With the pandemic halting almost all business operations earlier this year, the solar energy industry suffered a major blow. The plummeting demand for solar energy in both residential and commercial properties led to widespread job losses, especially in the United States.
With the gradual recovery of the global economy as businesses adjust their work environment under the “new normal,” the solar industry started recovering as well. In fact, since the overall market crash in March, solar stocks performed better than the rest of the clean energy sector as well as some of the technology players. This is evident from Invesco Solar ETF’s (TAN) gain of almost 90% since mid-March compared to the tech-heavy Nasdaq Composite’s gain of about 40% over the same time period.
In addition to announcing several partnership agreements and expansion projects, most of the solar companies reported impressive financials for the second quarter.
With rising stock prices and sound financials, investing in Enphase Energy, Inc. (ENPH), First Solar, Inc. (FSLR), Canadian Solar Inc. (CSIQ), and Azure Power Global Ltd. (AZRE) should help you make solid profits.
Enphase Energy, Inc. (ENPH)
ENPH designs, manufactures, and sells home energy solutions such as microinverter systems to the photovoltaic industry globally. Its semiconductor-based microinverter converts individual solar molecule energy and combines it with its patented networking and software technology for energy monitoring and control services. The company also provides AC battery storage systems, Envoy communications gateway, and Enlighten cloud-based monitoring services.
Though ENPH’s revenue for the second quarter ending June 2020 indicates a year-over-year decline, the company reported a record non-GAAP gross margin of 39.6%. Its worldwide Net Promoter Score of 66% this quarter indicates a slight increase from 64% in the previous quarter.
To compensate for the negatives caused by the pandemic, ENPH opened online stores in Europe and Australia and launched an online Enphase community.
On June 1st, ENPH announced its expansion plan to Poland through a partnership with solar distributor SmartX Sp. z.o.o. Also, on July 15th, it collaborated with Maxeon Solar Technologies to manufacture a factory-integrated Enphase IQ microinverter by the fourth quarter for residential customers worldwide.
ENPH expects its third quarter revenues to be within $160- 175 million and non-GAAP gross margin to be in the range of 37-40%, excluding stock-based compensation. Though the consensus EPS estimate for the third quarter ending September 2020 indicates a year-over-year decline, ENPH surpassed market estimates in each of the trailing four quarters, which is impressive.
ENPH gained more than 255% to hit its 52-week high on August 6th after hitting its year-to-date low of $21.49 in March.
How does ENPH stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
B for Industry Rank
A for Overall POWR Rating
You can’t ask for better. It is also ranked #6 out of 14 stocks in the Solar industry.
First Solar, Inc. (FSLR)
FSLR operates in two major segments — Modules and Systems — to provide photovoltaic solar energy solutions internationally. The Modules segment develops cadmium telluride solar modules to convert sunlight into electricity, while the Systems segment provides various power plant solutions.
On August 6th, FSLR announced its commitment to power 100% of its global photovoltaic solar manufacturing operations renewable energy by 2028. It plans to transition its facilities located in the United States to carbon-free electricity by 2026.
On July 23rd, FSLR entered into an agreement with Renewable Power Group of Goldman Sachs Asset Management to power American Kings Solar project with FSLR’s series 6 photovoltaic modules. FSLR also sold its North American Operations and Maintenance Business to NovaSource Power Services.
FLSR’s second quarter results were impressive, as revenue increased 20.6% quarter-over-quarter and 9.8% year-over-year to $642 million. Its restricted cash flow balance increased $44 million to $1.64 billion in the second quarter.
The consensus EPS estimate of $0.58 for the third quarter indicates a 100% rise year-over-year. The street revenue estimate of $683.73 million for the upcoming quarter indicates a 25% increase from the year-ago value.
FSLR hit its 52-week low of $28.47 on March 18th amid the virus-driven market crash. It gained more than 175% to hit its 52-week high of $78.54 on August 7th.
FSLR is rated a Buy in our POWR Ratings system, consistent with its impressive performance in the second quarter. It holds an A in Trade Grade, and a B in Buy & Hold Grade and Industry Rank. Out of 14 stocks in the Solar industry, FSLR is currently ranked #2.
Canadian Solar Inc. (CSIQ)
CSIQ develops and manufactures solar power products such as solar ingots, wafers, cells modules, etc. through two segments – module and Systems solutions (MSS) and Energy. Its MSS segment operates to design, develop, manufacture, and sell a range of solar power products, while the energy segment develops and sells solar power projects and electricity.
CSIQ entered into two power purchase agreements to acquire 274 MWp solar power projects from Braskem S.A. and Copel Energia in Brazil. In exchange, CSIQ plans to build a…
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