The Zacks Analyst Blog Highlights JinkoSolar Holding, Array Technologies, ReneSola and SolarEdge Technologies

For Immediate Release

Chicago, IL – January 20, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: JinkoSolar Holding Co., Ltd. JKS, Array Technologies, Inc. ARRY, ReneSola Ltd SOL and SolarEdge Technologies, Inc. SEDG.

Here are highlights from Thursday’s Analyst Blog:

4 Solar Stocks Seeing Explosive Growth

The biggest driver of the solar industry right now is the increased regulatory certainty in Europe and the U.S. following the Russia-Ukraine war and the related energy crisis. Recognizing the need for self-reliance in energy, both the EU and the U.S. are doubling down on renewables.  

In the Inflation Reduction Act (IRA), the U.S. will reportedly raise $738 billion. It will immediately authorize spending of $391 billion on climate and energy change initiatives. The act seeks to take 2030 greenhouse gas emissions 40% below 2005 levels, at which time there will be 950 million solar panels, 120,000 wind turbines and 2,300 grid-scale battery plants. Homes, businesses and communities will be incentivized to go green.

Businesses will benefit from the focus on increasing capacity to build renewable technology like solar panels or EV components, while the expanding renewable technology infrastructure will help sales. There will also be production tax credits for those building solar panels, wind turbines and batteries, as well as those processing key minerals; $10 billion in investment tax credits for new manufacturing facilities making clean technology products; $500 million under the Defense Production Act; etc.

For consumers, there will be incentives, such as a 30% tax credit to install solar panels on roofs, making the technology more affordable to middle and lower-income groups. The funding will include among other things, $9 billion in home energy rebate programs, especially for low-income consumers and 10 years of consumer tax credits to increase energy efficiency and affordability of heat pumps, rooftop solar, electric HVAC and water heaters. Rural electric cooperatives serving 42 million people will also see more cost-saving renewable projects.

More than $60 billion have been earmarked for "on-shore clean energy manufacturing in the U.S.," including for the domestic mining of materials used to make solar panels and batteries, as well as for offshore wind development.

The US Energy Information Administration's (EIA) short term outlook report from Jan 5 says that as the share of coal for electricity generation declines, it will be partially offset by an increase in utility-scale solar and wind generation, which will increase its share from 16% in 2023 to 18% in 2024. Renewables share in the US electricity generation mix will more than double between 2021 and 2050.

Europe is even more determined than the U.S. to shore up its renewables production because it doesn't have access to locally produced oil and gas like the U.S. So in May last year, the European Commission presented its REPowerEU Plan, which is in response to Russia's weaponizing of its energy resources. The plan tackles the problem from all angles, i.e. availability, sustainability and affordability of energy supply.

The 40% renewables target by 2030 was pushed up to 45%, for which a dedicated EU Solar Strategy is being framed to double solar photovoltaic capacity by 2025 and install 600GW by 2030. There is also a Solar Rooftop Initiative that will impose a legal obligation to install solar panels on new public and commercial buildings and new residential buildings. Domestic production of renewable hydrogen is also being boosted with the goal of 10 million tons per annum by 2030.

Since a total pivot to green energy will take time and money (€210 billion over the next five years, according to the EC), there will have to be increased reliance on coal in the near term, plus fossil fuel imports from new countries like the U.S., Qatar, Algeria and Azerbaijan.

In the meantime, gas demand reduction plans are getting a boost, along with building stores for the winter by November 1. The plan is to bring a 13% reduction in energy consumption by 2030. There are also plans for the common purchasing of gas.

Independent reports show that turning to renewables is bringing down cost and helping offset the cost of living increases across Europe. Further improvements and significant job creation will be consequential benefits.

Because governments are determined to speed up the switch to renewables, it is leading to tremendous demand for solar panels and components that is offsetting any raw material cost inflation. The following stocks are particularly strongly placed:

JinkoSolar Holding Co., Ltd.

Shangrao, China-based JinkoSolar is involved in the design, development, production and marketing of photovoltaic products like solar modules, silicon wafers, solar cells, recovered silicon materials and silicon ingots. It also provides solar system integration services and develops commercial solar power projects.

China and Europe are the major drivers of the company's business right now. In the last reported quarter, China shipments increased 500% and Europe more than 60%.

Because its production bases and sales networks are spread across a number of countries and raw material sourcing is on the basis of long-term contracts, it has the flexibility to deliver quickly. It also has an advanced R&D team, the output from which can quickly be turned into mass production.

