As we wrap up another week of stock market volatility, there is a lot for investors to consider. Despite the increasing sanctions on Moscow, Russia’s attack on Ukraine continues. And as a result of this conflict, investors are at the edge of their seats. It’s no secret that oil prices and global stock markets swung wildly after Russia launched an invasion of Ukraine. At one point we saw oil prices jump to $105 per barrel and natural gas futures soared more than 50%.
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With the shockwaves in the energy markets, investors could be eyeing some of the top energy stocks to buy in the market. After all, Russia is the second-largest producer of natural gas and the third largest oil producer in the world. As such, it would be nearly impossible for any country to meaningfully substitute Russia’s supply of natural gas to Europe in a short period. Following this disruption, it’s understandable why energy stocks have been among the hottest trades this week.
Solar Stocks For Your March 2022 Watchlist
Daqo New Energy (DQ)
Daqo is a China-based company that provides polysilicon products to the solar power industry. The company is seeing strong growth, but the firm’s share price has been weighed down by uncertainty in China. The company has grown EPS and sales by 74.9% and 59.7% per year over the past three years, respectively. This is roughly in line with the EPS growth analysts expect over the next five years — 74.9%, according to Yahoo Finance.
The average analyst price target for the stock is $84.52, more than double the current $40.53 price as of 21 January. That said, the share price has been tumbling from above $120 to below $45 since the start of 2021. This has created a potentially attractive P/E of 4.6 and forward P/E of 3.5.
There is the risk that China will continue to crack down on companies. That could mean the EPS forecasts may not come to fruition, or that current EPS could drop.
Daqo is beating industry averages in most financial metrics including margin, return on assets and return on invested capital. It has a strong cash position with minimal debt. The number of funds holding the stock increased significantly from 2019 to 2021 and has only decreased slightly as the stock has slid lower.
Generac Holdings (GNRC)
The stock price of Generac Holdings (NYSE: GNRC), a company that manufacturers backup power generation products for residential, light commercial, and industrial markets. It has risen by almost 7% over the last week while rising by about 4% over the last month.
This compares to the S&P 500 which remains down by about 3% over the last month. The recent gains follow the company’s stronger than expected Q4 2021 results, which saw revenue rise by 40% year-over-year to about $1.07 billion,, and adjusted EPS come in at $2.51. Demand for generators has been rising driven by multiple incidents of extreme weather and power outages over the last year and also due to the sheltering at home trend through Covid.
Moreover, the company’s outlook for 2022 is also solid, with sales projected to rise by between 32% and 36% versus last year as the company benefits from rising production capacity for its residential business, growth in commercial and industrial product sales, and demand from clean energy markets.
However, now that GNRC stock has seen a rise of 7% in a week and about 4% over the last month, will it continue its upward trajectory, or is a fall imminent? Going by historical performance, there is a higher chance of a rise in GNRC stock over the next month.
SolarEdge Technologies (SEDG)
SolarEdge Technologies (NASDAQ: SEDG) manufactures power optimizers and inverters used to convert the sun’s energy into usable electricity. These components have improved the way solar panels convert DC power produced by the sun into the AC electricity used by the electrical grid. A system that utilizes SolarEdge’s power optimizers will cost less than one that, for example, uses a microinverter built by a company such as Enphase Energy (NASDAQ: ENPH) and with minimal efficiency loss.
SolarEdge’s focus on manufacturing low-cost power optimizers has enabled it to win market share from competitors as solar project developers emphasize cost. The company has also invested money to acquire and develop new products in the energy storage and energy management spaces, as well as smart modules to help increase its average revenue per installation.
The company complements its leading market position with a strong, cash-rich balance sheet. That gives it the financial flexibility to invest in expanding its manufacturing capacity and technological lead over its competitors.
It has also given SolarEdge the flexibility to expand into other energy market segments, including storage, electric vehicle (EV) charging, batteries, uninterruptible power supply (UPS) systems, EV powertrains, and grid services solutions. Those factors set SolarEdge up for success in implementing its plan to expand its reach in the fast-growing clean energy sector.
JinkoSolar Holding Co. Ltd. (JKS)
Because of a more risk-averse attitude on Wall Street right now, investors are selling renewable energy companies even as they grow quickly compared with fossil fuels. This leads to solar stocks like JinkoSolar being undervalued, says Garvin Jabusch, chief investment officer with Green Alpha Advisors.
“That combined with Chinese political risk have left this very clear global leader … more than dramatically undervalued,” Jabusch says. Despite showing strong sales growth and gross margins, a valuation that compares share price to annual sales means many in the market are valuing the company with numbers “normally reserved for companies that are in imminent danger of bankruptcy and delisting,” he says.
“More risk has been priced in than actually exists, resulting in potential asymmetrical upside for people willing to buy right now.”
Enphase Energy (ENPH)
Enphase Energy (ENPH) is expected to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended December 2021. This widely-known consensus outlook gives a good sense of the company’s earnings picture. But how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.
The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on February 8. On the other hand, if they miss, the stock may move lower.
While the sustainability of the immediate price change and future earnings expectations will mostly depend on management’s discussion of business conditions on the earnings call. It’s worth handicapping the probability of a positive EPS surprise.
Sunrun(RUN)
unrun stock dropped Friday, following its fourth-quarter earnings report that beat revenue estimates but fell short on earnings as omicron matters took a toll. RUN stock tumbled on the news.
Late Thursday, Sunrun (RUN) reported an adjusted loss of 19 cents a share on revenue of $435.2 million. Analysts expected Sunrun to report an adjusted loss of 10 cents on revenue of $409 million, according to FactSet. Revenue jumped 36% from the year-ago period.
RUN stock plunged 6.8% to close at 21.56 on the stock market today, near a 17-month low.
In the fourth quarter, “Omicron-related labor shortages and higher fulfillment costs had a $13 million impact,” Needham analyst Vikram Bagri wrote in a note to clients. “Additionally, tight battery supply impacted product mix resulting in a $18 million impact on total value.”
However, said Bagri, “Adjusting for these issues, results would have been significantly better than our estimates. Customer orders and demand remains strong as evidenced by a 57% growth in backlog year-over-year, which will be captured in 2022.”
The company says it can offer solar energy to households with little to no upfront cost to those who lease their systems and offers a savings vs. traditional electricity. For those who lease, it designs, installs, finances, insures, monitors and maintains the systems. It also sells systems to those who want to buy.
In addition, Sunrun also offers a home solar battery service, Sunrun Brightbox. The device is designed to manage household solar energy, storage and utility power.
