It has been several months since I last
found a renewable company I’d be interested in investing in.
Recently SEDG, burst above its 200 day moving average, indicating a
strong uptrend. At the same time, the RSI indicates room to run.
I’m recommending SEDG up to $315.00.
SEDG manufactures and distributes the
inverters (and other equipment/services) that convert DC electric
current from Photovoltaic cells into AC current, ready for the grid.
This segment is less subject to the high volume, low margin
environment of the actual PV cells and is less of an R&D arms
race. It is also much less capital intensive. Thus, SEDG is
sporting attractive margins on its products.
The company is showing good growth on both the top and bottom lines. What I really like is they produce a lot of Free Cash Flow as a percentage of revenue. This indicates a lucrative product but also conservative accounting practices. The recent chart with 50 and 200 day moving averages as well as RSI is below.
Today’s recommendation is a little different that past ones. Previous investment ideas have had a “green” tilt. Today’s has a “tech/space” tilt. Materion is a mining company (a good one!) and mining is hard to do in an environmentally friendly manner. It is a necessary evil for a technologically advanced society. Eventually, this dirty industry should move off planet but for now we have to make do. Fortunately, the material this mine produces is particularly useful for aerospace applications and advances the cause.
Today, I’m reviewing a new way to invest in the new space movement. There are three good reasons for investing in space at this time: 1) location based sharing apps are growing rapidly thanks to satellite enabled navigation 2) decreasing launch costs are creating new economically viable industries 3) with the formation of the US Space Force governments and the defense industry are poised to increase investment in space.
This recommendation is probably going to be a little controversial. I’ve found an oil company that sees the writing on the wall and is committing to tapering off its upstream oil exploration and production activities in order to fund green energy projects and transition to a green future. Purists will dislike that the company will remain a net emitter of carbon for decades. I see a pathway forward to a near term future where billions are spent by industry per year on green projects instead of the few hundred million we see now.
I intend to show that this transition essentially guarantees the company will earn a low risk 12.5% in share holder return per year for decades while deleveraging their balance sheet and reducing litigation and regulation risk. I suspect when the competition sees what this move does for their bottom line, there will be a rush to replicate the model. This is how we get trillions of dollars in investment capital redirected from fossil fuels to renewables.
Today, I’m covering the renewable energy sector and making a buy recommendation. There is room for Wind and other alternatives at this company but the primary focus is utility scale solar photovoltaic plants.
A primitive selenium photovoltaic existed as early as 1839. During the early atomic age, Bell Labs improved on the design by using much more efficient silicon. The efficiency was still below the 6% deemed to be commercially viable. At any rate, there has been over a century of research and development into making better solar cells. If you were to buy a typical residential system today, you’d expect to get cells with an efficiency of about 20%. The technology exists already however for efficiency up to 26%, with 30% projected in just a few short years.