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Anatomy of Success: SolarEdge Technologies (SEDG)

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Stocks that boast a Zacks Rank #1 (Strong Buy) title have a long and demonstrable history of outperforming the market over a one to three-month time period. And, this unique ranking is only bestowed upon the top 5% of all stocks within the Zacks Rank universe.

Not only does this stock-picking system help identify the most elite stocks, but it also enables investors to hold a particular company while shares continue to gain in value beyond that three-month investment horizon.

Below is an example that shows investors how they could have realized an over 140% gain in ten months by following the Zacks Rank.

SolarEdge Technologies (SEDG - Free Report)

Headquartered in Fremont, CA, SolarEdge provides intelligent inverter solutions for the PV industry. The company's name brand SolarEdge system offers power optimizers, inverters, storage solutions, and a cloud-based monitoring platform. Additionally, it serves residential solar installations as well as commercial and small utility-scale solar installations.

Heading into its second quarter fiscal 2017 earnings release, SEDG was a #1 (Strong Buy) stock. Earnings and revenues surged past the Zacks Consensus, with sales growing 9% year-over-year. Non-GAAP net income of $25.8 million set a new record, and guidance provided for the third quarter was strong. Overall, sales outside of the U.S. continued to further strengthen SEDG’s diversified revenue base. As a result, the stock continued its Strong Buy run until the beginning of October. SEDG was initially added to the Strong Buy list on July 21, and the stock closed at $22.25 that day.

SolarEdge was made a #1 stock again on November 10 after it reported impressive third quarter earnings. Revenues of $167 million grew 30% year-over-year, while EPS easily beat analyst estimates. GAAP gross margin reached 34.9%, up from 32.6% in the year ago period. On the operational side, SEDG shipped over two million optimizers. Five months after becoming a #1 pick, the company’s stock price increased over 71% to $38.15 per share.

SEDG gained Strong Buy status once again on February 16 after reporting fourth quarter results. SolarEdge ended Q4 and fiscal 2017 with record results in its key financial and operational metrics, and grew revenues in each of the geographies the company operates in. Earnings and revenues both topped the Zacks Consensus, while the company noted that 2.5 gigawatts (AC) of inverters were shipped. Seven months after first becoming a #1 pick, shares increased more than 106% to $46.00 per share.

From then on, the stock maintained its presence on the Strong Buy list until well into April, and SEDG is now a #2 (Buy) on the Zacks Rank. Shares currently trade at around $53.50, and are up over 140% from when the company was first made a Strong Buy stock.

Here, this table shows the price performance of SEDG (in red), as well as the 12-month forward looking EPS estimate (in green) from the time the stock first earned a Zacks Rank #1 (Strong Buy). During this stretch, SEDG never moved lower than a Zacks Rank #3 (Hold).

By utilizing the Zacks Rank, investors are able to easily identify elite stocks that are best positioned to beat the market on a consistent basis, and how to hold those top stocks as they continue to grow.

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