We’re at the start of a long-term change in the global economy. Public opinion – and also, to an extent, the human desire to survive – is promoting green tech and green industry, and setting the stage for the future of energy production. We don’t have a crystal ball, so we can’t see the full shape of things to come, but in recent months, investors have been moving toward solar stocks.
While supply chain bottlenecks and labor shortages are impacting the solar power industry, these issues are not specific; they are affecting the economy generally. Several industry-specific factors, however, are putting tailwinds behind the solar scene.
First off, there’s robust demand for solar power, along with its ancillary equipment and infrastructure. At bottom, this is the key factor. Demand ensures that there’s a market.
On the regulatory front, two legislative acts are acting to support solar. The passage of the infrastructure bill earlier this month was a major catalyst, as the $1 trillion-plus bill includes significant funding for the solar power sector. This was followed by the House of Representatives passing a version of the President’s ‘Build Back Better’ bill. BBB, as it’s called, includes a more extensive raft of pro-green policies; investors now are waiting to see if the bill can be steered to passage in the Senate.
In the meantime, the solar industry has rallied on these points, and investors are taking longer second looks at several solar stocks. Wells Fargo’s analysts have pointed out two companies involved in the production of microinverters, a key piece of hardware in solar power units, and notes how they will benefit from the current situation. We’ve used the TipRanks platform to pull up the details on the firm’s picks.
Enphase Energy (ENPH)
We’ll start with Enphase. The company manufactures solar microinverters, the hardware that converts the direct current (DC) power produced in a photovoltaic solar panel into alternating current (AC) energy that can be used in existing electrical transmission systems. Enphase leads the market in inverter production, by virtue of its first mover advantage; it was the first company to commercialize inverter production at scale.
Last month, Enphase saw two major share price catalysts. First, the company announced the launch of its new IQ8 microinverter, the most advanced version of the technology on the market. The IQ8 device is ‘smart,’ and per the company, it is capable of forming its own microgrid and supplying backup power during an outage using only direct solar energy – it does not require a battery during daylight. This latest generation of microinverter is the first microgrid-forming version on the market.
The second catalyst was the 3Q21 earnings report. Enphase showed record revenue – at $351.5 million, the top line was up 96% year-over-year. EPS was also strong, at 60 cents per share on net income of $84.2 million. The EPS was double the year-ago value….
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