By 2040, the world will need to add the equivalent of India and China’s current energy system to meet the demands of a surging global population and rising incomes. Among all other forms of energy, solar PV (photovoltaic system) is forecasted to see the largest and fastest growth in new capacity additions as prices continue to plummet and world governments enact policy favoring renewables.

The claims above, which come from the International Energy Agency’s (IEA) just-released World Energy Outlook 2017, is constructive for one of our favorite stocks, SolarEdge Technologies (SEDG), held in our Global Resources Fund (PSPFX). The company was up more than 202 percent in 2017 as of November 13, jumping nearly 20 percent in a single day last week after record revenues and profitability were announced for the third quarter. The S&P 500 Energy Index, by comparison, has delivered negative returns for the year. 

As I told you back in May, we managed to buy shares of SolarEdge and other renewable names [tracking #USGL-2017-05-24-0161] after they contracted last November on fears that the incoming Donald Trump administration would curtail incentives for “green” energy capacity additions. We saw the correction as a prime buying opportunity, a move that helped drive performance in PSPFX, which was up 13.6 percent as of November 13.

SolarEdge at the Cutting Edge of the Solar Market

Our bet on SolarEdge—which made up 1.39 percent of PSPFX as of September 30—continued to pay off as the company just closed out a stellar third quarter. During the earnings call last week, founder and CEO Guy Sella reported record revenue of $166.6 million, up 30 percent from the same quarter last year; record cash flow generation of $33.6 million; and net income of $28 million, with diluted earnings per share at $0.61. This beat consensus estimates by 11 cents. Gross margins stood at 35 percent for the quarter. Oh, and the company has carried absolutely no debt for at least the past year.