The recently passed Inflation Reduction Act (IRA) may or may not impact inflation – but it contains provisions that are certain to impact clean energy, and particularly the residential and commercial solar power segments.
In fact, banking giant Goldman Sachs believes the IRA is one of the most meaningful policy developments for the US solar and energy storage sector and clears the way for at least a decade-long runway for stable installation growth across all residential, commercial and utility-scale markets.
Looking out toward 2026, the Goldman team sees a compound annual growth rate of 18% for solar installations, fueled at least in part by the supportive provisions of the IRA.
Against this backdrop, we’ve used the TipRanks database to pull up three solar power recommendations by Goldman’s 5-star analyst Brian Lee. Lee has tapped these stocks as buying propositions, and sees them bringing 50% upside – or better – to table. Let’s take a closer look.
Enphase Energy, Inc. (ENPH)
We’ll start with Enphase Energy, a leading designer and producer of solar power inverters, a vital piece of hardware in all solar energy installations. Solar energy collected by photovoltaic panels is direct current (DC) power, which is not usable on the regular electric grid and other power infrastructure; inverters, Enphase’s chief product line, convert the DC power to usable alternating current (AC) power suitable for residential and commercial distribution. Enphase was one of the first companies to bring commercial scale inverters onto the market.
This company has not rested on its laurels as a leader in an essential niche; it also produces, in addition to its multiple lines of microinverter technology, energy storage systems for use with solar power installations. The IQ battery line makes use of ‘smart’ tech to control power loads and set distribution priorities among power-hungry appliances.
Over the past several years, as the combination of social and political will has promoted solar energy, Enphase has seen steadily rising revenues and earnings. In the last reported quarter, for 3Q22, the company had a top line of $634.7 million, up an impressive 80% and a company quarterly record.
At the bottom line, Enphase showed a GAAP net income of $114.8 million, up from $21.8 million reported in the prior-year third quarter. The non-GAAP income came in at $175.5 million. In per-share terms, GAAP diluted EPS was 80 cents; this was up from just 15 cents per share one year earlier.
Enphase has also been good at generating cash through operations, and reported a Q3 free cash flow of $179.1 million. As of the end of Q3, the company had $1.42 billion in cash and liquid assets on hand.
Putting this company’s operations into the setting of the IRA, analyst Brian Lee writes: “We see ENPH as potentially being a direct and near term beneficiary of …….