SolarEdge (NASDAQ:SEDG) is in the spotlight following a multi-million dollar purchase by BlackRock (NYSE:BLK). The SEDG stock purchase comes amid rising solar energy prices due to market and labor disruptions from the coronavirus pandemic.
During the second quarter, U.S. solar energy prices rose higher by 8.1%. This was partly attributed to a Commerce Department investigation into tariffs on Southeast Asian products and rising input costs, which stalled some solar projects. In addition, the investigation stopped the flow of solar panels that account for more than 50% of U.S. supplies and 80% of imports. The rising energy prices have reversed a decade of cost declines in the renewable energy industry.
Meanwhile, solar power purchase agreements (PPAs) rose by 25.7% compared to last year.
Last month, President Biden waived solar panel tariffs on four Southeast Asian countries and invoked the Defense Production Act. The act ultimately seeks to help increase solar panel manufacturing in the U.S. The suspension of the tariffs will serve as a “bridge” as the U.S. works to ramp up production.
The White House explained:
“With a stronger clean energy arsenal, the United States can be an even stronger partner to our allies, especially in the face of Putin’s war in Ukraine.”
BlackRock Purchases 1.26 Million Shares of SEDG Stock
BlackRock disclosed in a 13G filing that it had purchased 1.26 million shares of SolarEdge. After the purchase, the investment firm now owns a total of 5.71 million shares.
Shares of SEDG stock have appreciated by more than 1,000% throughout the past five years. While past returns do not indicate future performance, it does indicate management has a solid track record of executing beneficial business decisions. On top of that, SEDG is down about 5% year-to-date (YTD), outperforming the S&P 500’s YTD loss of 21%.
The purchase comes as somewhat as a surprise. Earlier this month, BlackRock downgraded its outlook for stocks. The firm warned that rising interest rates globally would further put risk on “developed market equities.”
Meanwhile, BlackRock strategists noted rising rates in the U.S. may stall economic growth without bringing down inflation. Strategists stated that rising inflation may be due to “unusually low production capacity in an incomplete restart following the pandemic” instead of high demand.
BlackRock concluded:
“We see a new era of volatile inflation and growth sweeping aside a period of moderation … We downgrade equities and upgrade credit in this new regime.”
On the date of publication, Eddie Pan did not hold (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.