Management has said that polysilicon supplies have started to increase in China but the huge demand is leading to stable prices. As supply continues to increase this year, prices will come down, which along with increased production efficiency will help profitability. There is also great optimism about share gains this year and JinkoSolar is rapidly building capacity to meet the strong demand.

The Zacks Rank #1 (Strong Buy) stock has a Value Score of A and Growth Score of B. Analysts expect its revenue and earnings to increase a respective 37.2% and 93.0% this year. In the last 30 days, the Zacks Consensus Estimate for 2023 increased 15.5%.

Array Technologies, Inc.

Albuquerque, New Mexico-based Array Technologies manufactures and supplies solar tracking systems and related products in the United States and internationally. Its SmarTrack machine learning software is used to identify the optimal position for a solar array in real time to increase energy production.

Array is seeing very strong demand for its solutions and management is optimistic about its two new products that can operate with greater flexibility in varying site and weather conditions. This would be particularly useful if solar adoption and solar farms come up rapidly as a result of the IRA.

The Zacks Rank #2 (Buy) company has a Growth Score of A. Its revenues are expected to grow 19.5% this year and earnings 178.6%. The Zacks Consensus Estimate for 2023 has dropped a penny in the last 30 days.

ReneSola Ltd

Stamford, Connecticut-based ReneSola develops, builds, operates and sells solar power projects in the U.S., Canada, Europe, and elsewhere. It operates through three segments: Solar Power Project Development; Engineering, procurement and construction (EPC) Services, and Electricity Generation Revenue.

ReneSola's current strategy is to focus on high-margin high-quality project development opportunities in the U.S. and Europe, such as notice-to-proceed (NTP) or Ready to Build (RTB) solar projects. This slashes initial cost of permitting, checking feasibility, etc before it is turned over to EPC. Its goal is to target small-scale projects in diverse jurisdictions with a high PPA/FIT price.

A power purchasing agreement (PPA) with attractive feed-in tariffs (FIT) allow the developer to generate above-market rates for the power supplied. As of September 30, 2022, its quality mid-to-late-stage pipeline was 3.0 GW, it had successfully completed  around 900 MW of solar power projects and was operating approximately 249 MW solar power projects globally.

ReneSola has local teams in 10 countries, with a strong presence in the U.S. (several late-stage and under-development projects), China and Poland. Its presence is growing in markets like Hungary, Spain, France, the U.K., Germany and Italy. New markets targeted include Czechoslovakia and Greece. This focus sets it up for strong growth in the foreseeable future.

Moreover, it is strongly focused on the Yangtze River Delta area within China, which has attractive electricity tariffs and is a metropolitan area playing a major role in the country's economic growth. It also has late-stage pipelines in several other provinces including Zhejiang, Jiangsu and Anhui.

Recent results are benefiting from the strong tariffs in its China business and the recently-acquired solar farm in Branston, U.K.

The Zacks Rank #2 stock has a Value Score of B. Analysts currently expect 67.4% revenue growth and 261.1% earnings growth in 2023. The Zacks Consensus Estimate for the stock has been stable in the last 30 days.

SolarEdge Technologies, Inc.

Herzliya, Israel-based SolarEdge Technologies designs, develops and sells a broad range of systems and solutions including direct current (DC) optimized inverter systems, power optimizers, communication devices and smart energy management solutions used in residential, commercial and small utility-scale solar installations worldwide. Its customers are mainly solar PV system providers, installers, distributors, electrical equipment wholesalers and module manufacturers, as well as EPC firms. It operates through five segments: Solar, Energy Storage, e-Mobility, Critical Power and Automation Machines.

The current strength is coming from Europe (particularly Germany and the Netherlands), where revenues grew 90% in the last-reported quarter, and also from countries like Taiwan and South Africa. Because of this strength, and despite the fact that production lines are normalizing after COVID-related disruptions, SolarEdge is in the process of building further capacity. It also has plans to build manufacturing capacity in the U.S.

SolarEdge shares carry a Zacks Rank #2. Analysts expect the company to grow its 2023 revenue and earnings by 28.6% and 80.7%, respectively. Its 2023 estimates is down 4 cents in the last 30 days.

Conclusion

Being a secular growth market that will see phenomenal strength in the next decade or so with no deterrents that I can think of, investors would benefit from increasing their exposure to solar stocks.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Renesola Ltd. (SOL) : Free Stock Analysis Report

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