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Are Solar Stocks a Prime Bet as Infrastructure Bill Looms? (ENPH, GSFI, SEDG)

Remember the “Green New Deal”? Two years ago, in the infancy of the Democratic party primaries, Bernie and AOC and the hard progressive base were pushing it as the only way to avoid a climate change Armageddon. And plenty of scientists stepped up to underline the urgency of the idea.

But, alas, it seemed politically impossible.

Oh, how the times have changed. With the Georgia run-off upset in early January and the passage of the Biden $1.9 trillion stimulus deal over recent days (via the budget reconciliation pathway), the Green New Deal has come back to life – at least in spirit – because its basic precepts are now expected to define a massive infrastructure bill set to dominate the stage and spotlight in early 2022.

Democrats have figured out that they can pretty much do whatever they want once a year through the Budget Reconciliation process – filibuster be damned. This year, it was the $1.9T Covid bill. Next year, it may be a $3T infrastructure bill heavily skewed toward the climate change agenda.

Markets are going to latch onto this carrot soon. So will the GOP. In the latter case, if you want chicken, and the chef is only making pizza, you better get on board with a chicken pizza.

The Dems will strongly prefer a bipartisan bill, but they hold all the cards right now. So, for GOP leaders, you can either play ball and win something minor, or boycott out of principle and have no say at all in the end result.

In our estimation, one of the biggest beneficiaries of this political game theory landscape will be the solar space.

The current pullback in the space could be setting up some very interesting opportunities given this narrative. The carrot in front of the market is the next $3T check, and a good chunk of it is likely heading for renewable energy infrastructure.

With that in mind, we take a closer look at some of the more interesting names in the solar energy space, including: Enphase Energy Inc (NASDAQ:ENPH), Green Stream Holdings Inc (OTCMKTS:GSFI), and Solaredge Technologies Inc (NASDAQ:SEDG).

 

Enphase Energy Inc (NASDAQ:ENPH) delivers, according to its materials, “smart, easy-to-use solutions that connect solar generation, storage and management on one intelligent platform.”

The company built microinverter technology that added core value in the space and currently produces what it claims to be the “world’s only truly integrated solar-plus storage solution”. ENPH has shipped over 17 million microinverters, and more than 790,000 Enphase systems have been deployed in over 120 countries.

Enphase Energy Inc (NASDAQ:ENPH) most recently announced that Urban Solar has deployed a large-scale commercial solar system at the Praxis of Deerfield Beach senior living community in Deerfield Beach, Florida. Spanning nine buildings, the system is expected to produce 1,040,900 kWh of electricity in its first year of operation.

“This is the second master meter property in the MRK Partners portfolio that Urban Solar has helped bring into the future with solar energy, and Enphase Solar technology has once again proven to be the right technology for the upgrade,” said Michael Vergona, president at Urban Solar. “These master meter buildings were built in the 1980s and provide a vital source of housing for seniors with constrained budgets. A large-scale upgrade to an individually metered electrical system would have been complicated and expensive, so we were very happy to offer a solar energy alternative that helped to solve the problem.”

Even in light of this news, ENPH has had a rough past week of trading action, with shares sinking something like -29% in that time. That said, chart support is nearby, and we may be in the process of constructing a nice setup for some movement back the other way. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -32%.

Enphase Energy Inc (NASDAQ:ENPH) managed to rope in revenues totaling $264.8M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 26.1%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($679.4M against $534M).

 

Green Stream Holdings Inc (OTCMKTS:GSFI) targets commercial property owners with a surplus of rooftop or sky-facing square footage space for installation of photovoltaic systems to harness energy access at prices outcompeting local utility pricing.

GSFI uses solar power purchase agreements (PPAs) or equipment leasing arrangements with the property owners, and benefits from marginal efficiencies as well as various federal or state tax credits, regulatory agency rebates, and long-term revenue streams generated from the sale of the harnessed electricity.

Green Stream Holdings Inc (OTCMKTS:GSFI) most recently announced the prepayment of a Convertible Promissory Note in favor of EMA Financial, LLC dated September 22, 2020, in the amount of $147K.

According to the release, on February 24, 2021, the Company made the payment of $147,000 as full and final payment of the Promissory Note which included all principal, interest and any prepayment fees associated with this Promissory Note; Accordingly, the parties have no further rights or obligations as to each other and the Registrant will have no obligations to issue securities to Quick Capital, LLC under this Promissory Note.

Shares of the stock have been pulling back of late, but the company continues to pile up interesting catalysts. The pullback could offer an important opportunity at current levels, which are aligned with the stock’s long-term 200-day moving average. This threshold often provides a key supportive edge in sharp pullbacks associated with strong growth trends.

Green Stream Holdings Inc (OTCMKTS:GSFI) has put in place a clear pathway to potential growth and strong results in the future given its positioning and range of projects in one of the most promising market spaces for investors over coming years.

 

Solaredge Technologies Inc (NASDAQ:SEDG) is a global leader in smart energy technology. By leveraging world-class engineering capabilities and with a relentless focus on innovation, SolarEdge creates smart energy solutions that power our lives and drive future progress. SolarEdge developed an intelligent inverter solution that changed the way power is harvested and managed in photovoltaic (PV) systems.

The SolarEdge DC optimized inverter seeks to maximize power generation while lowering the cost of energy produced by the PV system. Continuing to advance smart energy, SolarEdge addresses a broad range of energy market segments through its PV, storage, EV charging, batteries, UPS, electric vehicle powertrains, and grid services solutions.

Solaredge Technologies Inc (NASDAQ:SEDG) most recently announced that it has entered into a strategic supply agreement with Sunrun (Nasdaq:RUN), a leading U.S. provider of residential solar, battery storage, and energy services. As part of the agreement, Sunrun will offer SolarEdge’s next generation PV inverter, Energy Hub, for residential customers.

“SolarEdge is pleased to expand its partnership with Sunrun, a company that is instrumental in bridging the gap between utilities and managed networks of home solar energy systems,” said Zivi Lando, CEO of SolarEdge.

Even in light of this news, SEDG has had a rough past week of trading action, with shares sinking something like -20% in that time. That said, chart support is nearby, and we may be in the process of constructing a nice setup for some movement back the other way. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -20%.

Solaredge Technologies Inc (NASDAQ:SEDG) pulled in sales of $358.1M in its last reported quarterly financials, representing top line growth of -14.4%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($1B against $436.1M).

Published by Steve Hackney

Steve Hackney is a corporate finance professional with over 14 years of experience in cash management and investing. He earned a Bachelor of Science in Finance from Florida State University and holds a Certified Treasury Professional certification. Steve lives in Orlando, Florida with his family.

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