a market capitalization of over $ 10 billion – in order to maintain its technology advantage for the foreseeable future.
In this case, SolarEdge becomes the ubiquitous technology backbone of the solar industry. Most of the solar panels in the world have SolarEdge inverters and optimizers installed.
That, of course, means that with the takeover of the energy market by solar in the 2020s, SolarEdge will become a multi-trillion dollar titan of the global energy industry.
The current titans of industry (electricity utilities) have market caps in excess of $ 70 billion.
SolarEdge could very easily get there one day …
This means that, despite its valuation of over $ 10 billion, SolarEdge stock is worth looking at as a potentially big long-term winner of the solar revolution.
At the time of this writing, Luke Lango held positions (neither directly nor indirectly) in the securities identified in this article.
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