3 Doomed Solar Stocks to Dump in December
Solar stocks have had a tough year due to rising interest rates and reduced sales. Solar industry growth in Europe has decelerated due to surplus inventories and reduced demand in crucial markets. In the United States, increased interest rates and a metering reform in California, the nation’s largest solar market, have dampened the demand for solar energy.
As a result, some solar companies now have little hope for recovery. These companies have witnessed significant share price declines, and their outlooks remain bleak. Therefore, it is better to divest from these solar companies before it’s too late.
With that in mind, here are three solar stocks to sell now.
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SolarEdge Technologies (SEDG)
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SolarEdge Technologies (NASDAQ:SEDG) is an American solar company providing inverters for solar systems. The company has faced a significant decline this year, with shares down more than 70%. This is primarily due to order cancellations and delays from European customers.
In Q3, the company reported revenue of $725 million, down year over year. Over the same period, the company lost $61 million.
This poor performance is attributed to unexpected cancellations and delays in its European backlog. These setbacks are linked to higher-than-anticipated channel inventory levels and a slower installation rate, particularly in the third quarter, when installations typically rise.
Analysts offer mixed recommendations for SolarEdge stock. Its 12-month average price target is $95.58, just slightly higher than its current share price.
Considering the current circumstances, I believe it is time to sell SolarEdge stock now. If the fourth quarter results are as poor as the third quarter, the stock might decline further, leading to more potential losses for shareholders.
SunPower (SPWR)
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SunPower (NASDAQ:SPWR) is an American solar company that provides residential solar systems and batteries. The company has experienced its most significant downfall since 2016, with the stock declining by 78% over the past year.
SunPower has encountered serious challenges, including broader industry problems and weak customer demand, raising concerns about its market position and ability to survive.
Q3 results also revealed the company’s financial decline, with revenue down 9%. Its net loss for the quarter was also wider than expected.
Analysts are also struggling to determine what the future holds for the company. They offer a wide range for their 12-month forecast, with a high forecast at $10 and a low at $2.50. Therefore, it is better to avoid taking any further risks and selling SPWR stock before facing more losses.
Enphase Energy (ENPH)
Source: IgorGolovniov / Shutterstock.com
Enphase Energy (NASDAQ:ENPH), surprisingly, is on the list of doomed solar stocks because shares have declined 60% over the past year. The primary cause of this downfall is a significant shortfall in its Q3 revenues, which dropped from $711 million to $551 million.
In addition to the domestic challenges, Enphase Energy faced a substantial revenue downturn in Europe, approximately 34%. This was primarily due to elevated inventory levels at distribution partners and weakening demand in key markets such as France, Netherlands, and Germany. These factors collectively pose significant challenges to the company’s revenue sustainability.
Furthermore, Enphase Energy has provided an estimated forecast for fourth-quarter revenue ranging between $300 million and $350 million. This is significantly lower than analysts’ estimates of $579 million. Given these circumstances, it might be best to divest from Enphase Energy before it experiences further declines.
On the date of publication, Nauman Khan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Nauman Khan is a dedicated stock investor with a strong passion for the financial markets, specializing in fashion, sports, and technology stocks. His commitment lies in providing expert guidance to fellow investors, assisting them in making well-informed investment decisions. Nauman holds a Bachelor’s degree in Accounting and Finance from Bahria University.
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