Some of the stock market’s best performers have been companies that adapted to the pandemic. Stay-at-home and technology stocks are the obvious winners. But there are plenty of other examples, too. Industrial giants’ products and services retained high demand. Traditional brick-and-mortar retailers embraced e-commerce; Williams-Sonoma saw its shares skyrocket 400% over the past year.
Solar companies were a different kind of market outperformer. Unlike other pandemic success stories that involved taking action and adjusting to a new normal, solar companies more or less kept doing what they had been doing. It worked beautifully. Low interest rates, strong demand, crippled oil prices, and investor optimism pole-vaulted large and small solar stocks to new heights. But this year, rising interest rates and other headwinds are straining solar companies. One of the market leaders, SolarEdge Technologies (NASDAQ: SEDG), is down 13% so far this year. After rising 235% last year, shares of SolarEdge aren’t exactly a bargain. Let’s break down SolarEdge’s business in the wake of the pandemic to determine if its stock is worth buying for long-term investors.