1. SolarEdge Technologies, Inc. (NASDAQ:SEDG)
Upside Potential: 176%
SolarEdge Technologies, Inc. (NASDAQ:SEDG) manufactures advanced energy solutions systems. The portfolio includes power optimizers, inverters, EV chargers, and cloud-based monitoring tools. It offers lithium-ion cells and containerized battery systems in its energy storage segment.
SolarEdge Technologies, Inc. (NASDAQ:SEDG) recorded $265 million in revenue during Q2 2024. The solar business contributed $241 million, while the non-solar business generated $24 million. The company delivered 2 million power optimizers, 66,000 inverters, and 128 megawatt-hours of batteries during the quarter, exhibiting consistent demand for its products despite challenging market conditions. It outperformed its shipment capacity by reporting $520 million in product sales, which was an increase of 18% compared to the previous quarter. Despite the record shipments, it undersupplied the market by $275 million due to its inventory clearance initiatives.
The U.S. residential market delivered a strong performance, with inverters and optimizers registering sales growth of 32% on a quarter-over-quarter basis. Moreover, battery sales also surged by 55%. This increase was mainly driven by the shift towards third-party ownership models and demand for DC-coupled backup storage systems. This demand was particularly visible in California and Puerto Rico regions, where power outages have driven people towards energy storage solutions. The U.S. commercial sales also increased by 18% due to the company’s advanced energy management systems.
However, SEDG plummeted by more than 80% in the last year due to declining demand and falling revenue growth. Despite this, the company is still focused on new product development. As part of its innovation strategy, it unveiled a solar platform for optimizing energy management. Furthermore, the DC-coupled modular system is expected to improve the company’s cost structure. It is designed to scale from 4.4 to 44 kilowatt-hours.
Given the initiatives, SEDG expects to turn cash flows positive by the first half of 2025. In anticipation of this growth, 24 hedge funds have collectively invested $182.1 million in the company as per Insider Monkey’s database (as of Q2 2024). Additionally, analysts have predicted an upside of 176% in the share price.
SEDG is the best battery stock to buy according to analysts. But our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SEDG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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