UNDERLYING

Listed on NASDAQ as SEDG in the Alternate Energy Industrial Sector

SolarEdge is an Israeli company and a leader in smart energy technology that develops and sells solar inverters for photovoltaic arrays, energy generation monitoring software, battery energy storage products, as well as other related products and services to residential, commercial, and industrial customers. Total revenue reported for 2021 was 1,96 billion USD. Like ENPHASE, it too is also a component of the S&P 500.

SolarEdge is also branching out into other markets, like electric vehicles, which should help going forward. The company’s e-Mobility division recently announced it was set to supply both batteries and electric powertrain and grid services solution systems to Fiat.

A major goal of Inflation Reduction Act–the largest federal government spending increase on alternative energy in U.S. history–is to strengthen energy independence, reduce dependence on Chinese imports, and reinvigorate the industrial sector. Clearly Solar edge is also front and centre to be a beneficiary of this strategy.

Additionally, energy consumers are increasingly becoming energy producers while helping to support grid stability in a new democratised energy economy.

The company valuation has seen a pull back after the last quarter’s earnings report and is now at a very attractive valuation entry point. The falling Euro hit the company’s operations, with 47% of its revenue generated in Europe. The Company however has confirmed its belief that lower margins now is the price to be paid for long term growth.

On the back of this, interestingly there has been a flurry of institutional buying on the stock with hedge funds and Investment banks taking increased positions in the company at the lower valuation entry points.

The current Bloomberg Analyst forecast for Solar Edge has an impressive combined 92.8% Buy/Hold and maintains a positive 12-month forward target pricing forecast.

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