Summary
- Boralex is a slow but steady grower offering a dividend.
- SolarEdge offers solid growth and remains an industry leader.
- Enphase is a growth machine, but investors may need to watch for share dilution.
Most stocks did not perform too well in 2022, and those in the clean energy sector were no exception, despite getting a boost as several governments around the world sought to strengthen domestic energy production with investments in renewables. The iShares S&P Global Clean Energy Index Fund (ICLN
Yet not all solar stocks joined in the industry-wide bear run. According to the GuruFocus All-in-One Screener, a Premium feature, there are three green energy stocks that were in the green for 2022 and are still undervalued based on GF Value: Boralex Inc. (TSX:BLX, Financial), SolarEdge Technologies Inc. (SEDG, Financial) and Enphase Energy
Boralex
Boralex Inc. (TSX:BLX, Financial) was up 15.39% in 2022. Shares traded around 40.88 Canadian dollars ($55.12) on Jan. 4 for a market cap of CA$4.20 billion. The GF Value chart rates the stock as fairly valued, as shares are trading slightly below their GF Value of CA$43.29.
The GF Value Line suggests the stock is fairly valued.
Quebec, Canada-based Boralex is a renewable energy company that develops and operates clean energy power facilities that run on wind, hydro, thermal and solar sources. The 30-year-old company has expanded internationally to the U.S., the UK and France, in addition to its home market in Canada.
The company has a three-year revenue per share growth rate of 4% and a three-year Ebitda per share growth rate of 7.8%. Going forward, analysts from Morningstar (MORN, Financial) are projecting a three-to-five-year revenue growth rate of 9% for the company. The company has a strong pipeline of 3,928 megawatts in wind and solar, and it is also striving to make value-additive acquisitions.
Growth in Boralex’s revenue and Ebitda per share over time.
Boralex pays a modest dividend yield of 1.6%, which is better than most companies in its industry and helps make up for the slow but steady pace of growth, though it still issues more shares than it buys back with a three-year average share buyback ratio of -4.8%.
SolarEdge Technologies
SolarEdge Technologies Inc. (SEDG, Financial) barely made it into the green with shares up 0.96% for the year, though this was still much better than the industry average as well as the S&P 500’s decline of 19%. Shares traded around $293.20 on Jan. 4 for a market cap of $16.41 billion. With a GF Value of $410.15, the GF Value chart rates the stock as modestly undervalued.
The GF Value Line suggests the stock is modestly undervalued.
SolarEdge is an Israeli photovoltaics company that primarily produces power optimizers, solar inverters and monitoring systems that are aimed at increasing the energy output of solar power arrays. This company has been a go-to component supplier for residential solar installers over the past decade. It has also expanded into commercial solar and energy storage, as well as electric mobility solutions in Europe.
The company has achieved an exceptional three-year revenue per share growth rate of 21.6%, though its three-year Ebitda per share growth rate has been slower at 9.9%. Morningstar analysts project a three-to-five-year revenue growth rate of 22.01% for the company. SolarEdge cites factors such as increasing per capita electricity consumption, population growth and urbanization that should boost its total addressable market in the long term in addition to the global transition to renewable energy.
Growth in SolarEdge’s revenue and Ebitda per share over time.
Since it is mainly focused on growth and maintaining its status as the world’s number one solar inverter company, SolarEdge does not pay a dividend. Moreover, it is a net issuer of shares with a three-year average share buyback ratio of -4.7%.
Enphase Energy
Enphase Energy Inc. (ENPH, Financial) posted an incredible 44.83% gain in 2022. As of Jan. 4, shares traded around $253.39 for a market cap of $34.46 billion. The GF Value chart rates the stock as modestly undervalued as shares are trading well below their GF Value of $322.02.
The GF Value Line suggests the stock is modestly undervalued.
Based in Fremont, California, Enphase designs and manufactures software-driven residential and commercial solutions for solar energy generation, home energy storage and web-based system monitoring and control. In fact, Enphase is considered a top rival of SolarEdge when it comes to solar monitoring and control systems. Its globally diversified supply chain has helped Enphase gain an edge in recent years amidst supply chain turmoil.
Enphase has been growing at lightning speed with a three-year revenue per share growth rate of 45% and a three-year Ebitda per share growth rate of 138.8%. Analysts from Morningstar project a three-to-five-year revenue growth rate of 31.55%, which is slightly lower than historical levels but still quite high. The company has projected revenue to be in the $680 million to $720 million range for its fourth quarter of 2022, which is astonishing considering its revenue for the entirety of 2019 was $624 million.
Growth in Enphase Energy’s revenue and Ebitda per share over time.
The company pays no dividend and has a three-year average share buyback ratio of -7.7%. The lack of a dividend is not concerning for a high-growth stock, but that steep net stock issuance merits closer investigation. As shown in the chart below, the bulk of recent share issuances came in 2019 and the later part of 2020, with shares outstanding having mostly levelled off since then.
Trend in Enphase’s shares outstanding.
Disclosures
I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours.
Source: https://www.forbes.com/sites/gurufocus/2023/01/06/3-top-performing-solar-stocks-trading-below-gf-value/