How We Made 50% in Six Weeks from Solar… And There’s Still Room to Run

Dividend Investing

I want you to consider an astounding fact. Since 2010, the costs associated with solar power have fallen by 70%.

Simply put, there’s an energy revolution happening around us, and it’s upending the global energy market.

Not only that, but we’re making big profits. Just last week, our #1 solar stock crushed Wall Street’s profit estimates, and the shares soared 22.7% in one day.

Investors need to understand that you’re not going to have another chance to get in at the beginning. In 2016, the growth in solar power capacity overtook that for coal-fired capacity for the first time.

Between 2007 and 2016, installations of new solar panels grew nearly 90-fold, from just 169 megawatts of capacity to 15 gigawatts.

I want to stress the reason behind this growth—solar power is now cheaper than coal in many places around the world and, in less than a decade, will likely fall below the cost of both natural gas and wind to be the low-cost electricity option nearly everywhere.

Now that I’ve told you about this great growth industry, let me fill you in on the company that’s best positioned to benefit from this worldwide change in how electricity is generated.

SolarEdge Technologies (SEDG)

The stock I’m talking about is SolarEdge Technologies (SEDG).

SolarEdge has invented an intelligent inverter solution that has changed the way power is harvested and managed in a solar photovoltaic (PV) system. Let me explain what differentiates the company’s technology. This is important because SolarEdge is well on its way to becoming the de facto solar inverter manufacturer with their DC voltage optimizer strategy.

Traditional PV systems aren’t terribly efficient. There’s a lot of power loss. Even weather can cause a loss in power yields.

SolarEdge delivers a distributed system that tackles these challenges. Energy loss due to panel mismatch is prevented by performing “maximum power point testing” for each panel individually. String voltage is kept fixed at all times, so strings can be combined regardless of length, tilt, or type of panels used. Continuous performance measurement enables online monitoring and fault detection at the panel level. To achieve all of this without raising the cost of a solar system, SolarEdge provides panel optimizers as well as its own inverter and monitoring web portal.

The company’s Power Optimizer is embedded into each panel by panel manufacturers instead of the junction box, or can be retrofitted by PV installers onto regular modules. The power optimizer optimizes energy output by performing MPPT individually for each panel and maintains a fixed DC string voltage. Power optimizers also collect performance measurements for each panel, transmitting the data over existing power lines.

The SolarEdge Solar inverter is responsible for DC to AC inversion while power point testing and voltage management are handled by power optimizers separately for each module. Fixed string voltage ensures operation at the highest efficiency (up to 97%) at all times, regardless of the string length and temperature.

A Sunny Earnings Report

That leads us up to last week’s earnings report. Some investors were nervous because the solar market has been somewhat sluggish this year, but SolarEdge reported very good results.

On Monday, May 6, SolarEdge said it made 64 cents per share for the first quarter. That was two cents better than the consensus of Wall Street analysts. But the big news was the company’s outlook for Q2. SolarEdge sees Q2 revenue between $310 million and $320 million.

When trading opened the next day, shares of SEDG exploded higher for a one-day gain of 22.7%. Not only that, but the stock had been rallying going into the earnings report. In a six-week stretch, the stock gained nearly 50% for us.

But it doesn’t end there.

SolarEdge is also getting involved with electric vehicles. The company recently unveiled a home electric car charger with a solar inverter that merges the worlds of electric vehicles and residential solar power.

Tesla (Nasdaq: TSLA) had hinted at such a product, but SolarEdge, which was Tesla’s inverter partner on the first generation of its Powerwall, beat Elon Musk to the punch. It can charge an electric vehicle from both the grid and a solar array.

By supplementing grid power with PV power, the company’s Level 2 EV charger offers charging at a rate up to six times faster than a standard Level 1 charger. The new charger will be able to work with Time-of-Use (TOU) rates in order for EV owners to charge at the lowest rate possible on top of using the excess energy from their solar array.

SolarEdge’s HD-Wave inverter, once integrated with an EV charger, will not only provide the existing management and monitoring of solar production, but will also enable EV charging from a single inverter and dashboard.

This solution offers cost savings by eliminating the need for an additional conduit, wiring, and breaker installation.

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