The 5 Finest Solar Shares to Purchase in July 2021 –

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This year has not been the friendliest for solar stocks, at least so far, as the entire sector underperformed after posting staggering gains last year.

However, this temporary drop in the valuation of solar companies could offer late-night buyers an opportunity to get into this promising and growing segment of the energy sector at more reasonable multiples.

Below is a list of five names currently trading at attractive multipliers and whose growth prospects could generate the kind of profits they have in the past once the current downtrend reverses.

1. SolarEdge Technologies (SEDG)

SolarEdge Technologies (SEDG) price chart – 1-day candles with multiple indicators – Source: TradingView

SolarEdge is an Israel-based solar company that manufactures and installs solar inverters and similar solutions for residential and commercial customers primarily in Europe and the United States and currently has a market capitalization of $ 12.5 billion.

In the past three years, the company has more than doubled its sales, with sales rising from $ 607 million in 2017 to $ 1.46 billion by the end of last year.

Last year was particularly disappointing as the company's revenue was nearly flat due to the disruption the pandemic caused to SolarEdge's operations, but analysts expect revenue growth to accelerate again this year, and potentially at $ 1.9 billion -Dollars will land.

The company's profit margins have been deteriorating recently, which is a negative factor, but the company's balance sheet remains conservatively funded as it has long-term debt of $ 677 million on assets of $ 2.5 billion including $ 868 million -Dollars in cash.

Currently, SolarEdge is trading at a price / earnings ratio of 46 and based on analyst forecast EPS growth of around 40%, SolarEdge appears to be conservatively valued as growth rates should accelerate at some point in the future once solar energy solutions become widespread adopted by companies to meet their net zero carbon emissions targets.

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2. Generac Holdings (GNRC)

Generac Holdings is a well-known power generation company operating out of Wisconsin and employing over 6,000 people. The company has specialized in the manufacture and sale of energy storage and other power generation systems for residential and commercial use for years, but appears to be increasingly focused on developing solar technologies, as demonstrated by the company's recent acquisitions.

Just a few days ago, Generac announced that it had acquired a microinverter manufacturing company called Chilicon Power, while in the past the company has also acquired other similar companies such as Pika Energy and Neurio Technology.

According to its latest annual report, the company plans to launch a “clean energy line of products sold under the Generac brand under the names PWRcell ™ and PWRview ™.

The company expects the market for these products to “grow significantly” as the energy landscape continues to favor renewable energies.

Generac is now a highly attractive company that has seen its sales results increase by the low double digits in recent years, while profit margins have also improved over the past three years.

As of the end of the first quarter of 2021, the company had $ 930 million in debt with $ 3.4 billion in total assets, including $ 745 million in cash, while free cash flow has increased recently than has doubled, increasing from $ 200 million in 2018 to $ 420 million by the end of 2020.

Currently valued at 42 times projected earnings per share for the next twelve months, Generac is a fairly valued growth company that could successfully position itself as a leader in solar energy products if the market rapidly shifts towards renewables from energy.

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3. Enphase energy (ENPH)

Enphase Energy is a California-based manufacturer of renewable energy solutions primarily focused on the design and installation of solar energy systems for residential and commercial use through do-it-yourself packages and through a network of distributors and installers in the United States and America other corners of the world concentrated.

Enphase's revenue has grown rapidly in recent years, rising from $ 286.2 million in 2017 to $ 774.4 million at the end of last year. Meanwhile, the company has already made net profits, with margins gradually improving from top to bottom.

As of the end of the first quarter of 2021, the company had $ 930 million in long-term debt with $ 2.2 billion in assets, including $ 1.49 billion in cash.

Enphase's valuation is currently valued at 85 times forecast earnings for the next twelve months, but it's still a company to watch out for in case the current downtrend in the sector as a whole is pushing its trades further down Multiples.

Analysts currently expect Enphase to average 40% earnings growth over the next two to three years, with earnings per share expected to be around $ 3.5 through the end of 2023. Based on these numbers, Enphase would be an attractive solar stock if the price fell near the $ 140 level, or 16% below current levels.

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4. Brookfield Renewable Partner (BEP)

Brookfield Renewable Partners (BEP) Price Chart – 1-Day Candles with Multiple Indicators – Source: TradingView

Brookfield Renewable Partners operates several renewable energy plants in North America, Brazil, Europe, China and Colombia that generate electricity from solar, wind and other renewable sources.

The company's revenue skyrocketed from $ 2.8 billion to $ 4.05 billion in 2019, while remaining near that level through the end of last year. Going forward, analysts expect revenue to grow relatively slowly at a rate of around 4% per year, while the company will generate profits through 2022 with an estimated EPS of $ 0.25 for this year and $ 0.65 for 2023.

With its current market capitalization, the company is only trading at 4 times its forecast sales. That multiple is a bit high for a company with rather stalled growth prospects. However, the company is in good financial shape with long-term debt of $ 17 billion and assets of $ 50.9 billion consisting primarily of property, plant and equipment.

Additionally, Brookfield only appears to be trading at 2.5 times its tangible book value. For a company with assets in such a promising and emerging industry, this is a relatively conservative valuation that could open the door for a future acquisition from a larger energy company looking to break a foothold in the renewable energy segment of the market.

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5. Invesco Solar ETF (TAN)

For those looking to take a more conservative approach to entering the solar market, the Invesco Solar ETF (TAN) could be the perfect vehicle to build a diversified position in this promising sector.

The fund currently invests in a basket of 46 different holdings, with its top 10 stocks accounting for 55% of its total assets. The fund's largest position is currently Enphase Energy with 11% of TAN assets, followed by SolarEdge with 9.5%.

Meanwhile, TAN calculates an annual expense ratio of 0.75% and is currently monitoring around $ 3.5 billion for investors.

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About Alejandro Arrieche PRO INVESTOR

Alejandro is a financial writer with 7 years of experience in financial management and financial analysis. He writes technical content on business, finance, investing and real estate and has also helped finance companies build their digital marketing strategy. His favorite subjects are value investing and financial analysis. Other publications Alejandro has written for include The Modest Wallet,, and LearnBonds.


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