This week we are going to look at a stock that isn’t so well covered in the press. SolarEdge is a renewable energy company that is a front runner of its sector. With Biden’s new commitments to green energy, how high will it grow?
SolarEdge Technologies, Inc. (SEDG) reached its yearly high this week at $377. The company’s share price has risen over 20% in the past few months seeing a massive year-on-year growth of 173.32%. Morgan Stanley rated the company as “overweight” with a target price of $354 meaning it is in a strong position to grow. This equates to a 19% upside from Wednesday’s closing price.
If we compare the performance of SolarEdge against the S&P 500 we can see it is growing much faster than the top 500 companies in the US.
SolarEdge has seen one big setback this year due to fresh competition. The renewable energy company has rocketed up from its low of $180 in September when Tesla launched a solar inverter, which was previously a market dominated by SolarEdge.
Of course the big news that affects green stocks is Bidens pledge to support green energy solutions. This news presents a great opportunity for the solar technology company and a huge turnaround from the previous office. While President Trump promoted the use of high-polluting fossil fuels, President Biden has imposed a moratorium on oil in the Arctic National Wildlife Refuge and advocated a $2 trillion green energy plan to “achieve a carbon pollution-free power sector by 2035.” He has also extended the solar investment tax credit for another two years to encourage more widespread implementation of solar energy solutions. With the recent changes made by Biden, hours after his inauguration, green technologies should be more favourable! Biden made a bold move rejoining the Paris climate agreement that Trump had dropped out of. People see him setting a precedent of action and restoration, making many US stocks rally.
Furthermore, renewable energies are becoming more cost effective, Garvin Jabusch, investor at Green Alpha Advisors, remarks the cost of generating electricity from solar methods has reduced by 90% over 10 years. Making solar energy creation much more affordable and therefore attractive will surely boost the growth of this sector and SolarEdge’s stock price.
Buy or Sell?
Not sure whether now is the right time to sell? If you think recent events are overhyping the potential of SolarEdge then selling high and buying again at a lower price will be the best route to maximise profit.
Looking to buy? Now might be a little late to enter the game, with the company price much higher than the industry average indicating an adjustment is on the way.
However, expert analysts overall see SolarEdge as a BUY.
In the short-term the stock will fall (over the next 2 months) as a bearish pattern was detected with a triple moving average crossover. Whereas longer term the stock will rise and then flatten, with the possibility of the price even falling in a few years time. So depending on how long you want to hold SEDG stock determines whether now is a good time to buy.
Overall SolarEdge has a sunny future ahead (pardon the pun). Although slightly negative over the current year, longer term the company will see considerable growth.
|Next 5 Years (per annum)||20.00%|
|Past 5 Years (per annum)||33.18%|
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