The solar industry could see brighter days ahead.
In 2018, the market was valued at about $52.5 billion. By 2026, it could reach $223.3 billion.
All thanks to a global push for green energy, and President Biden’s Inflation Reduction Act. Plus, remember, the U.S. just pledged to reduce emissions by up to 52% over the next several years. Europe wants to cut CO2 emissions by up to 55% by 2030. China says it’ll stop releasing CO2 in the next 40 years.
Also, according to Energy.gov, the U.S. Department of Energy says that by 2035, “solar energy has the potential to power 40% of the nation’s electricity, drive deep decarbonization of the grid, and employ as much as 1.5 million people—without raising electricity prices.” By 2050, about a third of global electricity could be provided by solar.
All are incredible catalysts for solar stocks, like oversold Enphase Energy (ENPH), which was also upgraded to a buy at Janney Montgomery Scott.
Granted, according to Enphase CEO Badri Kothandaraman, “We expect our U.S. business to be slightly down in Q1 compared to Q4, primarily driven by seasonality and the macroeconomic environment. We are seeing that our distributor and installer partners are a little more cautious in booking orders,” as quoted by Barron’s.
Still, there are a few catalysts that should push ENPH higher.
One, according to Janney Montgomery Scott, Enphase’s forecast of sales for the current quarter was higher than expectations. In fact, it expects for Q1 revenue to come in between $700 million and $740 million, with a gross margin of between 41% and 44%. Analysts were expecting sales of $685.2 million. And two, other solar companies have made positive comments about solar demand that gives the firm reason to be optimistic.
While ENPH is up $12.75 on the day, it’s still oversold at $211.67. From here, we’d like to see the stock challenge resistance around $260. Longer-term, we’d like to see a test of $340 again.