We recently compiled a list of the 10 Worst Performing Solar Stocks to Buy Now. In this article, we are going to take a look at where SolarEdge Technologies, Inc. (NASDAQ:SEDG) stands against the other solar stocks.
Solar electricity is a renewable energy source that is produced by converting sunlight into usable power. This conversion occurs either through thermal energy capture or by using photovoltaic (PV) technology in panels and glass. The resulting electricity is then integrated into power grids for distribution to homes, businesses, and industries. The core technologies include photovoltaic (PV) systems, which use diverse solar module types like monocrystalline and polycrystalline, and concentrated solar power (CSP). In 2023, the global solar power market was valued at $253.69 billion, with North America commanding a 41.30% share, as reported by Fortune Business Insights. This market is set to expand to $436.36 billion by 2032, growing at a 6% CAGR. The US is a key driver of this growth, with its market expected to reach $103.96 billion by 2032. Government incentives and the push for renewable energy support this.
The COVID-19 pandemic particularly presented a complex landscape for the global solar power industry. Initially, lockdowns and economic uncertainty caused a sharp decline in activity. In the US, for example, solar permit issuances plummeted by 32% in late March 2020 compared to early February, according to the Solar Energy Industries Association. However, the pandemic also accelerated the long-term trend towards renewable energy. Economic recovery and stimulus programs prioritized clean energy, which led to a surge in demand that exceeded pre-pandemic levels. The pandemic also exposed vulnerabilities in the supply chain. With ~70% of the world’s solar panels manufactured in China and an additional 10-15% produced by Chinese companies in Southeast Asia, the disruptions in Chinese manufacturing facilities during February 2020 significantly impacted global supply.
Currently, the solar power market is experiencing growth driven by technological advancements and supportive government policies. AI, the IoT, and big data are being integrated to enhance solar efficiency, which enables better forecasting and asset management. Notably, the US Department of Energy invested $750,000 in AI diagnostics for solar systems in 2021 and allocated $7.3 million in 2020 for AI-powered solar solutions. Global efforts to combat climate change are also leading to increased investments in the solar industry. The US plans to invest nearly $1 trillion in clean energy, including $5 billion in solar manufacturing, which will create 47 new manufacturing plants and power an additional 7 million homes. The US anticipates renewable energy will account for 26% of its energy share. Renewables account for ~29% of global electricity generation. By the end of 2021, the global installed capacity of solar PV reached 842.14 GW, making it the second-largest renewable electricity source after wind. To meet the Paris Agreement targets, the International Renewable Energy Agency and the International Energy Agency aim to achieve a 90% share of renewable electricity globally by 2030.
Methodology
We used the Finviz stock screener to compile a list of the worst-performing solar stocks with low 6-month performance. We then selected the 10 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 1000 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A technician installing a communication device in a large solar energy system.
SolarEdge Technologies, Inc. (NASDAQ:SEDG)
6-Month Performance as of February 27: -27.83%
Number of Hedge Fund Holders: 30
SolarEdge Technologies, Inc. (NASDAQ:SEDG) designs, develops, manufactures, and sells DC-optimized inverter systems and a suite of related products for solar photovoltaic (PV) installations globally. This includes power optimizers, inverters, batteries, storage solutions, EV chargers, smart tracking, and energy management software, along with cloud-based monitoring and design tools.
Its solar product segment features inverters, optimizers, and energy management software. In Q4 2024, this segment generated $189 million in revenue, with 60% coming from the US, 24% from Europe, and 16% from international markets. It shipped 895 megawatts, of which 63% was for commercial/utility and 37% was for residential, with an average selling price of $0.208 per watt. It’s ramping US manufacturing, with facilities in Austin and Florida producing inverters and optimizers. By focusing on domestic manufacturing, it’s aiming to capture more of the US market.
The company is focusing on regaining market share through stronger customer relationships and technological advancements. SolarEdge Technologies, Inc. (NASDAQ:SEDG) is prioritizing innovation, particularly in energy management software and its next-generation Nexus residential portfolio, which is expected to come out in Q4 2025. Its commercial battery product is gaining traction in Europe and international markets.
Overall SEDG ranks 7th on our list of the worst performing solar stocks to buy now. While we acknowledge the growth potential of SEDG as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. 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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Disclosure: None. This article is originally published at Insider Monkey.